Beware the Cloud Behind the Silver Lining

by Carol Ko, 16 May 2012

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topics:
Risk Management Technology

tags:
enterprise risk management finance and cloud computing

In a soon-to-be-released survey of CFOs in Hong Kong, CFO Innovation found that 59% regard themselves as proactive partners of the CIO in jointly devising the company’s overall enterprise cloud strategy and offering advice to the board on its adoption.

But 60% of those same CFOs admit that they have only limited knowledge of the cloud, with another 16% saying they have heard of it, but have no knowledge of it.

They should talk to Peter Koo, Partner, Enterprise Risk Services, at Deloitte China. A certified public accountant, he is also a certified information systems auditor, a certified information security manager and certified in the governance of enterprise IT, among a string of certifications.

In this interview with CFO Innovation’s Carol Ko, he discusses the cloud computing risks that “remain less visible to the community,” lack of standards that amplify the dangers vendor lock-in and other issues that both CFOs and CIOs need to know. Excerpts:

How are different businesses responding to the risks associated with cloud computing?

Data security and privacy are especially the major concerns for businesses that deal with critical process and sensitive data in their daily operations. They include those from the financial services industry, government agencies and healthcare bodies, as they are regulated where industrial compliance is required.

The public and healthcare sectors are more concerned about data privacy, especially in a public cloud environment [that is, cloud services owned and operated by a third-party vendor and offered to many different companies], where sensitive data such as personal information and medical records are being stored or transferred.

It is important that authentication and authorization have been properly defined and structured to prevent unauthorized access. Imagine the serious consequence of leaking a medical record of a politician or celebrity to the public and it is easy to understand why both data encryption and Identity Access Management are essential elements for a secure cloud environment.

For the manufacturing sector, companies focus more on system integration and customization of the cloud solution. Because of high technological requirement, integrating a system with sophisticated manufacturing processes for a cloud solution is not an easy task.

Vendor lock-in is another high-risk area that needs to be addressed, as currently the interoperability among different cloud platforms has not yet been available. This would impose difficulties for establishing the initial communication channels among different cloud applications. Also, there will be no guarantee on data integrity when changing the cloud service provider.

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