AWS outage costs major companies millions per hour, Insurance may cover losses - with a catch

In a major setback, the recent Amazon Web Services (AWS) outage reportedly cost major companies millions of dollars per hour, highlighting the risks of relying heavily on a single cloud provider. While many businesses can claim insurance to compensate these losses, experts caution there are caveats. The outage impacted thousands of companies worldwide, disrupting a wide array of online services - from social media and gaming to food delivery, streaming platforms, and financial services.

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To know the exact financial impact of an outage like today’s is difficult, but Tenscope has attempted to put it into perspective. According to techradar.com, their estimate suggests that global businesses could be losing around $75 million for every hour major websites remain offline, with Amazon bearing the brunt - approximately $72 million per hour.


The analysis further details the potential costs for each major site impacted:

• Amazon: $72,831,050 per hour
• Snapchat: $611,986 per hour
• Zoom: $532,580 per hour
• Roblox: $411,187 per hour
• Fortnite: $399,543 per hour
• Canva: $342,466 per hour
• Slack: $194,064 per hour
• Reddit: $148,402 per hour

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WILL INSURANCE CUT DOWN LOSSES OCCUR DUE TO AWS OUTAGE?

Insurance will likely cut losses for many affected parties, though the process is often more complicated than it seems.

"For major businesses, hours of cloud downtime translate to millions in lost productivity and revenue. Yet many policies don’t trigger unless an outage lasts eight hours or more," Ryan Griffin, US cyber practice leader at McGill and Partners, told techradar.com.

"We’re seeing a gap between operational exposure and insurance response and it’s the same pattern that emerged after CrowdStrike. The market is experimenting with parametric options, but adoption remains low," Griffin added.

AWS CONFIRMS SYSTEM STABILITY

Amazon announced on Monday evening that a major outage affecting its cloud computing service has been resolved, ending widespread disruption to internet services worldwide. The cause was traced to a malfunction within AWS, the company’s cloud computing division that powers the infrastructure behind many of the world’s largest organisations. AWS supports governments, universities, and businesses, making its systems critical to daily digital operations. The resolution restored access for millions of users and companies globally.

"By 3:01 PM, all AWS services returned to normal operations. Some services such as AWS Config, Redshift, and Connect continue to have a backlog of messages that they will finish processing over the next few hours. We will share a detailed AWS post-event summary," according to AWS Health Dashboard.

AWS TRACES PROBLEM IN DOMAIN NAME SYSTEM

Amazon traced the outage to problems with its domain name system (DNS), which translates web addresses into numeric IP addresses that allow websites and apps to load on connected devices. On its status page, AWS reported "increased error rates and latencies for multiple AWS Services in the US-EAST-1 Region." The company said engineers were 'immediately engaged' and actively working to both mitigate the issue and fully understand its root cause.