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Financial Data in the Cloud?


Financial Data in the Cloud?

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Karma-343206
Karma-343206
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We've yet to see a test of what happens when a cloud service provider gets into financial difficulty. I'm not sure what the US law is when it comes to the appropriation of assets during a bankcruptcy and that is also an issue in and of itself. Is the US law different from the UK law or the Australian law. To big to fail?

What would happen when the administrators are appointed, how would they wind down the company? How would they recover monies to the creditors? What are the assets of the business? Are you an asset as a customer? If the sole purpose of the administrators is to recover as much money to the creditors as possible what $ value can they place on allowing you continued access to your data?
david_wendelken
david_wendelken
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When I got started in computers back in the early '80s, there was a business model called 'time-sharing'. Software was run on expensive mainframes and businesses shared those mainframes via a time-sharing service. They connected to the time-shared mainframes via dial-up using dumb terminals.

Browsers = dumb terminals.
The Cloud = time-shared mainframes.

Same reasons for and against apply. Nothing's really changed except the dial-up isn't at 300 baud any more. Smile

You can rest assured that the techies working for the cloud won't be giving YOUR system personalized attention. That's because they'll be responsible for so many systems that they can't possibly do so. The major variable expenses for such an organization is labor so they'll minimize the staff necessary to do the work in order to boost the profits.
john barnett
john barnett
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The EU directive on data protection (implemented in the UK as part of the Data Protection Act 1998) requires that personal data stay within a country in which the regulations have been enacted into law.
Unless the terms and conditions can guarantee that the data will stay within a country in which these have been enacted, or equivalent - such as the hosting provider having signed up to the Safe Harbor scheme (which effectively means they have to treat the data in line with the requirements of the DP Act 1998 and gives Europeans the right to sue in the US if they are not followed) then there is no way that any sort of personal information, not just financial, could be held outside the EU.
Phil Factor
Phil Factor
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John, this is a fascinating thought. As I read it, it would be no defense for the director of a company guilty of a breach of the DP Act that he/she was unaware that the 'cloud' provider was holding the data in a country that was not a signatory to equivalent legislation. As fines up to half a million pounds can now be imposed, or even imprisonment, this might concentrate the mind of any manager considering a 'cloud' solution!


Best wishes,

Phil Factor
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john barnett
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Effectively it means that any contract to store the data within a cloud or internet hosted environment would have to guarantee that the data would have to reside in a country within the EU with guarantees of it not moving outside it.

For those not aware of it (should have posted this earlier) details of the US Government safe harbor scheme are at http://www.export.gov/safeharbor/

John
TomThomson
TomThomson
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Hi Phil,

I think your statement
Nevertheless, there will have to be further compromises between the pioneers of The Cloud and the regulators, before companies feel safe in entrusting their data to such an abstract service, seemingly 'remote from sand and iron'. And I still haven't found a Cloud provider who can tell me about failed attempts to access my data.

is a little inaccurate. Compromise is no use at all. There are (in Europe, anyway) very clear regualtions about keeping data safe, there's no room for compromise, contracts with companies providing storage and/or processing in the cloud have to conform to those regulations or someone is going to be in very big trouble. There are some similar laws in the US too (or at least courts in the US have managed to interpret some laws as as if they were similar) and several states have pretty strong breach disclosure laws which would scare many corporations clean out of the cloud. It's all very well having penalty clauses in your contract with your cloud storage provider, but if he goes bust he will be a straw man and the penalty clauses will be worthless. And when those clauses prove worthless, that is proof that your diligence in validating the contract was less that what was due, and you are up the creek with no paddle.

Tom

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