- Where Insurance & Technology Meet

Cloud Computing – Real Opportunities, Real Risks, Real Insurance

There is little doubt that Cloud Computing presents real opportunities.  But there are also real risks, and real risk mitigation strategies, which can include insurance.

As we’ve noted recently in this space, organizations of all sizes and shapes (including insurers),  are moving to cloud computing to reduce fixed costs, and allow greater flexibility.  And there are emerging case studies that show that returns on investment for things like email and corporate sales management are very compelling.  IT services company Computacenter, in announcing its cloud-based email offering, conducted a survey which found that 90% of companies saw a place for cloud based email within the organization.  A  report from Forresters concluded: “Bottom line: Cloud-based email makes sense for companies or divisions as large as 15,000 users. And every company can benefit from occasional users or email filtering to a cloud-based provider.”  (Should Your Email Live in the Cloud:  A Comparative Cost Analysis. Ted Schadler, Forrester Research, January 5, 2009.  Note:  Distribution of the report through CIO/CSO Online Resources was sponsored by Google Apps).

However there is a growing concern about risks of cloud computing.  There are very legitimate concerns about availability, reliability and security that require technical review (there is a good summary of issues on CloudCommons).  But they also require careful business analysis of the risks, and development of risk mitigation strategies.  John Weigelt, cloud policy expert and national technology officer at Microsoft Canada, framed this well in a recent interview with IT in Canada: “Today businesses protect their information in a certain manner – some are better at it than others but they do have an approach.  As you begin to move your services outside your organizational boundaries – perhaps you have a hosted cloud from a Canadian hosting provider, perhaps you are going to an international, commercial cloud – you can’t toss your security challenges over the fence and hope that someone else will resolve them.”

Insurance can form a part of this resolution.  SearchCIO provided the following advice: “The manager of a fine hotel would never allow an electrician or plumber to work without being insured; it’s standard fare on service contracts in the physical world. Not so in cloud computing, where provider coverage in the form of cyber insurance is far from a given. This undoubtedly will change as businesses push providers to share the risks of a data breach or unexpected downtime, experts said.”

Web 2.0 Collaboration, including cloud computing, is a major theme of the 2011 Technology Conference.  Donald Light, Senor Analyst, Celent, will present on “Clearing the Air:  SaaS and Clouds”.    Tony Jacob, Industry Solutions, Insurance, Worldwide Financial Services, Enterprise & Partner Group, Microsoft Corporation will present on “Leveraging the cloud  to grow your business”. Philippe Lafreniere CIP, VP Insurance Solutions & Field Marketing, Exigen Insurance Solutions will present on Cloud Computing, SaaS and Core Insurance Applications.

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Never rely on any one computer or any one service to protect your critical information. Whether that information is stored in your own computer, in the cloud, or anyplace else, you need to have multiple copies, all stored in multiple locations 🙂

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