Adopting the cloud is risky but at least the insurance is cheap

To cloud or not to cloud - that is the question...

I am a big user of cloud-based applications

But at the same time, I am predicting a massive disruption for the internet (virus/ cyber-terrorism) which seems to be that I don’t believe my own predictions.

A few points:

  1. When that disruption happens it will of course not be aimed at your business specifically – but at internet infrastructure.
  2. Even if you manage to stay ‘up’ – your clients won’t anyway, so the disruption will be effective despite those local/effective back-ups  & strategies
  3. Most companies nowadays do their back-ups to the cloud which does not make your back-up accessible anyway when the cloud has some thunder…J

So there are two distinctions here to be considered: internet as a piece of infrastructure and just data records and storage. (You may use the internet to access your storage or you may not.)


The internet may be temporarily disabled in a big way in the future (like a road being blown up in a war) but that will eventually be fixed.

The bigger risk I see is that if the cyber-terrorists destroy the integrity of the banking system (or health, or government). That would be a huge issue that affects every business. The general internet may still work and the cloud may still be relatively safe. There is not much you can do about this risk I imagine?


You can easily store your data onsite – but will that data have value when you don’t have the infrastructure to access/service your clients?

If so, then local storage/servers is an option. This depends on the nature of your business and how mission critical your data records are.

Generally speaking, the cloud providers are easier, bigger targets for mischief makers, but this is balanced by the fact that they generally put resources into protecting their assets – probably more effectively and more robustly than you can?


On balance I would say that on cost/benefit analysis the Cloud is as good as any other option for most businesses (depending on the independent value of your data records).

What you SHOULD DO is to INSURE against these risks – because that is ultimately all that it is.

I don’t know for sure, but I reckon this risk is under-priced in insurance companies (because their actuarial models work on finding patterns in past data occurrences and they are NOT geared for these Black Swan events.) That means the insurance will be relatively cheap – until it happens once. That is; there are business continuity insurance products and there are ‘cyber’ products available – it is just that I do not think the insurance companies will have been able to truly cost the actual risk, and therefore these insurance products will be relatively cheap.