Critical cloud service outages increase in 2024: Parametrix

According to Parametrix, a provider of digital business interruption risk solutions, critical cloud service disruptions among the top three public cloud providers rose by 18% in 2024, with the duration of these outages increasing by 18.7% compared to the previous year.

Parametrix’s Cloud Outage Risk Report 2024 highlights the growing risks associated with cloud infrastructure, as businesses continue to rely more heavily on these services.

The report reveals a concerning trend: six significant cloud outages in 2024 lasted more than 10 hours each, contributing to nearly 100 hours of total downtime.

While North America experienced the majority of these interruptions, other regions such as Europe and Asia were also impacted. Human error remained the leading cause of these outages, accounting for 68% of incidents in 2024, a substantial increase from 53% the previous year.

This growing reliance on cloud computing underscores the systemic risks that businesses now face, particularly as the demand for cloud services, fuelled by the rise of generative AI and other advanced technologies, accelerates.

“Cloud infrastructureʼs critical importance to business operations worldwide was underscored in 2024,ˮ said Jonathanan Hatzor, Co-Founder and CEO of Parametrix. “Major incidents like the global CrowdStrike outage in July, AWSʼs service disruption in the US-EAST-1 region, and Google Cloudʼs power failure in Frankfurt highlight the growing systemic risks faced by enterprises dependent on digital supply chains.ˮ

He continued: “The rapid adoption of generative AI has further accelerated demand for cloud services. The top three cloud providers invested $82 billion in infrastructure in Q3 2024 alone. While this growth fuels innovation, it also amplifies the risks of cloud outages, which can disrupt operations, diminish customer trust, and result in significant financial losses.ˮ

The report also notes that as cloud service providers invest heavily in infrastructure—$82 billion in Q3 2024 alone—the rapid expansion of these services introduces new risks.

While the growth of cloud services fuels innovation, it also increases the likelihood of service failures, which can lead to significant operational disruptions, loss of customer trust, and considerable financial losses. Google Cloud experienced a dramatic 57% increase in critical downtime, while Microsoft Azure saw a decline of over 20%. AWS, however, remained the most reliable, with only two critical outages, both lasting under 30 minutes.

Parametrix’s data-driven approach to cloud risk modelling continues to provide valuable insights for insurers and reinsurers.

The report highlights the importance of understanding regional and service-specific outages, as well as the patterns of attritional risks that can escalate into catastrophic events. Insurers need to refine their models to better quantify risk aggregation and improve policy pricing and coverage accuracy.

Sharon Haran, Chief Commercial Officer of Parametrix, reinforced the need for more nuanced models to assess cloud outage risks. “Our third annual report reinforces a key lesson: cloud risk cannot be modelled as a single systemic event. Understanding regional and service-specific outages, attritional risk patterns, and escalation pathways is critical to defining realistic disaster scenarios. Models that fail to incorporate these fundamentals may misrepresent exposure and lead to inaccurate risk
assessments.ˮ

He added: “The rapid expansion of cloud services, fuelled by AI adoption and digital transformation, has introduced new layers of risk that require a more nuanced, data-driven approach to modelling. Cloud failures can no longer be viewed as rare, systemic events. They must be assessed with precision, recognising both attritional and catastrophic scenarios. Our models continue to help insurers define realistic disaster scenarios and ensure coverage structures reflect the true nature of cloud outage risks.ˮ

The report emphasises that as the frequency and duration of critical cloud outages continue to rise, the need for more accurate risk management strategies becomes more urgent. Businesses, insurers, and service providers must adapt to these evolving challenges by leveraging data-driven models that consider the complexity and scale of cloud service interruptions.

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