Knowledge Center

In the second half of 2025, two major cloud services, AWS and Cloudflare, experienced outages that rippled across nearly every business sector nationwide. A regional healthcare system suddenly found its patient portal offline for six hours. A construction firm couldn't access project management tools, stalling multiple jobs in progress. A manufacturer experienced a 90-minute outage that froze three production lines, resulting in nearly half a million dollars lost in output and overtime costs. A transportation company watched its routing platform go dark, disrupting deliveries across six different states. 

None of these organizations were hacked. They simply lost access to a critical vendor that went offline without warning. When all was said and done, losses were estimated between $38 million and $581 million. 

This is the new reality facing business and leadership teams. Some of the most damaging business interruptions today don't come from cybercriminals. They come from the cloud-based platforms your company relies on to run operations, communicate with customers, and generate revenue. And because these failures are accidental, not malicious, most businesses are less prepared for them. 

The Modern Dependency Problem

For years, businesses have been working on their defenses against cyber threats. Investing in firewalls, encryption, and compliance training programs. Yet many companies have overlooked a vulnerability hiding in plain sight: the operational risk created by a third-party technology. 

From electronic health record (EHR) systems and customer relationship management (CRM) systems to payroll platforms, enterprise resource planning (ERP) systems, telematics systems, and payment processors, nearly every department depends on technology hosted elsewhere. These systems work beautifully—until they don't. 

When a cloud provider goes offline, your business often goes offline with it. There is no negotiation, no ransom to pay, no button you can push to restart your systems. You wait for the vendor to recover, and during that time, financial and operational consequences build quickly. 

These outages may seem technical on the surface, but their impact reaches far beyond IT—affecting revenue, operations, customer trust, and long-term strategy. Below are the four hidden costs of vendor-driven cloud outages. 

1. Financial Losses That Start Immediately

When a major cloud service fails, revenue interruptions can begin within minutes. The average cost per minute can range from $14,056 for most organizations to $23,750 for large enterprises. Transactions halt, systems stop processing, and customers get stuck mid-action. For organizations with strict performance requirements, even a short outage can trigger fees for missed deadlines or for noncompliance with Service Level Agreement (SLA) requirements. And after the blackout ends, the backlog continues to grow as teams work to recreate lost work, reprocess orders, or manually handle automated tasks. 

Industries built on real-time access feel the stress of an outage immediately. 

• Healthcare organizations may experience billing delays, slower patient intake, or rescheduled appointments, all of which can reduce revenue.
• Construction firms lose billable time when field teams cannot access schedules or update project logs. 
• Manufacturers may face production standstills if ERP systems freeze, leading to idle labor, late orders, or increased overtime costs. 
• Transportation companies can immediately fall behind on deliveries if routing or dispatch systems fail. 

Even short outages can take days to unwind financially, and the true cost is often far higher than the lost hour the system was down. 

2. Operational Disruption Across Every Team

Cloud outages are now part of the potential eventualities of doing business in a modern digital age. But as soon as a cloud outage occurs, and digital systems stop working, the ramifications can spread quickly and affect an entire operational ecosystem. Teams are forced to shift to manual processes, leading to multiple issues simultaneously. These issues include: 

• Project delays: Without access to updated files or schedules, teams pause work or rely on outdated information.
• Communication gaps: Phones, messaging tools, or CRMs go offline, making coordination difficult. 
• Manual errors: Handwritten notes or spreadsheets lead to mistakes and data cleanup later, after systems are back online.
• Service interruptions: Deadlines slip and scheduled work stalls, straining client relationships.
• Loss of visibility: Frozen dashboards leave leaders without real-time insight into production or fleet activity. 

Once systems come back online, teams often spend days reconciling data, rebuilding workflows, and resyncing tools. The aftermath of the recovery phase can be far more disruptive than the outage itself.

3. Reputational Damage

Customers don't care whether AWS or your internal server caused the outage. They care that your service wasn't available when they needed it.

In industries built on reliability, this perception carries weight. 

• Healthcare patients may lose confidence in patient portals or scheduling systems.
• Construction clients may question a contractor's ability to keep projects on track.
• Manufacturers and distributors rely on accurate data and may become concerned when systems freeze.
• Transportation customers expect real-time tracking and often react quickly when visibility is lost.

Rebuilding trust takes time. Even a brief interruption can prompt negative reviews, customer complaints, and even prompt some to move to competitors.

4. Long-Term Strategic Consequences

Although outages may last only minutes or hours, their long-term effects are harder to quantify. Some customers may move on to competitors who appear more stable. Others renegotiate contracts or impose stricter performance requirements. 

Companies may also face higher operating costs as they invest in redundant systems, backup communication tools, or additional staff to handle future disruptions. These expenses often pull resources away from other budgets or initiatives earmarked for company growth. 

Often, these investments highlight an underlying issue—overreliance on a single cloud provider. Consolidating critical systems with a single vendor increases the risk that one outage disrupts the entire business. Recent disruptions tied to faulty software updates, such as the CrowdStrike incident affecting airlines, highlight how quickly a single failure can paralyze operations. Diversifying cloud vendors and reducing single points of failure have become core parts of long-term resilience planning. 

When organizations struggle with technology stability, customers and partners may perceive them as less capable in markets where real-time data and digital reliability are becoming the standard. Even short disruptions can influence customer expectations, budget decisions, and overall competitiveness. 

The Blind Spot in Your Insurance Program

Many organizations assume that their cyber or property policy will respond to cloud outages. Most are surprised to learn that non-malicious vendor failures are often excluded unless specific endorsements are added. 

Some of these coverages to review include:

• Cyber insurance with system failure coverage, dependent business interruption, service interruption, and extra expense coverage. 
• Property insurance with contingent business interruption or cloud service provider endorsements designed for digital disruption. 
• Tech E&O or professional liability for businesses that deliver digital services or depend on reliable system availability. 

Because cloud outages are increasing, many companies now find that the cost of enhanced coverage is far lower than the overall cost of a single disruption. 

What Business Leaders Should Prioritize Now

An effective response to cloud outages begins with awareness among owners and their executive teams. This is both a technological and a business risk conversation. 

Leadership teams should be asking:

1. Which systems are truly mission-critical, which vendors control them, and is there enough diversity among these vendors?
2. How much revenue could be lost if those systems go down?
3. Do we have backup workflows for our most sensitive operations?
4. How long can our teams operate manually?
5. Does our insurance actually cover vendor outages—not just cyberattacks?

AWS and Cloudflare were not anomalies; they are reminders of how interconnected our world and operations have become, and how easily programming failures can occur. The businesses that recover fast are those that understand their digital dependencies, negotiate stronger vendor agreements, maintain clear contingency plans, and structure insurance programs that reflect these realities. 

Before another vendor outage occurs, review your policies with your client advisor to confirm how they address cloud failures caused by software configuration issues. Identifying and closing coverage gaps now gives your organization a stronger financial foundation and protects your reputation from downtime during the next outage.