in Features

Managing cloud computing risks

Posted 20 March 2019 · Add Comment

Sarah Hewitt, Director, Major Risks Practice, Gallagher and Craig Mounser, Senior Underwriter, Technology Practice, Travelers Insurance Company, provide insights into cloud computing opportunities and risks.



What is ‘Cloud Computing’?

Providers of cloud computing services ‘rent’ technology infrastructure to companies, as and when they need it. As data grows, and computing and storage needs increase, companies pay cloud providers based on how much service they use, instead of investing in more of their own servers, adding new software or growing their technology workforce.

There are three main service models for cloud computing:
•    IaaS (Infrastructure as a Service) - In the most basic service model, companies can buy access to processing, storage, network and other computing infrastructure.
•    SaaS (Software as a Service) - In this popular model, users access software in a web browser, rather than having to buy and manage their own software.
•    PaaS (Platform as a Service) - The PaaS model is targeted at application developers. Cloud providers offer web-based platforms – along with a range of tools – that allow developers to develop and test applications.

What are the key exposures involved in cloud computing?

When you sign up with a cloud computing provider, you are turning over some of your functions and/or data to people who do not work for you yet your legal obligations, whatever they may be, do not all go away simply because you have contracted out services.

Risk 1: Lack of access
Perhaps the biggest risk is that you are placing your data, operational processes or technological capability in the hands of others. If something happens to the cloud provider’s equipment or the business suddenly closes its doors, how will you continue to operate?
Risk 2: Security as a low priority
Many cloud providers do not see security as a key component of their business model. The way that some companies often end up contracting for cloud services adds to the risk. Rather than a uniform, high-level decision made by corporate leaders with appropriate scrutiny of all issues, in many companies end users arrange their own cloud computing use.
Risk 3: 'Take it or leave it' contracts
Cloud computing service agreements are often pro-vendor and may lack adequate protection for cloud users. If you seek modifications of the cloud provider’s contract, you may be told to 'take it or leave it'. Nonetheless, contracts should always be reviewed and assessed for exposure to risks.
Risk 4: Legal compliance
Contracting for computer cloud services does not transfer the primary obligation for compliance from your company to the cloud providers. Ultimately, you are responsible for your company’s legal obligations, whether to customers or regulators. Your risk can be managed contractually but your legal obligations are not all eliminated or transferred.

How can you manage these risks?
One way to mitigate risk is to implement the same level of due diligence that you would in making any other contracting decision.
1.    Make sure that the right people – such as technology experts, risk managers and lawyers – in your organisation are assessing the risk, evaluating the cloud provider’s services, and mitigating exposures through contractual provisions, including use of indemnity and transferring liability.
2.    Decide within your organisation what data to send to the cloud, what data should be maintained in-house, and how to back up and archive all data for disaster recovery planning purposes and regulatory compliance.
3.    Make sure once your contract is in place that someone actively manages it, monitoring performance and requiring compliance with contract provisions, including service level agreements.
4.    Work closely with your broker and insurer to understand your insurance coverage. Cyber risk policies typically protect you from the cost of losses that your customers incur because of technology problems you encounter, such as transmission of viruses, denial of service or disclosure of private information.
5.    Well-documented compliance.

In conclusion, as the economies of scale continue to grow, it is likely costs will fall and reliability and security standards will improve making cloud computing ever more attractive to a wider range of business models and the growth trend in the take up of cloud computing will continue for the foreseeable future.

 

Other Stories
Advertisement
Latest News

Satellite data learning tool brings EO to the next generation

A new UK Space Agency-backed online tool for learning satellite Earth Observation (EO) is now available for trial by higher education institutions.

Operational benefits of freeports in England

The establishment of new freeports in England - expected to be operational by the end of 2021 - offer the prospect of a range of unique business benefits, according to law firm DLA Piper.

Air Charter Scotland unveils second Biggin Hill based Citation M2

Air Charter Scotland has introduced a second Cessna Citation 525 M2, from its newest London Biggin Hill Airport base, coinciding with the first lifting of travel restrictions from 17th May.

Heathrow calls for significant expansion of 'green' list countries

As it reported today that it had lost 6.2 million passengers in April, down 92.1%, compared to pre-pandemic 2019 figures - following over a year of restrictions on non-essential travel - Heathrow called for significant expansion of

Guidance issued to prevent use of vehicles as weapons in terror attacks

New guidance designed to prevent commercial vehicles, including vans, lorries, buses, coaches and even cranes, from being used as weapons in acts of terrorism, was published yesterday.

Cobham Mission Systems wins $7.1m NAVSUP UWARS contract

Cobham Mission Systems announced today that it has been awarded a new $7.1 million prime contract from the US Naval Supply Systems Command Weapon Systems Support (NAVSUP) for production and delivery of Universal Water Activated

ODU 0201311219
See us at
Space Comm Expo BTRAF Museum BTDSEI bt1602170921