Experts have described Crowdstrike’s incident last week as the most extensive IT outage in history. Picture Getty
CrowdStrike’s massive meltdown, and why investors should watch cybersecurity stocks
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- CrowdStrike’s failure was the most extensive IT outage in history
- Cybersecurity is becoming more vital as the world faces increasing cyber attacks
- And here’s a list of cybersecurity stocks on the ASX
A massive IT failure by CrowdStrike (NASDAQ:CRWD) on Friday, July 19, had far-reaching consequences, grounding flights, roiling markets, and disrupting operations for businesses worldwide.
Shares of CrowdStrike plummeted by more than 25% over two days in response to the incident.
The disruption was compounded by unrelated issues affecting Microsoft Corp.’s Azure cloud services, ensuring that the impact would be felt across multiple sectors for potentially days to come.
So, who is Crowdstrike?
CrowdStrike is a dominant force in global cybersecurity, renowned for its software that defends businesses against ransomware attacks and other digital threats.
Controlling approximately 18% of the US$9 billion global market, CrowdStrike edges out its rival Microsoft, according to market research by IDC.
Its technology leverages artificial intelligence and is (or perhaps was) highly regarded for its effectiveness in combating emerging hacking tactics.
The global IT outage originated from a flawed software update released by the company, triggering widespread failures across critical industries such as airlines, banking, healthcare, and retail.
Crowdstrike clarified that the disruption was not caused by a cyberattack or a security breach.
“Blue screen of death”
Experts have described the incident as the most extensive IT outage in history.
In a blog post released last Friday, CrowdStrike admitted that a “logic error” was responsible for the Microsoft outage.
The error stemmed from a sensor configuration update to its cybersecurity software Falcon, a type of update that occurs regularly, which caused a widespread breakdown on millions of Microsoft Windows systems globally.
Crowdstrike said such updates “are a normal part of the sensor’s operation and occur several times a day in response to novel tactics, techniques, and procedures discovered by CrowdStrike.”
“This is not a new process; the architecture has been in place since Falcon’s inception,” the company added.
In the IT world, logic errors are notorious for creating “infinite loops,” where systems endlessly consume CPU resources, often resulting in a crash commonly referred to as a “blue screen of death.”
How the glitch affected Australia
CrowdStrike’s outage also triggered significant disruptions across Australia, impacting crucial services such as air travel, broadcasting, and access to essential sectors like hospitals and banking.
Home Affairs Minister Clare O’Neil said that resolving the aftermath of Friday’s major IT outage could take one to two weeks.
“….It will take time until all affected sectors are completely back online. In some cases, we may see teething issues for one or two weeks,” O’Neill told the ABC.
O’Neil, however, assured the public that critical infrastructure and emergency services, including triple-0, remained fully operational throughout the incident.
Efforts are ongoing as authorities work closely with CrowdStrike through the National Coordination Mechanism to address lingering issues.
“CrowdStrike informed the meeting that they are now close to rolling out an automatic fix to the issue with their update, as is Microsoft,” O’Neill added.
The cyber incident came after the Australian Government was informed by MediSecure last week that about 12.9 million people may have had their personal and health information, including prescription details and healthcare provider data, exposed due to a cyber security breach.
The company, which facilitates electronic prescriptions and dispensing, said its investigation indicated that 6.5TB of data stored on the server was likely exfiltrated by a malicious third-party actor.
Cyber incidents to keep rising
With cyber incidents such as those on the rise, cybersecurity has become even more essential in today’s digital era.
We depend on cybersecurity software to defend against online threats, preserve privacy, and maintain trust on the internet.
Without it, individuals and organisations risk financial losses and harm to their reputation.
Research firm Statista recently predicted the annual cost of cybercrime worldwide will increase by 70% between 2023 and 2028.
Fortune Business meanwhile predicts that the cybersecurity market will grow to US$425 billion by 2030, almost two and a half times its value in 2023.
Cybersecurity stocks on the ASX
Senetas’ focus is in the field of encryption.
The company’s main product is its encryption hardware, which is used to protect data in transit across networks and secure sensitive information from unauthorised access.
Senetas’ products are widely used in sectors where data security is critical, such as government, defence, finance, and healthcare.
Recently, the company secured its largest-ever order for high-speed ethernet encryptors through its distributor, Thales.
The order, from a Middle Eastern government agency, comprises over 100 encryptors with speeds of 1Gbps and 10Gbps.
This deal is expected to boost Senetas’ FY24 revenue by $2.5-$3 million and its FY24 pre-tax profit by $2-$2.3 million.
archTIS focuses on secure information sharing and collaboration.
The company’s main product is called Kojensi, which is a secure content and collaboration platform designed to protect sensitive information while enabling secure sharing between organisations.
Kojensi is used primarily in sectors such as government, defence, and critical infrastructure.
Whitehawk’s main product is the Whitehawk Cyber Risk Framework, which helps organisations identify cyber risks effectively, offering real-time mitigation recommendations.
In early July, Whitehawk struck its first ever deal win with an ASX 100 listed company, Tabcorp Holdings (ASX:TAH).
“This is an important contract that gives us material visibility in the Australian market to complement our success in the US market over the past 5 years,” said Terry Roberts, Executive Chair of WhiteHawk.
“Although WHK has had contracts previously with small Australian clients, we have now contracted with a large Australian company for an annual subscription of our proven, AI-Based Cyber Risk Program, with the ability to add key features throughout 2024.”
Firstwave specialises in cybersecurity solutions tailored for businesses and enterprises.
Its main product is the Cloud Content Security Platform (CCSP), which offers comprehensive protection against cyber threats such as malware, phishing attacks, and data breaches.
In June, FirstWave announced an extension and expansion of its contract with Telstra (ASX:TLS), its largest customer, for the CyberCision cybersecurity-as-a-service platform.
The specifics of the contract are confidential, but FirstWave expects its revenue to increase by approximately 20% in FY25 as a result.
Together, Telstra and FirstWave aim to provide ISM-compliant (a standard established by the Australian government) cybersecurity-as-a-service to Australian government users.
Qoria, formerly Family Zone Cyber Safety, specialises in providing cybersecurity solutions designed specifically for families and schools.
Its main product is the Family Zone platform, which offers tools and features to help parents manage their children’s online activities safely.
The platform includes features such as content filtering, screen time management, social media monitoring, and cyber safety education.
It allows parents to set boundaries and restrictions on internet access, block inappropriate content, and receive alerts about their child’s online behaviour.
In addition to the consumer market, Qoria also provides solutions tailored for educational institutions.
Its products help schools and teachers manage and monitor students’ internet usage in compliance with educational standards.
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