The cost of downtime isn’t just lost revenue. For most companies, it’s a combination of cloud spend spikes, engineering time, customer trust, and contractual fallout—all hitting at once. That’s why CFOs increasingly look at outages through two complementary lenses: business risk preparedness and global employee continuity. cloud spend spikes, engineering time, customer trust, and contractual fallout business risk preparedness global employee continuity. Joe Cronin, President of International Citizens Insurance, notes that resilience is not only an infrastructure conversation—especially for globally distributed companies. International Citizens Insurance International Citizens Insurance “For global teams, resilience isn’t just infrastructure; it’s people. If key employees are traveling or living abroad, continuity depends on having plans and coverage that reduce friction when something unexpected happens,” Cronin said. To quantify downtime beyond rough estimates, finance teams need cloud economics datathat ties incident windows to incremental spend and ownership. cloud economics data cloud economics data cloud economics data The Four Buckets of Downtime Cost Downtime is expensive because it creates multiple types of loss at once. A practical way to estimate impact is to break costs into four buckets: customer, engineering, cloud, and commercial. customer, engineering, cloud, commercial Customer cost includes churn risk, refunds or credits, and the support backlog created when users can’t complete key actions. Even when revenue eventually recovers, trust erosion and increased support load often linger.
Engineering cost includes incident response hours, context switching, and roadmap slip. Outages pull teams away from planned work, delay releases, and create long “recovery tails” of follow-ups, postmortems, and rework.
Cloud cost often increases during incidents due to retries, failover, autoscaling, and surges in logging/observability. These mechanisms are valuable—they help restore service—but they can also create noticeable spend variance during the incident window.
Commercial costincludes SLA credits, partner escalations, and reputational impact. SLA credits may show up as discounts on future invoices, but the larger cost is often relationship friction—partners lose confidence, customers question reliability, and leadership attention gets diverted. Customer cost includes churn risk, refunds or credits, and the support backlog created when users can’t complete key actions. Even when revenue eventually recovers, trust erosion and increased support load often linger. Customer cost Engineering cost includes incident response hours, context switching, and roadmap slip. Outages pull teams away from planned work, delay releases, and create long “recovery tails” of follow-ups, postmortems, and rework. Engineering cost Cloud cost often increases during incidents due to retries, failover, autoscaling, and surges in logging/observability. These mechanisms are valuable—they help restore service—but they can also create noticeable spend variance during the incident window. Cloud cost Commercial costincludes SLA credits, partner escalations, and reputational impact. SLA credits may show up as discounts on future invoices, but the larger cost is often relationship friction—partners lose confidence, customers question reliability, and leadership attention gets diverted. Commercial cost FinOps Reality: Incidents Are Variance Events Cost spikes during outages aren’t surprising. Retries, reroutes, failover behavior, and increased telemetry are often necessary to restore or maintain service. The customer may only see a degraded experience, but behind the scenes, systems can become significantly more expensive to run during disruption. For finance teams, the key is measuring cost as a baseline vs. the incident window. Baseline is the “normal” operating spend and performance. The incident window is the period during which the disruption occurred. Comparing the two helps quantify incremental cloud spend, labor, and commercial impact—so the business can learn and invest in the right reliability improvements. baseline vs. the incident window Sam Meenasian, Vice President of Sales and Marketing at USA Business Insurance, emphasizes that downtime is rarely a single-line item. USA Business Insurance USA Business Insurance Most teams price downtime as lost revenue, but the bigger cost is the ripple effect: missed commitments, customer trust, and the internal scramble that pulls people off their core work,” Meenasian said. Most teams price downtime as lost revenue, but the bigger cost is the ripple effect: missed commitments, customer trust, and the internal scramble that pulls people off their core work,” Meenasian said. The Insurance Lenses When companies think about “risk,” they often focus on a policy. In practice, the biggest difference-maker is preparedness: who owns what, what gets documented, and how quickly the business can stabilize operations when something breaks. Business preparedness Incidents become more expensive when responses are improvised. Clear ownership, an incident response plan, and consistent documentation reduce confusion and shorten recovery time—especially when vendors, contracts, and service commitments are involved. “When an incident hits, preparedness matters. Clear ownership, a documented plan, and a clean record of what happened can make the difference between a quick recovery and a long, expensive mess,” Meenasian said. Global employee continuity For distributed companies, resilience also depends on people's availability. Time zones are one challenge, while travel and international assignments add another. If a key employee is abroad—traveling for work or living overseas—unexpected disruptions can remove them from rotation and slow response efforts. International Citizens Insurance supports this “people continuity” layer with solutions such as international health insurance, expatriate insurance, travel insurance, international life insurance, and corporate group coverage for global employees—helping companies reduce friction when employees need support across borders. “Companies build redundancy into systems; they should also build it into their workforce. Global employee coverage and clear escalation plans help teams stay operational even when someone is suddenly unavailable,” Cronin shared. Mini-Model + Checklist A simple way to estimate downtime cost is: Downtime Cost = (SLA credits or lost revenue) + (support load) + (engineering hours × loaded rate) + (incremental cloud spend during the incident window) + (churn risk proxy). Downtime Cost = (SLA credits or lost revenue) + (support load) + (engineering hours × loaded rate) + (incremental cloud spend during the incident window) + (churn risk proxy). Downtime cost checklist: Downtime cost checklist: Define incident windows and tag incident-related spend
Establish severity levels, clear owners, and a communication path
Centralize runbooks and test access quarterly
Build follow-the-sun coverage and backups for travelers/expats
Run postmortems that produce at least one measurable improvement Define incident windows and tag incident-related spend Establish severity levels, clear owners, and a communication path Centralize runbooks and test access quarterly Build follow-the-sun coverage and backups for travelers/expats Run postmortems that produce at least one measurable improvement Closing Thoughts Reliability costs money, and incidents cost more. The most resilient companies don’t just hope outages won’t happen—they measure impact, reduce variance, and invest where it moves the needle. For modern CFOs, that means treating cloud spend discipline and people continuity as part of the same risk stack: the goal is not perfection, but fast recovery—and fewer expensive surprises. measure impact, reduce variance, and invest where it moves the needle This story was published under HackerNoon’s Business Blogging Program. This story was published under HackerNoon’s Business Blogging Program. This story was published under HackerNoon’s Business Blogging Program. This story was published under HackerNoon’s Business Blogging Program. Business Blogging Program Business Blogging Program

The is an opinion piece based on the author’s POV and does not necessarily reflect the views of HackerNoon.

The Hidden Cost of Downtime: A FinOps and Insurance Perspective

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