Single points of failure risk more global IT outages

Significance

Growing reliance on the same software, hardware, protocols and cloud infrastructure has exacerbated the risks of single points of failure (SPOF), where issues emanating from one vendor lead to widespread catastrophic failures and system outages.

Impacts

• Insurers will be cautious about underwriting risks linked to SPOFs due to the potential volume of simultaneous claims.
• Regulators may consider limiting the number of customers individual vendors can acquire, either through policy or antitrust litigation.
• SPOFs may prompt clients to switch tech vendors, potentially intensifying competition within the industry.