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


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



  • 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

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