The Fortune 500 could suffer direct financial losses in excess of $20 billion due to a partial outage of third-party cloud services
Use of the cloud has been adopted widely by corporations in recent years, becoming the third-party backbone of the digital supply chain. It is especially high among Fortune 500 companies, a cohort which boasts a total market value of more than $20 trillion and employs about $29.2M people worldwide.
Parametrix Insurance uses a study of Fortune 500 companies to demonstrate its approach to quantifying the impact of cloud outages on companies and identifying the more impactful potential events to the insurance industry and managing the risk of accumulation.
Based on the data accumulated from Parametrix Cloud Monitoring System as well as data relating to companies cloud infrastructure, the key components to modeling the risk are:
i. a model of cloud outage behaviour,
ii. a model to estimate the cloud infrastructure of companies based on an external scan of their tech stack, and
iii. a model to estimate the impact of cloud outages on companies with specific cloud architectures.
The Fortune 500 case study provides an initial benchmark for the impact of some catastrophic events in the billions of USD. The publicly available data relating to the Fortune 500 allows us to illustrate the implementation of the above tools along with an approach to quantifying and managing the accumulation risk posed by the cloud outage events.