Cloudflare outage highlights the need for solution to connected risk

Tuesday morning’s outage experienced by Cloudflare, a major internet infrastructure provider, which caused major  websites  to become inaccessible, is yet another example of a connected risk event that creates ripple effects across multiple commercial organisations, according to Russell.

It seems that corporates and their specialty class (re)insurance partners are powerless to resist the threats posed to their balance sheets by intangible (and even tangible risks) but Russell is working with its (re)insurance clients and corporate partners to close at least part of the protection gap. 

The ripple effects of connected risk can be felt by everyone across a business, from employees and partners to suppliers and clients both within their discrete network and outside of it, so it makes sense that the problem requires a connected solution, which is under development. 

Several major internet services appeared to have been affected by the Cloudflare issue, including those from X, Spotify, OpenAI and, once more, Amazon Web Services (AWS). 

This event compounds the damage caused by the AWS outage just a short time ago, which impacted seemingly unconnected websites. That outage impacted websites and apps as diverse as Reddit, Snapchat, Signal, Duolingo and HM Revenue and Customs - an example of Connected Risk in motion. 

Julian Kirkman-Page, Head of Business Development at Russell said:  

“The question is, how can a corporate or their specialty class insurance broker or underwriter address outages such as the recent Cloudflare and AWS events? There are no easy solutions in the traditional (re)insurance market as it currently stands. A recent survey of Russell Working Group risk manager identified reputation,  cyber,  and non-damage BI as being identified as key drivers of losses.   

“This reflects the wider need for corporates, insurers, and their wider stakeholders and vendors to be more resilient and not just assume that they can outsource this threat to cloud vendors, as the impact still potentially resides on the company balance sheet with implications for its senior executives.  This means that better risk resilience management is needed to more effectively assess risk outcomes.

“Any insurance coverage, policy wording and event exposure analysis must adapt to this new emerging threat event landscape to better support the risk outcomes of business risk resilience management strategy. Corporates are now calling for new types of outcome-based policies that support the need for non-damage business interruption coverage for events that disrupt their wider network without damage, no matter the peril.”