Legal approaches to management of the risk of cloud computing insolvencies

What is it about?

The failure of a cloud computing service provider has been acknowledged as presenting significant potential risk, given growing usage of cloud services by businesses, including financial institutions, public authorities and individuals. The disruption that a loss of access to data, or the means to process it, could present risk of a systemic nature. However, approaches to cloud computing insolvencies are yet to receive significant attention in academic literature. This article represents an initial attempt to identify the potential impact of an insolvency in this area as well as possible contractual approaches to risk containment, noting their limitations. It then identifies possible data recovery difficulties and the tensions that this would lead to in insolvencies. Drawing upon examples of insolvencies in other sectors, it suggests preventative and reactive approaches to cases of wide public impact, as well as a need for a supranational approach given the potential for a ‘too big to fail’ scenario.

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