Global IT outage reveals vulnerabilities in tech and finance sectors
On Friday, there was a service outage affecting Microsoft and CrowdStrike services, crippling the operations of many companies globally. According to an analysis conducted by Grzegorz Dróżdż, an expert at Conotoxia Ltd, this event also impacted stock markets. "For the first time, we are dealing with a global blackout," he writes.
On Friday, there was a global IT outage. And in fact, two that overlapped each other. Problems were noted with both the servers supporting the Microsoft Azure service and the machines using the antivirus service CrowdStrike.
Microsoft and CrowdStrike stopped working. "Global blackout"
Grzegorz Dróżdż, an expert at Conotoxia Ltd., confirms in his analysis that the incident was felt in financial markets. "It looks like for the first time we are dealing with a true global blackout. What previously seemed like just a science fiction invention has become a reality, revealing the fragility of modern technological systems," the expert writes in the analysis. He points out the scale of the contemporary world's dependency on a single technological company and the potential threats that such concentration brings.
The analyst compares this event to Nassim Taleb's "black swan" concept. Dróżdż emphasizes that "the disruptions affected not only individual users but primarily large institutions, such as banks (including central banks), stock exchanges, and airports, paralyzing operations at the peak of the holiday season and causing chaos in many other sectors."
Impact of the outage on financial markets
Grzegorz Dróżdż also analyzes the outage's direct impact on financial markets. He reports that "Microsoft shares on the German stock exchange fell by more than 2 percent, while shares of CrowdStrike, which confirmed the problem concerns their Falcon Sensor software, fell by nearly 14 percent." The expert simultaneously notes that "although the outage was quickly identified and repaired, shares of CrowdStrike's competitors gained as much as 6 percent in pre-market trading."
The analyst predicts that the consequences of this incident may be long-lasting.
The decline in Microsoft's shares and many other companies affected by the blackout will likely negatively impact the main American indexes, as Microsoft, being the second-largest company in the world by market capitalization, constitutes as much as 8.7 percent of the Nasdaq 100 index and 7 percent of the S&P 500 index - the author writes in the analysis.
Lessons for the future
Grzegorz Dróżdż emphasizes that this situation should be a lesson for the entire technology and financial sector. Recalling the words of Warren Buffett, the expert reminds that "it takes many years to build a brand's trust, and just a moment to lose it". This event shows how fragile the reputation and market value of even the largest tech companies can be.
The analyst points out the need to increase cybersecurity and diversify IT systems. As he suggests, companies and institutions should consider strategies to reduce their dependency on single technology service providers to minimize the risk of similar incidents in the future.
Regarding the extent of the financial markets' damage caused by the outage, we will be able to assess it more fully on Friday afternoon. After 9:30 AM Eastern Time, the New York Stock Exchange will begin operations.
