Global Microsoft IT outage

With organisations still recovering from the global Microsoft IT outage, caused by a faulty software update by CrowdStrike, it may be some time before the true costs of this downtime are known.

Airlines, hospitals, financial services and media outlets have experienced the most disruption and affected companies should be keenly reviewing their IT provider contracts, business interruption insurance policies and cyber insurance policies, to identify avenues available to claim for the consequential losses.

Losses could stem from: 

• an inability to trade fully, or at all, for a period of time
• logistical system failures preventing goods, services or people being in the right place at the right time
• the reimbursement of additional expenses incurred by customers, due to an inability of a business to properly deliver its goods and services
• investors being unable to alter their investment position for a period of time.

The above list is not exhaustive but having assisted many organisations in quantifying and submitting their COVID-19 business interruption (BI) claims, we sympathise with the difficulties that can arise when insurers are resisting payouts based on nuances in the wording of insurance agreement clauses. Furthermore, since COVID-19, insurers may have tightened the wording around causation, which has been one of the main battlegrounds in payout eligibility.

Organisations should not be deterred by these challenges. However, it may be prudent to seek a legal opinion on the likely success of a claim against their IT provider or insurer before proceeding. Typical considerations include:

• the causation issue and evidentially linking this to losses
• whether notification requirements with the supplier or insurer have been complied with
• whether the length of the disruption is covered by the supply contract or policy.

Should eligibility thresholds be met, we recommend seeking out the assistance of a forensic accountant with extensive experience of business interruption claims, to assist with maximising the quantum of losses recovered.

Our Forensic Services team are well versed in assisting organisations with the quantification and submission of BI claims, including providing reports for insurers evidencing and justifying such claims. If you have experienced losses as a result of the global IT outage, we would be delighted to assist you.

If you require assistance in this area or want further information as to how we can help you, please contact Martin Chapman or Alex Houston.

Explore the challenges we tackle in a wider BI context in our Business interruption: The challenges of quantification article.