The ability to outsource a company’s technology infrastructure to a third party via cloud computing may seem like a dream come true—until the cloud arrangement breaks down. In April 2011, many Web sites that used Amazon’s cloud services business for hosting went down when Amazon encountered technical difficulties.

Businesses that rely on cloud computing risk losing revenue or facing extra expenses if the cloud provider experiences problems, says Robert Parisi, network security and privacy practice leader at insurance brokerage Marsh.

“When you put something into the cloud, you’re taking an aspect of your operations or infrastructure and handing it over to a third party,” Parisi says. “If that third party doesn’t deliver or is unavailable or for whatever reason just doesn’t get the job done, as a company you’re becalmed.”


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