Business Law and Cloud Computing

Every day more companies move towards cloud computing, but recent cyber-attacks have raised questions about security and reliability. Several other legal considerations have been raised, and it is therefore important for businesses considering this path to make sure to weigh the legal factors as well as cost benefits.

There are many reasons why companies are switching to cloud computing. According to the National Law Journal, some experts think that cloud computing could cut corporate IT costs by half. The cloud also offers attractive flexibility, with usage-based fee structures and the ability to scale performance up higher than any typical corporate IT.

The biggest down-side to cloud computing has to do with security concerns (perceived or otherwise), such as whether cloud service providers can be trusted to look after critical and confidential business data. The consequences of lost data, as seen from high profile data loss cases, can lead a business to lose billions of dollars.

If a company is moving to the cloud, they need to make sure they are protected legally. This involves knowing the relevant security and data laws to ensure that corporate and consumer interests are protected. This will also involve having a designated employee or attorney who monitors the business policies to make sure they are compliant, particularly when laws about data and security are diverse and constantly changing. There are very strict data security requirements specific to industries (like health care), and these must be met to avoid fines or graver penalties. Companies must also be aware of applicable laws outlining notification requirements in case of a data security breach. These regulations can be different through the country, but the business will need to be aware of the rules in any states they are in.

Additionally, a business switching to cloud computing needs to investigate and monitor any potential cloud vendors. Strict terms and conditions governing how the vendor will store, care for, and protect data need to be established. A contract with a cloud servicing vendor should also address liability issues in the event of a breach.

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