Storage in the cloud

I love the idea of keeping all of my documents in “the cloud.” What are the potential dangers of cloud storage for my business?

When most people think of clouds, they think cumulus, stratus or maybe cirrus. Modern business owners know that cloud services are Internet tools that allow users to create, edit and store documents and data remotely.

When you’re on the road and have an important document you need to send to a client, it doesn’t do you much good to have it in a filing cabinet

100 miles away. The cloud allows you to access your documents from your phone, tablet or computer and instantly edit and share them.

The range of cloud computing services run the gamut from free, basic applications for the general public, to advanced, costly services specifically designed for bigger companies. The bigger services can include professional services beyond data storage, including running the company’s own applications on remote computers or managing customer relations.

The ability to access and share documents quickly from anywhere in the world is a big benefit. But what are the risks? Very few laws exist that specifically relate to cloud services. It really depends on what kind of business you have and what information you will be storing on the cloud.

For example, financial institutions may be prohibited from using certain cloud services because they are restricted from disclosing a consumer’s personal financial information to a non-affiliated party. Similarly, the Health Insurance Portability and Accountability Act limits health providers from using or disclosing health records in ways that conflict with privacy regulations.

All businesses should be concerned about the security, privacy and confidentiality of their data. If you have trade secrets, you’ll want to be particularly careful in how you protect that information.

What if you temporarily can’t access your documents or data because the system goes down or the provider goes bankrupt? Depending on your business, the impact of losing your information, even temporarily, could be enormous. What if the online database becomes corrupted? Are your documents backed up somewhere?

Before you pick a cloud service, look into its security policies. How will the business remedy a security breach? What if a disaster strikes systems? Is there a history of security breaches that you can investigate?

You’ll find that most cloud service contracts deny any liability for outages or data losses and they’ll probably try to limit damages as much as possible. Check the company’s history of security breaches and balance the risks and benefits of working with that provider.

Mary Luros is a business law attorney with Hudson & Luros, LLP, in Napa, and can be reached atmary@hudsonluros.com. The information provided here is not legal advice, nor does it form an attorney-client relationship with the author. The author makes no representations as to the reliability or accuracy of the above information.