Why the CrowdStrike Failure Highlights the Need for Digital Resiliency

Crowdstrike, a leading cybersecurity firm trusted by organisations in regulated industries for endpoint security and cyber attack response services, recently experienced a significant failure that caused chaos across the globe.

Its critical software update malfunctioned, causing widespread operational disruptions and the blue screen of death for its clients and their end users.

The global outage, which saw hospitals, airlines, and banks unable to access their systems, has underscored the urgent need for digital resilience throughout the supply chain.

For legal and procurement professionals, the implications of this global cyber failure are clear: relying on a single vendor is a double-edged sword.

While it may simplify procurement processes and foster strong vendor relationships, it also creates a single point of failure. When that vendor faces a security breach, technical failure, or other disruptions, your business could face regulatory non-compliance, financial loss, and reputational damage.

Understanding the criticality of your vendors and the level of risk they pose to your operations is crucial for achieving digital resilience and robust business protection.

What is Digital Resilience?

Digital resilience is a business’s ability to predict, withstand and recover from compromises on its digital infrastructure, including cyber outages, attacks, and threats. As a result of globalisation, interconnected supply chains, increasing cyber intelligence, and complex IT environments, it can be hard to achieve.

Digital resilience is a strategic initiative for Legal and Procurement teams as it enhances risk management, ensures regulatory compliance, protects sensitive data, maintains operational continuity, and builds trust and reputation with customers.

By prioritising this work, these teams can better manage vendors and contracts, safeguarding the organisation’s interests in an increasingly interconnected and digital world.

If your business doesn’t prioritise digital resiliency, the failure of a critical IT services vendor, such as Crowdstrike, will leave it exposed to:

• Operational Disruptions: Systems experience outages and performance issues, causing delays and inefficiencies.
• Security Vulnerabilities: The incident exposed security weaknesses, leaving clients vulnerable to cyber threats during the downtime.
• Regulatory Non-Compliance Risks: Disruptions increased the risk of regulatory non-compliance for clients in regulated industries like banking and healthcare, leading to potential legal and financial repercussions.
• Financial Impact: Immediate remediation efforts resulted in financial losses, including costs from downtime, mitigation, and restoring operations.
• Increased Litigation Risks: Disruptions raised the risk of litigation from clients and stakeholders affected by the operational and security impacts.
  

  Watch our podcast on how to digitalise procurement

Why the Crowdstrike Outage is an Important Warning

The Crowdstrike outage is a warning sign because it highlights the vulnerabilities and risks associated with relying heavily on a single vendor for critical cybersecurity services.

It shows how even leading security providers can experience failures, causing significant operational disruptions, exposing security weaknesses, and increasing the risk of non-compliance with regulatory standards.

If the Crowdstrike outage had been a targeted cyberattack rather than an update failure, critical data could have been encrypted for ransom, resulting in extended downtimes, severe financial losses, and the theft of sensitive data or intellectual property.

Manual risk management processes are no longer sufficient to keep pace with the evolving threat landscape. Automation is critical in effectively managing third-party risks, providing a scalable and efficient way to ensure continuous compliance and security.

How to Build Digital Resilience

Manual vendor management processes are slow, error-prone, and inefficient, making it difficult for businesses to build digital resilience. The time-consuming nature of manual tasks leads to delays in onboarding, risk assessments, and incident responses, leaving companies vulnerable to disruptions. 

At Gatekeeper, we know that true digital resilience can only be achieved when it's baked into your end-to-end vendor, contract, and third-party management processes. Those processes need to be standardised, streamlined, and automated.

Our Vendor and Contract Lifecycle Management platform is designed to give you total visibility of your vendors and third parties, complete control of processes including due diligence, and the ability to safeguard your business’s compliance.

Watch our webinar on third party risk management

Automating your vendor risk management processes, and building digital resilience with Gatekeeper, looks like this:

• Send an NDA Request: Gatekeeper simplifies the NDA process by allowing you to send an NDA request directly to the vendor automatically through the platform with a single click.
• Create Instant Vendor and Contract Records: When the vendor adds their website URL, Gatekeeper automatically creates a comprehensive vendor and contract record filled with relevant data and stores it in a repository.
• Complete Pre-Due Diligence Vetting: Gatekeeper performs an instant credit and cyber health score check, enabling you to vet the vendor before starting the due diligence process.
• Digital Signatures: Gatekeeper moves the vendor straight to digital signatures, significantly reducing the time and need for negotiations.
• Initiate Due Diligence: Once the health checks are satisfactory, the due diligence process begins. Gatekeeper focuses on areas that have not already been assessed.
• Simplify Due Diligence Responses: Due diligence responses are streamlined, using drop-down options and lists to make it easy for vendors to complete.
• Score Compliance Responses: Each response is automatically scored, providing an instant compliance statement.
• Identify Potential Risks: Gatekeeper allows you to dive deeper into specific areas, such as the vendor’s cyber health and fourth-party risks, to identify and understand additional weak points.
• Continuously Monitor Vendors: This comprehensive data is used throughout the vendor lifecycle, ensuring continuous management and risk mitigation, enhancing overall vendor performance and security.

Conclusion

The Crowdstrike outage is a stark reminder of the critical importance of digital resilience and the risks associated with relying heavily on a single vendor for cybersecurity services. While this incident was a genuine mistake rather than a targeted attack, it highlighted the vulnerabilities that can arise from such dependencies.

Legal and procurement teams must take proactive steps to assess and mitigate risks, understand their vendor’s risk appetite, and develop comprehensive incident response plans. Embracing vendor and contract management software that offers third-party monitoring is essential for timely risk detection and mitigation.

By prioritising these measures, businesses can better protect themselves against disruptions, safeguard sensitive data, and maintain compliance with regulatory standards.

If you're ready to build your digital resilience, speak to one of our specialists about how Gatekeeper can help.