Gartner Research

Unlimited Liability in Cloud Sourcing Agreements: Protecting Your Organization's Interests

Published: 20 June 2017

ID: G00332849

Analyst(s): David Ackerman , Stephanie Stoudt-Hansen

Summary

As IT services move into the cloud, fears over a loss of security are causing organizations to ask cloud providers for unlimited liability clauses in contracts. Sourcing and vendor management leaders must understand this highly debated subject to drive the right protections for their organizations.

Table Of Contents
  • Key Challenges

Introduction

Analysis

  • Create and Maintain a Sourcing Risk Register to Assess and Prioritize the Security and Data Risks, Based on Brand Image and Financial Impact
  • Evaluate Unlimited Liability Versus Limited Liability to Clarify What Level of Liability Is Required to Ensure Business Continuity, While Also Recognizing the Impact on Service Price and Vendor Financial Viability
  • Determine the Impact for Each Risk; Then Decide If It Can Be Accepted and, If Accepted, Establish a Risk Mitigation Strategy

Case Study

  • Trends in Liability Favoring the Client
  • Liability Is Equally Important in Small Deals
  • State Case Proves Government Impact Can Limit Punitive Damages and Drive Lower Rewards; Understand Your Contract's Choice of Law and How It Will Impact Recovery

Gartner Recommended Reading

©2020 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. and its affiliates. This publication may not be reproduced or distributed in any form without Gartner’s prior written permission. It consists of the opinions of Gartner’s research organization, which should not be construed as statements of fact. While the information contained in this publication has been obtained from sources believed to be reliable, Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Although Gartner research may address legal and financial issues, Gartner does not provide legal or investment advice and its research should not be construed or used as such. Your access and use of this publication are governed by Gartner’s Usage Policy. Gartner prides itself on its reputation for independence and objectivity. Its research is produced independently by its research organization without input or influence from any third party. For further information, see Guiding Principles on Independence and Objectivity.

Already have a Gartner Account?

Purchase this Document

To purchase this document, you will need to register or sign in above

Become a client

Learn how to access this content as a Gartner client.