Big Business Risk in the Digital Supply Chain

Cloud reported as significant risk factors in annual 10-k

An increasing number of companies now reports their concerns over cloud downtime risk in formal stock exchange documents such as annual 10K filings. Examples include: 

1. ‍Salesforce: Any interruptions or delays in services from third parties, including data center hosting facilities, cloud computing platform providers and other hardware and software vendors, or from our inability to adequately plan for and manage service interruptions or infrastructure capacity requirements, could impair the delivery of our services and harm our business.
2. Netflix: We rely on Amazon Web Services … and any disruption of or interference with our use of the Amazon Web Services operation would impact our operations and our business would be adversely impacted … Currently, we run the vast majority of our computing on AWS.
3. Lyft: We primarily rely on Amazon Web Services to deliver our offerings to users on our platform … AWS facilities are vulnerable to damage or interruption from natural disasters, cybersecurity attacks, terrorist attacks, power outages and similar events or acts of misconduct …. Any negative publicity arising from these disruptions could harm our reputation and brand and may adversely affect the usage of our offerings.‍
4. Cisco: Cyber attacks or data breaches on our customers’ or third-party providers’ networks, or in cloud-based services provided to, by, or enabled by us, could result in claims of liability against us, give rise to legal and/or regulatory action, damage our reputation or otherwise materially harm our business … [and] could, in each case, result in claims of liability against us, damage our reputation or otherwise materially harm our business.

‍

Recognize. Mitigate. Transfer

Cloud providers will continue to improve reliability, but mistakes and shortfalls will still lead to downtime events. In 2021 and 2022, the three largest cloud providers- Amazon AWS, Microsoft Azure, and Google Cloud- reported hundreds of performance interruptions per year- an average of 25 per month.  These lead to business interruptions that result in very real financial losses. And the more severe and prolonged the downtime event, the greater the cost impact. Companies must recognize, mitigate, and transfer this risk.

‍

Understanding the risk of cloud downtime is the first step in making sure it doesn’t bring your business to a costly halt. This post is the third in a series about managing cloud outage risks in the Digital Supply Chain. You can read more about it in the Parametrix report revealing the details of cloud downtime among the three major providers – Amazon Web Services, Google Cloud, and Microsoft Azure.