A dark cloud in the sky
Property Casualty

A Troublesome ‘Cloud’ is Looming

Nick Maletta
Nick Maletta
Client Executive, Property Casualty

OK, so I don’t have a degree in Meteorology and I certainly can’t predict the weather. Though, I can tell you when the sun is out and it’s hot, I’m one happy guy. But, I digress. The “cloud” I’m referring to has nothing to do with the sky above, but cyber liability.

Ever heard of the cloud or cloud-based services? In simple terms, these services are made available to users via the Internet from a cloud computing provider’s servers as opposed to being provided from a company’s own on-premises servers. So, basically, they enable both businesses and casual users to maintain as much or as little electronic data as they wish on a third-party’s mainframes without the need for or the expense of having to buy and maintain their own hardware systems.

Sounds great, right? Sure does. Easily move your data off premises and free up server space —what’s not to like? Well, there’s some risk involved with moving your data to a cloud-based vendor. C’mon now, you had to know by the title of this blog that I’ve got some concerns.

The Risk of a Cloud Services

If you’re thinking about moving your data to a cloud-based server, you need to ensure the risks don’t outweigh the rewards. Think about the following:

  • You need to be mindful of the agreements you’re signing with cloud-based vendors and how the indemnification language flows or what the limitation of cyber liability states. This can often be counter intuitive to what you may believe the responsibilities to be.
  • Cloud services are often untested and could be a weak source of security. This is all the more reason to purchase a cyber liability policy to supplement potential breach expenses.
  • Cloud services are aggregators of data and, as such, are often under attack by cyber thieves potentially more than other storage services.
  • You need to be aware of where the cloud information is located. You may have contracts in place elsewhere that require you to keep the data onshore. Keep in mind, many of these cloud providers take the data throughout the world.

There is a lot of documentation out there with the good, the bad, and the ugly of cloud-based services. The key step you need to take before making any kind of switch is simply doing your research. Cloud-based services can be a slippery slope for companies.

After all that, I now want to know: Is your company thinking of switching to cloud-based services? Have you made a move already? If you’ve made the move, is it working for you or are there issues? My goal is to communicate the pros and cons of all facets of this business to you. So, let me know and help me spread the word. Comment below and let’s talk!

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