The past couple of years have seen cloud services move from the periphery of most businesses to the mainstream.
Drawn by the cost savings, agility and scalability that the cloud has to offer, companies have been migrating to the cloud en masse. A recent Harvard Business Review survey found 84 percent of companies had increased their reliance on the cloud in the past year.
At the core of this trend is a calculation by businesses that the benefits of the cloud outweigh the risks. Strange as it may sound, the benefits may outweigh the risks for the insurance industry, too. Of course, the type of risk insurers see in the cloud is different from most businesses, and has been a longstanding concern to underwriters. Even so, the cloud has enabled security capabilities that substantially lower risk in other areas — at least to the point that it merits another look.
The case against the cloud
Insurers have understood for a long time that they must manage aggregation of risk across the portfolio of products that they sell. Few places aggregate cyber risk as neatly as the cloud, and an unforeseen event that triggers multiple claims could spell bankruptcy, if not properly understood and managed.
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