A while back, there was a global incident where CrowdStrike’s update to the Falcon cybersecurity platform affected Windows connectivity; as a result, there was revenue loss for corporates..
What risk mitigation measures were implemented, and what clauses were introduced in the "subscription agreement" renewal to claim financial losses from both parties or first- and second-tier dependencies/suppliers?
A timely reminder of the critical need for robust “force majeure” and “service level agreement (SLA)” clauses—especially for security and infrastructure platforms. Post-incident, many firms are revisiting liability caps, indemnity for downstream impacts, and supplier chain transparency.
Curious to hear how others updated their vendor contracts after the CrowdStrike outage.
My guess is the majority of companies which had signed up for CrowdStrike's services did not have any punitive clauses in their contracts to protect them financially from the outage but they will likely try to add these after the fact. At the same time, I'd expect CrowdStrike's procurement & legal folks would be modifying their subscription agreements to protect THEM from this :-).
Kiron Saving Changes...
Luis BrancoCEO| Business Insight, Consultores de Gestão, LdªCarcavelos, Lisboa, Portugal
Juzly Sheriff Excellent question - and highly relevant for those operating at the intersection of project management, contracting, and risk governance in digital ecosystems.
The CrowdStrike incident highlights a critical issue: systemic risks posed by cybersecurity or SaaS vendors can cause widespread operational impact — and must be addressed with greater contractual sophistication.
Here are some key areas to consider:
1. Liability and Limitation of Damages Clauses
Standard SaaS agreements often cap liability (e.g., to 3 months of fees).
In light of incidents like this, it’s reasonable to renegotiate clauses to:
- Acknowledge strict liability for critical service disruptions;
- Allow for the claiming of actual financial losses (e.g., business interruption, reputational damage);
- Require the vendor to hold cyber liability insurance with sufficient coverage.
2. Strengthened SLA Clauses
Agreements should include clear service availability targets, maintenance windows with proper notice, and enforceable remedies for repeated SLA breaches.
3. Flow-down Clauses for Subcontractors
When second- or third-tier suppliers introduce risk, contracts must explicitly extend accountability to them.
Without flow-down clauses, clients remain exposed to systemic failure with limited recourse.
4. Early Termination and Tech Substitution Provisions
Subscription contracts should include practical mechanisms for graceful exit or tech replacement in the event of major systemic incidents - without excessive termination penalties.
5. Audit Rights and Transparency Mechanisms
Beyond financial remedies, organizations should push for technical audit rights, regular security reviews, and incident reporting protocols with defined response times.
This type of failure reinforces the need for active contract management, integrated with risk governance — not merely a procurement exercise.
Project Managers with a strategic lens can be the bridge between Legal, IT, vendors, and business continuity planning.
Thanks for raising this.
I’d be very interested in hearing from peers who’ve successfully renegotiated similar clauses post-incident.
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1 reply by Juzly Sheriff
Aug 03, 2025 10:05 AM
Juzly Sheriff
...
Thank you for your details.
What are we discussing is a reactive mechanism? With the existing contractual agreement, is it possible to claim losses from Microsoft and CrowdStrike? And I am sure Insurance companies will now increase the premiums against cyber threats/negligence.
I'm interested in understanding sample clauses and how we negotiate with insurance.
Senior Projects Manager | Field & Marten AssociatesNew Westminster, British Columbia, Canada
Juzly, my thoughts are in line with Kiron’s. I do expect that enterprises impacted by the incident began negotiating stronger terms in their renewals to protect themselves again such incidents. Saving Changes...
Juzly Sheriff Excellent question - and highly relevant for those operating at the intersection of project management, contracting, and risk governance in digital ecosystems.
The CrowdStrike incident highlights a critical issue: systemic risks posed by cybersecurity or SaaS vendors can cause widespread operational impact — and must be addressed with greater contractual sophistication.
Here are some key areas to consider:
1. Liability and Limitation of Damages Clauses
Standard SaaS agreements often cap liability (e.g., to 3 months of fees).
In light of incidents like this, it’s reasonable to renegotiate clauses to:
- Acknowledge strict liability for critical service disruptions;
- Allow for the claiming of actual financial losses (e.g., business interruption, reputational damage);
- Require the vendor to hold cyber liability insurance with sufficient coverage.
2. Strengthened SLA Clauses
Agreements should include clear service availability targets, maintenance windows with proper notice, and enforceable remedies for repeated SLA breaches.
3. Flow-down Clauses for Subcontractors
When second- or third-tier suppliers introduce risk, contracts must explicitly extend accountability to them.
Without flow-down clauses, clients remain exposed to systemic failure with limited recourse.
4. Early Termination and Tech Substitution Provisions
Subscription contracts should include practical mechanisms for graceful exit or tech replacement in the event of major systemic incidents - without excessive termination penalties.
5. Audit Rights and Transparency Mechanisms
Beyond financial remedies, organizations should push for technical audit rights, regular security reviews, and incident reporting protocols with defined response times.
This type of failure reinforces the need for active contract management, integrated with risk governance — not merely a procurement exercise.
Project Managers with a strategic lens can be the bridge between Legal, IT, vendors, and business continuity planning.
Thanks for raising this.
I’d be very interested in hearing from peers who’ve successfully renegotiated similar clauses post-incident.
Thank you for your details.
What are we discussing is a reactive mechanism? With the existing contractual agreement, is it possible to claim losses from Microsoft and CrowdStrike? And I am sure Insurance companies will now increase the premiums against cyber threats/negligence.
I'm interested in understanding sample clauses and how we negotiate with insurance. Saving Changes...
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