As Cyber Attacks Increase Cloud Insurance Emerges
By Juliette Fairley
NEW YORK (MainStreet)--With cloud technology companies such as CloudArena raising $1.5 million in early stage funding, cloud computing is poised to become a leading industry in coming years.
CloudArena created HotelRunner, a cloud based property, online sales and digital marketing management platform for hotels and accommodations of all sizes.
"We are going to use this investment to enhance our productivity and increase the quality of our services to boost the sales and marketing competencies of our worldwide customers," said co-founder Arden Agopyan.
CloudArena is one of the many emerging companies that make up the cloud computing market, which is expected to grow to $241 billion in 2020, according to a study by Forrester Research called "Sizing the Cloud."
"Now that cloud computing is an established business and a high growth market, there needs to be risk transfer associated with it," said David Kimmel, CEO of CyberRiskPartners, parent company of CloudInsure.
Malicious or criminal attacks accounted for 41% of data breaches compared to 24% in 2009, according to the Ponemon Institute. About 1,611 breaches took place in 2012 up 48% from 2011.
"Small companies can be put out of business with a single cyber incident," Kimmel said.
Insurers have responded with a new product designed to protect the emerging cloud crowd. Liberty Insurance became the first primary insurance carrier to cover risk associated with cloud computing technologies. The resulting CloudInsure is the world's first insurance platform designed specifically to address emerging privacy and security risks within the cloud environment.
"Cloud computing offers significant benefits in cost savings, scalability and performance, but as underwriters, we have to be very alert to the dynamic risks that accompany it because both the law and technologies are changing rapidly," said Oliver Brew, vice president of Liberty Insurance's technology and privacy practice.
For example, President Barack Obama signed an executive order on February 12, 2013 directing federal agencies to consider new cyber-security mandates were possible under the law. "Data in the cloud is safe but it carries its own risk and challenges," Kimmel said. "Aggregating data from so many companies in one place creates an attractive opportunity for hackers. Insurers are grappling with quantifying these dynamics and risks."