Cloud computing is Internet-based computing, whereby shared resources, software, and information are provided to computers and other devices on demand.
Using a third party to host all or parts of your company’s technological presence has become so ubiquitous in the business world that many companies could not function without it. When assessing the risk of doing business in the cloud, the question has moved away from whether or not to take part in it and becomes the question of how cloud computing can best be managed to mitigate risk.
It is fundamental to understand that outsourcing business functions to a third party is not synonymous with outsourcing your risk. The data may reside on a different company’s systems, but the responsibility for that data has not been transferred. Companies must respond to their customers whether or not they are using a cloud service.
One of the best ways to mitigate risk is to treat your cloud provider like any other independent contractor by actively managing the relationship, reviewing contracts (many have hold-harmless clauses that favor the cloud operator), securing indemnity (the provider should have appropriate errors and omissions coverage) and understanding the vendor’s security practices.
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