It has been estimated that businesses in the US could lose $15 billion if a leading cloud service provider were to experience a downtime of at least three days. This is based on a recent report published by Lloyd’s of London in partnership with the American Institutes for Research (AIR), which looked into the potential risk of cloud failure as well as the possible financial impact.
According to their findings, Fortune 1000 companies will carry 37% of the ground-up losses and 43% of the insured losses in the event that a cloud service was offline for three to six days. It also suggested that, if a cyber incident were to take down one of the top three cloud service providers for the same allotted time, it would result in $4.2 to $8.6 billion of ground up losses for the manufacturing industry, and $1.4 to $3.6 billion for the wholesale and retail trade industry.
However, it also found that businesses outside the Fortune 1000 – who are more likely to use cloud provider services – would likely be hit the hardest, carrying a 63% share of economic losses and 57% of insured losses. Additionally, the transportation, warehousing, and financial sectors would all be impacted as well, with each suffering ground up losses of $400 million and information sectors would have ground up losses of $847 million.
Trevor Maynard, Head of Innovation at Lloyd’s, is quoted as saying: “This report provides a detailed picture of the costs to the US economy as a result of a cloud service provider failure. Clouds can fail or be brought down in many ways – ranging from malicious attacks by terrorists to lightning strikes, flooding or simply a mundane error by an employee. Whatever the cause, it is important for businesses to quantify the risks they are exposed to as failure to do so will not only lead to financial losses but also potentially loss of customers and reputation.”
The report’s findings raise some serious concerns about the risks of using cloud-based computing, especially considering how more people than ever are using the cloud for their online activities. Tech companies like Apple, which use and curate their own cloud storage services, media services like Netflix, which offer hours of entertainment stored online, social media platforms like Instagram, which store their user’s content and information, and even casino sites such as Spin Palace, which is currently offering a Spin Palace bonus which includes free spins, all rely on the web to store their data and information. This is to say nothing of the millions of ordinary people who use cloud services like Google Drive, Apple iCloud and Amazon Cloud Drive for their own use and convenience. Every single one will be affected if a major incident were to take one of these services offline.
Fortunately, despite the report’s gloomy forecast, such an event has yet to actually happen. Furthermore, there is a chance now that, with this data out in the open, cloud providers will realize the risks and begin to take steps to ensure that such a disaster never comes to pass. One can only hope that they do so as soon as possible.
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