A New View on Cloud Outage RDS

Discussion paper builds on new data and better understanding of cloud behavior to propose a new approach to RDS 17.3, "Cloud Cascade".
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As cloud technology rapidly evolves and reliance on cloud services grows, insurers and reinsurers are increasingly exposed to cloud-related risks.

A New View on Cloud Outage RDS analyzes Lloyd’s RDS 17.3 “Cloud Cascade”, offering a more practical and insightful scenario that aligns results with the actual structure of the cloud landscape.

The white paper addresses key challenges with the current cloud outage RDS, including:
  • A lack of specificity about the nature of the event
  • A lack of specificity about the scope of the outage event
  • A lack of specificity about the impact on insureds
  • Superfluous details about the event
  • Return period estimates, and
  • Inadequate economic loss assumptions
‍Parametrix proposes essential data elements to specify a new cloud outage scenario. Utilizing different, more granular, and readily available data will result in a more plausible RDS.

This will enable more informed decisions regarding capital allocation, risk management strategies, and pricing of cloud-related insurance products.