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☁️ '''Cloud computing risk''' encompasses the spectrum of [[Definition:Operational risk | operational]], [[Definition:Cyber risk | cyber]], [[Definition:Regulatory risk | regulatory]], and [[Definition:Concentration risk | concentration]] risks that arise when [[Definition:Insurance carrier | insurance organizations]] rely on third-party cloud infrastructure and services to run core business functions — from [[Definition:Policy administration system | policy administration]] and [[Definition:Claims management | claims processing]] to [[Definition:Actuarial modeling | actuarial modeling]] and [[Definition:Data analytics | data analytics]]. As insurers and [[Definition:Insurtech | insurtechs]] accelerate their migration away from legacy on-premises systems, cloud computing risk has moved from an IT concern to a board-level governance issue that intersects with [[Definition:Enterprise risk management (ERM) | enterprise risk management]], [[Definition:Solvency | solvency]] oversight, and [[Definition:Outsourcing | outsourcing]] regulation.

⚠️ Several dimensions of cloud risk carry particular significance for insurers. [[Definition:Data protection | Data protection]] is paramount: insurance companies hold vast repositories of sensitive personal, health, and financial data, and a cloud [[Definition:Data breach | breach]] can trigger regulatory penalties under regimes like the EU's General Data Protection Regulation, [[Definition:HIPAA | HIPAA]] in the United States, or data localization requirements in markets such as China and India. [[Definition:Vendor concentration risk | Vendor concentration]] is another acute concern — the global cloud market is dominated by a handful of hyperscale providers, meaning an outage at a single vendor can simultaneously disable operations across multiple insurers, [[Definition:Third-party administrator (TPA) | TPAs]], and [[Definition:Managing general agent (MGA) | MGAs]]. Insurance regulators have responded with specific guidance: the [[Definition:European Insurance and Occupational Pensions Authority (EIOPA) | EIOPA]] issued cloud outsourcing guidelines requiring insurers to maintain audit rights and exit strategies; the [[Definition:Monetary Authority of Singapore (MAS) | MAS]] mandates technology risk management standards for cloud adoption; and the [[Definition:Prudential Regulation Authority (PRA) | PRA]] in the UK treats material cloud dependencies under its [[Definition:Critical third-party | critical third-party]] regime.

🔎 From an [[Definition:Underwriting | underwriting]] perspective, cloud computing risk also represents a growing exposure within [[Definition:Cyber insurance | cyber insurance]] portfolios. A single cloud provider failure or compromise could trigger [[Definition:Systemic risk | systemic]] losses across thousands of [[Definition:Policyholder | policyholders]] simultaneously — a [[Definition:Aggregation risk | correlation problem]] that challenges traditional [[Definition:Diversification | diversification]] assumptions in cyber [[Definition:Catastrophe modeling | catastrophe modeling]]. Insurers therefore face cloud risk on both sides of the balance sheet: as users who must manage their own operational resilience, and as underwriters who must price and manage accumulations of cloud-dependent exposures in their [[Definition:Book of business | books]]. This dual exposure makes cloud computing risk one of the more complex and consequential emerging risks confronting the insurance sector today.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Cyber risk]]
* [[Definition:Operational risk]]
* [[Definition:Concentration risk]]
* [[Definition:Cyber insurance]]
* [[Definition:Outsourcing]]
* [[Definition:Cloud service provider risk]]
{{Div col end}}

Definition:Cloud computing risk - Revision history

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