We explore growth trends in the cloud services market, its importance to the global economy, and the implications of cloud services disruptions on companies and re/insurers. The paper outlines the structure and key ingredients of the key cloud providers (AWS, GCP, and Azure).

We highlight the rationale for re/insurers to protect their cyber portfolios from cloud outage accumulation losses, and present key considerations for corporates to protect their tangible and intangible assets from cloud-driven disruptions.

We present the key features of parametric cloud downtime transactions, and explain relevant notions and coverage features including Waiting Period, Cloud Vendor, Cloud Regions, and selected Services. The paper includes examples of hypothetical transactions and payouts.

We discuss outage modeling, and explain important features of the Parametrix monitoring system, which captures cloud outages in real-time. The paper defines an outage, and discusses the applicability of the term to insurance and ILS.

We detail the prime attractions of cloud outage risk transactions to investors in traditional and securitised re/insurance instruments. These include:

• transparency and objectivity of the trigger mechanism, 
• alignment with the cloud vendor to contain outages quickly, 
• the short tail of the transaction leading to limited collateral trapping, 
• the precision of peril definition, and 
• the diversification benefits of assuming cloud outage risk.