If you are considering supplementing or replacing your in-house data storage with cloud computing, you need a comprehensive risk management strategy to protect against cyber risk that can expose your company to substantial financial losses and reputational harm.
Before you decide to send information to the cloud, you should assess the impact of a loss or theft of that data on your internal operations and client / customer relations. Assessment should be made by risk management and information technology personnel, together with senior-level management and supervisors of employees who are most likely to send data to the cloud.
Cloud service providers typically will offer you little or no contractual risk protection in their contracts. It is therefore important to address the potential losses resulting from data breach or service outage by securing cyber liability insurance coverage from an insurance company that specifically includes cloud-based services in their policy forms.
Storing data in the cloud can be very advantageous. However, before you start transferring information, it is important that you carefully plan your cloud computing objectives and secure insurance that protects your exposure to cyber risk.
This information is not intended to be exhaustive nor should any discussion or opinions be construed as legal or financial advice. Readers should contact legal counsel or their CPA for legal tax advice.