This year has presented us with an array of events, from the largest outage in the history of IT to an AI washing issue turned D&O claim. While these headlines are undoubtedly entertaining, they’re also pivotal lessons for startups. Let’s see how the events of 2024 will reshape 2025.

The CrowdStrike Wake-Up Call

Rewind to July 2024, when most of us were enjoying the sun on our faces. In another corner of the world, CrowdStrike, a leading cybersecurity firm, faced a massive issue when a faulty update to its software caused widespread system crashes for millions of Windows users.

Enter business downtime to stage left.

One tech glitch brought thousands of cloud-reliant businesses to a screeching halt—healthcare, transportation, finance, etc. Revenue was lost, flights were canceled, patient care was delayed, and more.

Yes, we can blame a tech glitch — but due to this mishap, we expect to see heightened regulatory scrutiny of cybersecurity practices, more thorough vetting of third-party vendors, and deeper reliance on the safety net of business downtime insurance.

AI Washing Snowballs Into D&O Litigation

It’s not uncommon for businesses to overstate their AI capabilities. After all, companies focused on AI are more likely to secure funding or even see better stock performance. However, it’s another thing entirely for those “exaggerations” to morph into investor suits!

But that’s precisely what happened to Joonka, a now-shuttered recruitment platform. The Securities and Exchange Commission (SEC) charged Joonka’s CEO and founder for using new-school buzzwords like “artificial intelligence” and “automation,” when those capabilities weren’t accurate.

As expected, SEC Chair Gary Gensler issued a series of warnings to publicly traded companies, but startups aren’t in the clear. So what do these yellow flags mean for the startup community?

Most importantly, this incident drives home the point that AI washing is something to avoid. Be transparent; the AI Spokesperson must color in the lines. Next, startup leaders should not skimp on their D&O coverage. It’s a significant expense, you bet — but try facing an SEC investor suit without it.

Data Breaches: The Latest Trend (That No One Wants to Follow)

It doesn’t seem possible to see more headlines about another data breach or the latest hacker, but it’s happening. In fact, the National Public Data (NPD) breach occurred in April 2024 yet wasn’t publicly discovered until August 2024. Nearly 3 billion US citizens had their personal information exposed, making it one of the largest data breaches in history.

So, is this the new normal?

The short answer is yes. We don’t expect to see a decline in data breaches. Hackers and cybercriminals are likely stocking up on energy drinks and working overtime.

Startup leaders should follow suit, enhancing cybersecurity measures and data privacy compliance, thoroughly vetting third-party vendors, and redefining their proactive risk management stance.

The new exposures 2024 brought to the forefront should motivate us to know our vulnerabilities extensively, empowering us to customize our insurance and risk management plans to our
needs. We’ve got this!

With data breaches on the rise, safeguarding your business’s most valuable asset — your data— is crucial. Written by Dyanne Harvey for Founder Shield, Small Business, Big Threats: 5 Practical Steps to Shield Your Data explores real-life cyber threats and offers practical steps to protect your business. Ready to boost your cybersecurity?

Read more now!