May 13, 2024

A New View on Cloud Outage RDS

As cloud technology rapidly evolves and reliance on cloud services grows, insurers and reinsurers are increasingly exposed to cloud-related risks. 

A New Approach to 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. 


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