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Your Friday Five

Every Friday we distill 200+ insurance, legal, and market-risk articles into three signals your board may need for its Monday briefing.

Three developments caught our attention this week:

• How 78 minutes crashed 8.5 million systems last summer - and why your third party vendors could be a massive operational risk
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• Armchair quarterbacks emerged after CrowdStrike, but Ascot Group's CIO explains why they're missing the real lesson about Black Swan preparedness
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• How generic "ransomware" tabletop exercises create false confidence instead of testing actual vulnerabilities

CrowdStrike's 78-minute outage cost $5.4 billion and proved third-party tools are a top institutional risk

Summary

July 19 marked one year since 78 minutes nearly crashed the internet.

At 04:09 UTC, CrowdStrike pushed Channel File 291; a routine update that would cost Fortune 500 companies $5.4 billion.

By the time they reverted it 78 minutes later, over 8.5 million Windows systems had crashed worldwide. Aviation took the hardest hit with 15,000+ canceled flights over the next 72 hours, while hospitals and banks scrambled to restore operations.

The technical failure was almost mundane: a mismatch between input fields, missing runtime array bounds checks, and a logic error in their Content Validator.

Yet this cascade of basic quality control gaps brought down infrastructure that millions depend on.

No breach. No sophisticated attack. Just trusted security software becoming the threat itself.

CrowdStrike CEO George Kurtz called it "a moment that tested everything." The company's response - their Resilient by Design framework - fundamentally rewrote how enterprise security platforms operate, introducing sensor self-recovery, ring-based deployments, and granular customer controls.

(source)

So what?

The vendors protecting you can take you down faster than any attacker.

The same cloud-native velocity that lets security vendors push instant updates to millions of endpoints creates a catastrophic blast radius when things go wrong.

As one security executive observed, "even companies with strong practices, a staged rollout, fast rollback, can't outpace the risks introduced by the very infrastructure that enables rapid delivery."

Post-crisis critics always emerge with perfect hindsight, but they're missing the real lesson about Black Swan events

Summary

Ascot Group's CIO calls out the "armchair quarterbacks" who emerged after CrowdStrike.

In a pointed Medium post, Owen Williams challenges the post-crisis commentators who "quickly offered hindsight critiques, analyzing vendor practices, patch processes, and dependency risks." His observation cuts deeper: these critics miss the fundamental nature of Black Swan events - they're unpredictable by definition.

Williams draws parallels to past crises: "This pattern recurs after every major event. After the 2008 financial crisis, for example, economists who missed early warning signs quickly recommended what regulators should have done."

The CrowdStrike incident follows the same script - the technology's most significant risks emerged from its most trusted components.

His most striking insight: even CrowdStrike's strong practices, staged rollouts, and 78-minute rollback couldn't outpace the risks introduced by cloud-native infrastructure itself.

(source)

The LION Lens

What happened — Williams identifies three recurring archetypes: "the Black Swan, an unanticipated disruption; the armchair quarterbacks, who critique with hindsight; and the 'post-event Cassandras', who claim to have foreseen disaster" (source: Article 2).

Why it matters — This pattern repeats after every crisis, from 2008's financial collapse to Southwest Airlines' 2022 failure and TSB Bank's 2018 migration disaster, but hindsight analysis rarely prevents the next Black Swan.

Practical implications — Organizations focusing on preventing "another CrowdStrike" will miss the next crisis, which Williams warns will emerge from an entirely different trusted component.

So what?

The Boy Scout principle beats sophisticated prediction models.

"Be Prepared" means building redundancy, rehearsing failover procedures, and accepting efficiency trade-offs. Organizations that invest in resilience before disruption recover faster and preserve more trust than those perfecting their post-mortems.

The strategic opportunity lies in identifying your most trusted components - the ones nobody questions - and building specific failover capabilities for when they fail.

The LION POV

Here's how we're advising clients:

• Map your "unquestioned dependencies"; systems so trusted they bypass normal risk assessment. These often include security tools, authentication systems, and cloud providers.
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• Implement "trust but verify" architectures. Even your most reliable vendors need containment boundaries and manual overrides.
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• Run "trusted component failure" scenarios in your crisis simulations. What happens when your endpoint protection becomes the attack vector?

Preparation determines survival.

Most crisis simulations fail because they test generic scenarios instead of your actual vulnerabilities.

Summary

Effective tabletop exercises share three critical features: realistic scenarios, cross-functional participation, and measurable outcomes.

Yet many still run generic "ransomware attack" or "data breach" simulations that bear no resemblance to their actual risk profile.

The September attacks on European airports and Jaguar Land Rover's four-week production halt prove that even mature organizations fail under real pressure. Organizations that survived recent attacks had rehearsed scenarios specific to their technology stack, their vendor dependencies, and their unique vulnerabilities.

Cross-functional participation separates effective drills from compliance theater. Your legal team needs to practice regulatory notifications. HR must know how to communicate with employees. PR requires templates for customer outreach.

When these teams first meet during an actual crisis, coordination fails.

(source)

So what?

Generic tabletop exercises create dangerous false confidence.

Here's how we structure effective crisis simulations:

• Start with threat intelligence specific to your sector. Community banks face different attacks than hedge funds. Your tabletop should reflect the adversaries actually targeting institutions like yours.
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• Include "trusted component failure" scenarios inspired by CrowdStrike. What happens when your EDR solution becomes the attack vector? How do you operate when your backup provider is compromised?
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• Measure decision velocity, not just decisions. Track how long it takes to reach your general counsel, activate your crisis communications plan, and notify your cyber carrier. Speed matters as much as accuracy.

Need help designing institution-specific crisis scenarios? Contact LION Specialty

The Bottom Line

Between trusted vendor vulnerabilities, Black Swan inevitabilities, and regulatory mandates for crisis simulation, operational resilience has shifted from competitive advantage to survival requirement.

Financial institutions face a narrow window to build "fail-safe" architectures before the next 78-minute crisis tests their readiness.

That's why we created the D&O Contract Vigilance Blueprint. It's a 5-day email course to help you:

• Secure better D&O insurance: Learn how to avoid common policy mistakes
• Protect your personal assets: Understand your potential liability

​>>>Get the D&O Contract Vigilance Blueprint​

Don't wait until a claim hits to find out your institution is under-protected.

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Stay Covered,

Natasha & Mark​
Co-Founders and Managing Partners
LION Specialty

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