The Global Cyber Outage on July 19, 2024: Uncovering Vulnerabilities in Digital Systems Affecting Property Management and Other Industries Dependent on Microsoft's Windows

On July 19, 2024, a global cyber outage disrupted a multitude of industries due to a faulty software update from CrowdStrike that caused computers running Microsoft Windows to crash. If your company uses these systems, you were likely impacted, especially if you rely on specific software that became inaccessible. This outage underscored our heavy reliance on digital systems and highlighted their vulnerabilities.

Impact on the Property Management Industry

The property management sector, which depends on lease management software to automate leases, post digital notices, process work orders, and facilitate rent payments, was particularly affected. Companies using Windows-based systems experienced significant disruptions. Here are some ways a cyber outage can impact property management operations:

1. Data Access

   • Lease management software stores critical data on tenants, leases, payments, and maintenance schedules. A cyber outage can block access to this data, halting daily operations.

2. Payment Processing

   • Automated rent collection and payment processing can be interrupted, causing delays in rent collection and potential cash flow issues.

3. Tenant Communication

   • Communication tools within lease management software may become unavailable, hindering the ability to send notifications, updates, and respond to tenant inquiries. Additionally, certain projects or repairs that require posting notices—whether electronic/digital or hardcopy—may be delayed until those notices can be posted.

4. Maintenance Requests

   • Tenants may be unable to submit maintenance requests through the software, leading to a backlog of issues and potential dissatisfaction.

5. Compliance and Reporting

   • Disruptions to regulatory compliance and reporting features can make it challenging to meet legal obligations and reporting deadlines.

6. Security Risks

   • A cyber outage could signal a larger security breach, potentially exposing sensitive tenant and property data to unauthorized access.

7. Operational Delays

   • Routine operations, such as lease renewals, move-ins, and move-outs, can be delayed, affecting tenant satisfaction and operational efficiency.

8. Reputation Damage

   • Prolonged outages can damage the reputation of a property management company, leading to tenant distrust and potential loss of business. For instance, one major airline affected by the July 19 cyber outage hired a law firm to pursue legal actions against CrowdStrike and Microsoft to seek damages for the computer crashes that led to thousands of flight cancellations.

Key Impacts of Cyber Outages on Property Management Operations and Mitigation Strategies

1. Data Access Disruption

   • Cyber outages block critical lease data, halting operations.

2. Payment Processing Delays

   • Rent collection and invoice processing for contractors and suppliers were interrupted.

3. Communication Breakdown

   • Tenant communications and maintenance requests faced delays.

Preparing for Cyber Outages

To operate effectively in the digital landscape, property management companies must always maintain a state of readiness. Reflecting on my experience as a general manager at a small resort in Jamaica, I recall how we handled power outages with a massive generator. During an outage, the lights would only dim momentarily before the generator seamlessly kicked in, ensuring uninterrupted operations. This experience taught me the value of having a reliable backup system in place.

While cyber outages differ from electrical outages, the principles are similar. Just as the resort's success lay in its backup system, property management companies must have strategies to manage cyber disruptions. The July 19, 2024, cyber outage is a stark reminder that digital systems are not infallible. Do you have a backup system? Here are some strategies to consider:

1. Backup Systems

   • While cloud storage is fantastic for reducing physical storage needs, access to that information can be lost during a cyber outage. Just as the resort relied on a generator for power, property management companies should ensure they have offline copies of lease records and alternative systems ready. During the CrowdStrike cyber outage, one New York hospital successfully switched to a manual system for critical operations, thanks to thorough preparation and training.

2. IT Collaboration

   • Work closely with your IT department to establish and regularly test backup plans. As in the hotel industry, where seamless transitions during power outages were critical, property management companies must ensure that IT teams can restore digital operations swiftly, even if only temporarily.

3. Emergency Protocols

   • Incorporate cyber outage and IT disruption protocols into your emergency plans. This ensures that operations continue smoothly during disruptions.

4. Staff Training

   • Train staff, especially those in rental offices, on how to handle outages. Ensure they know what to say and what not to say to maintain tenant confidence and calm.

5 Crucial Takeaways from the Cyber Outage Impact on Property Management

1. Operational Disruption

   • Cyber outages can halt lease management operations, affecting data access, rent processing, tenant communications, and invoice processing.

2. Critical Data Access

   • Ensuring access to critical lease data is essential, as outages can block this information, disrupting daily operations.

3. Financial Impact

   • Automated rent collection and invoice processing, including payments to contractors and suppliers, can be significantly delayed, affecting cash flow.

4. Communication Challenges

   • Delays in tenant communications and maintenance requests can lead to dissatisfaction and operational inefficiencies.

5. Preparedness and Security

   • Implement backup systems, work closely with IT, and incorporate IT disruptions into emergency protocols. These measures not only ensure business continuity but also provide peace of mind to tenants by protecting their personal information from potential breaches.

Conclusion

The July 19, 2024, cyber outage served as a stark reminder of the vulnerabilities in our digital systems. Property management companies must take proactive steps to prepare for such events by implementing robust backup systems, collaborating closely with IT departments, and training staff to handle outages effectively. By doing so, they can reduce the impact of cyber outages and ensure the continued satisfaction and trust of their tenants.