Managing Legal Risk in the Cloud

We have a new author here.  Please welcome Brett Rigby with as many comments as possible.  Thanks for always passing by.  Here you go:

What is Cloud Computing?

Some of you may be wondering what cloud computing is, exactly, or why it may be important to understand in the business and legal world. While certain aspects of cloud computing may seem complex, a simpler way of understanding this concept is to think of Mother Nature’s clouds above us. Clouds encompass the earth and store enormous amounts of moisture. Like these clouds, cloud computing involves a worldwide internet network that stores data. Many people are involved in cloud computing without even knowing, such as when they join a social network (Facebook, Twitter, LinkedIn, etc.), email, use a media service (YouTube, Flickr, etc.) or use an internet search engine. Familiar cloud providers include Google, Amazon, and Yahoo, which utilize a mass of computers as storage clouds. Businesses, both large and small, also use cloud computing in a number of ways, ranging from communication to document storage. While there are several benefits to cloud computing, there are also several “dark clouds” that may produce trouble and are therefore important to understand in order to avoid potential harm.

Benefits of Cloud Computing

Benefits of cloud computing include the accessibility of a large amount data and the saved cost of not having to purchase additional hardware to increase storage capacity. Storing data on something like Google Docs allows the user to access that data whenever he has internet access. This user will, therefore, not have to carry around a DVD, thumb drive, or external hard drive in order to access stored information. Not only does this save the user the cost of such hardware or the burden of transporting external storage devices, but it provides him with a much larger amount of storage than he will most likely need. Instead of a company’s information being stored on an internal server, the information is stored in a network run by a third-party. Small and medium-sized businesses in particular have taken hold of cloud computing, which often results in giving them a competitive advantage by allowing them to go beyond their immediate resources. Whether communication occurs within the office or between offices in various parts of the world, cloud computing helps increase productivity by connecting people, allowing them to share and access information that may not otherwise be available.

Potential Risks and Issues

So far, cloud computing sounds great, and it is, which is why an increasing number of businesses are utilizing these networks. In our technological era, it is not difficult to understand why cloud computing is one of the fastest growing segments of the IT industry. With such growth and popularity, however, there are certain problem areas which users need to be aware of, such as privacy. These areas also include legal issues, including jurisdiction and eDiscovery. Because cloud computing is still relatively young, there remains much to be determined. To what extent can you trust the cloud provider to keep your information private? There is no concrete answer, and there is always a risk of some information becoming exposed. While advocates of cloud computing argue that such security issues are no more likely to occur (and in some cases less likely) than someone physically entering a building, office, or home in order to obtain private information, some experts are concerned that cloud computing could provide thieves and hackers “easy” access to very important and confidential information that would otherwise not be at risk.

Like constructing a building on an unstable foundation, businesses that put all of their apples in one basket by relying too much on cloud computing for their business needs may encounter trouble if internet security protocols fail. Although companies like Google, Amazon, and Yahoo are “stable,” other providers may not be as experienced in avoiding possible pitfalls. Businesses should be particularly careful about using cloud computing to store tax and accounting records, contracts, trade secrets, employee work and health information, confidential consumer information, etc. Because it is nearly impossible to control where information “in the cloud” may be stored, something saved in one state, country, or regional area may end up in a cloud hovering over a completely different area. This is where privacy law and issues of jurisdiction may come into play, because such law varies depending on the physical location of the provider. Some business clients may be opposed to this type of data storage because of the possible security risks. Also, because the cloud is the internet, if an internet connection is lost or unavailable, access to data stored using cloud computing consequently becomes unavailable until internet access is restored.

Conclusion

Overall, cloud computing possesses the potential to be of tremendous aid to users, such as small businesses, who are looking for an easy, efficient, and cost-effective way to operate. Although young, cloud computing will likely be around for a long time. Companies and individuals looking to take advantage of cloud computing should carefully research various providers to ensure that the services offered best suit their needs. The best thing users can do is to adopt stable security strategies and be wise in what information is accessible in the cloud.

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