The concept of insurance goes back two and a half thousand years, back to the Achaemenid Empire of Ancient Iran, when people would offer gifts to the monarch each New Year. Each gift would be registered, and if the gift-giver needed financial help during the following year, the monarch would arrange it – according to the value of his gift.
Fast forward to present day, and the world is littered with different types of insurances. From health insurance and life insurance, to terrorism insurance, divorce insurance, crop insurance and everything in between. And now? There is cloud insurance.
As technology advances, insurance providers celebrate. New advancements mean new things to need protection against. More protection means more policies, and more policies mean more money lining insurance providers’ pockets.
What is cloud insurance?
Cloud insurance has been designed to offer financial protection to cloud providers and organisations who work in the cloud. If something should go wrong, such as a data breach or an outage, cloud insurance could offer financial compensation for any resultant losses.
Many organisations are wary about moving into the cloud because of the perceived risks – the financial risk of losing sensitive data in the cloud, and the risk of losing potential revenue and work capability.
Removing that risk with cloud insurance may encourage more organisations to move their business forward into the cloud. However, security is also an issue. There’s no point blindly moving into the cloud if its not safe – even if there is insurance as backup.
In this way, cloud insurance can offer something extra. Some cloud insurance providers also provide data back-up services, in which periodic snapshots are taken of the provider’s cloud environment, to provide data back-up, should the information be lost.
Mandatory Data Breach Notification
Something else that may enhance the popularity of cloud insurance is Australia’s mandatory breach disclosure legislation. Still yet to be passed, the bill will compel government agencies and organisations to notify customers of serious data breaches regarding personal, credit reporting and eligibility, or tax file number information.
Which would understandably lead cloud providers and businesses in the cloud to consider financial protection. No more sneaky cover-ups of data breaches – organisations on the wrong end of a data breach would be forced to face the music. Enter, cloud insurance.
Endorsing the bill, Australian Privacy Commissioner, Timothy Pilgrim, has expressed concern about the growing number of data breaches in Australia, and the fact that, “we are only being notified of a small percentage of serious data breaches that are occurring. Many critical incidents may be going unreported and consumers may be unaware when their personal information could be compromised.”
Forcing organisations to own up to data breaches can only be a good thing. It would allow those with lost data to deal with the issue accordingly (cancel credit cards and so on), and it would encourage organisations in the cloud to treat data with more care (organisations would prefer to prevent a scandal, than deal with the aftermath of one).
As for cloud insurance? Global risk consulting firm Protiviti’s Aaron Greenman said, “Insurance is one mitigating option… But you have to remember that insurance is really only going to limit the damage to financial compensation after the horse has already bolted. If your reputation is shot, one of the key risks for most organisations, financial compensation does not mean much.”
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