CrowdStrike: What to tell clients when a cyber event affects them

The CrowdStrike outage was a worldwide event, and the impact is still being felt. You received the calls, maybe you were affected personally or someone you care about was affected. What do you say? How do you advise them? Here are one advisor’s story and tips.

As a financial advisor, my phone typically rings off the hook after any significant market event. Last Friday was no exception, but the scale and nature of the calls were unlike anything I’d experienced before. A fault with an update issued by cybersecurity company CrowdStrike had led to a cascade effect among global IT systems, causing disruptions across various industries. Banks, health care providers, TV broadcasters and airlines were all hit hard. My clients were understandably anxious and looking for reassurance.

The day started with a call from one of my long-time clients, John. He runs a small business and has a diversified investment portfolio. “What’s going on? I can’t access my bank account, and I’m hearing all sorts of things about this CrowdStrike issue. Should we be worried?”

“John, I understand your concern,” I replied, trying to project calm. “It’s a widespread issue, but let’s take a step back and assess the situation. Your investments are diversified, which helps mitigate the risk. We need to see how this develops and make informed decisions rather than reacting impulsively.”

I spent the next few hours fielding similar calls. Clients were worried about their savings, retirement accounts and the overall stability of the market. The fault in the CrowdStrike update had triggered a chain reaction, affecting critical infrastructure and services worldwide. Banks couldn’t process transactions, hospitals were struggling with patient data, TV broadcasters were offline and air travel was severely disrupted. The financial sector was naturally hit hard, leading to significant market volatility.

One of my newer clients, Lisa, was particularly anxious. She had just started investing a year ago and was still getting comfortable with the ups and downs of the market. “My portfolio is down significantly today. Should I sell everything before it gets worse?”

“Lisa, I know this is unsettling,” I said, trying to ease her fears. “But selling in a panic is usually not the best strategy. Remember, we have a long-term plan in place. Market disruptions happen, but the key is to stay focused on your long-term goals. Let’s review your portfolio and see if any adjustments are necessary, but don’t make any hasty decisions.”

As the day went on, I scheduled a series of webinars and virtual meetings to address my clients’ concerns collectively. I wanted to provide a clear picture of what had happened, the potential impacts and how we could navigate through the crisis. During the webinar, I explained the technical fault in the CrowdStrike update and how it had led to a domino effect across various industries. I reassured my clients that while the immediate impact was severe, systems were being restored and measures were being taken to prevent future occurrences.

I also shared some essential tips and suggestions for handling such crises:

1. Stay calm and informed.

Market disruptions can be alarming, but panicking often leads to poor decision-making. Stay informed by following reputable news sources and avoid making impulsive decisions based on fear or speculation.

2. Diversify your investments.

Diversification is a key strategy to mitigate risk. Ensure your portfolio includes a mix of asset classes, sectors and geographic regions. This way, a disruption in one area won’t have a devastating impact on your entire portfolio.

3. Focus on long-term goals.

Investing is a long-term endeavor. Market fluctuations are normal, and overreacting to short-term events can derail your financial plans. Stay focused on your long-term goals and trust the strategy you’ve put in place.

4. Review your portfolio regularly.

Although it’s important not to react impulsively, regular reviews of your portfolio can help ensure it remains aligned with your goals and risk tolerance. Make adjustments as needed but avoid making drastic changes based on short-term events.

5. Understand the risks of cybersecurity.

In today’s digital age, cybersecurity is a critical aspect of business operations. Invest in companies that prioritize robust cybersecurity measures and have strong incident response plans. Consider cybersecurity ETFs to gain exposure to this growing sector.

6. Consult with your financial advisor.

Your financial advisor is there to guide you through market turbulence. Don’t hesitate to reach out with questions or concerns. Regular consultations can help you stay on track and make informed decisions.

By the end of the day, I felt a sense of accomplishment. Despite the chaos, I had managed to provide my clients with the information and reassurance they needed. The CrowdStrike incident was a stark reminder of the vulnerabilities in our interconnected world, but it also highlighted the importance of having a solid financial plan and staying calm in the face of adversity.

As I finally sat down to dinner with my family, I reflected on the day’s events. Being a financial advisor is challenging, especially during crises, but it’s also incredibly rewarding. Helping people navigate through uncertainty and achieve their financial goals is what makes this job worthwhile. The CrowdStrike incident was a significant disruption, but it was also an opportunity to reinforce the principles of prudent investing and the importance of staying the course.

When the phone rings what is your plan, how do you advise clients, and will they receive calm and reason from you?

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