Maze Ransomware attack to hit Cognizant revenue

Mumbai: IT services provider Cognizant revenue may be impacted by the Maze ransomware attack last week, the company said in a disclosure made to the US Securities and Exchange Commission.

“Although we are in the early stages of assessing this incident, the attack has caused and may continue to cause an interruption in parts of our business and may result in a loss of revenue and incremental costs that may adversely impact our financial results,” the company said in a filing.

In its forward looking statement the company said the ongoing assessment may determine the extent of impact on the financial results going ahead, “Factors that could cause actual results to differ materially from those expressed or implied include the ongoing assessment of the ransomware attack, legal, reputational and financial risks resulting from cyberattacks, including the ransomware attack, the effectiveness of business continuity plans during the ransomware attack and the COVID-19 pandemic, and the other factors discussed in our most recent Annual Report on Form 10-K and other filings with the Securities and Exchange Commission.”

The Maze ransomware attack over the weekend had disrupted internal Cognizant systems as well and affected clients leading the company to rope in law enforcement agencies and outside experts to contain the fallout.

According Beenu Arora, CEO and co-founder of US-based cyber security company Cyble, this could result in some fresh regulatory, legal and opportunity costs for the company. Liabilities from the attack such as the possible leakage of Personally Identifiable Information (PII) could also result in GDPR penalties and restrictions, “Most large customers /organizations have stringent Data Privacy and Protection clauses, which can create significant liabilities should the service provider fails to protect their interest in good faith and due care,” he said.

The time spent to rectify damage caused by the security incident would also result in some extent of opportunity cost, he added. “As leaders focus on damage control and deploy resources from "revenue-generating" streams to the internal incident, affected organizations lose significant value. It generally has an immediate effect on the coming quarter's revenue outcome depending on the severity of an incident.”

Cognizant is likely expecting lawsuits and claims from customers due to this incident, according to legal experts. “Cognizant could be expecting customer confidential data to be leaked online leading to claims and lawsuits from them. The company also mentioned that there has been service disruption to clients, this again could also lead to legal issues and damages,” said Salman Waris, Partner at Tech Legis Advocates and Solicitors.

“Our internal security teams, supplemented by leading cyber defence firms, are actively taking steps to contain this incident. Cognizant has also engaged with the appropriate law enforcement authorities,” it said. “We are in ongoing communication with our clients and have provided them with Indicators of Compromise (IOCs) and other technical information of a defensive nature.”

When contacted, a company spokesperson did not say whether the breach had been contained.

In an internal message to employees, Cognizant said, “We continue to experience issues with corporate applications such as Skype, WebEx and OneCognizant as well as other applications required for delivery. Our security and IT teams are investigating and working to resolve the issues as quickly as possible.”

It added, “If you are experiencing issues working on client projects, please notify your Cognizant manager. Your business leaders are aware of the issues and will discuss this with the appropriate client contact.”