In this video, we discuss cloud computing risks as covered on the Information Systems and Controls ISC CPA exam.
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Despite the inherent risks associated with storing sensitive data and applications off-site, cloud services are generally considered more secure than managing IT infrastructure in-house, or "on-premises." This heightened security perception stems from the fact that cloud providers must adhere to stringent security protocols and procedures to comply with various regulations, such as the General Data Protection Regulation (GDPR) in Europe and the Health Insurance Portability and Accountability Act (HIPAA) in the United States. These regulations mandate that cloud providers maintain the highest security standards, which includes regular updates and security patches, as well as robust internal controls. This comprehensive approach to security often surpasses what individual companies can achieve with their own resources, making cloud services an attractive option for safeguarding data.


Third-party cloud providers often undergo SOC 2® engagements, which are independent audits designed to evaluate and verify the cloud service provider's control mechanisms and management's assertions concerning the security, privacy, and confidentiality of customer data. These audits are comprehensive assessments that include how well the service organization's controls align with the Cloud Security Alliance's Cloud Controls Matrix. This matrix is a framework for cloud security that outlines specific controls providers should implement to ensure the security of their systems. The SOC 2® report provides detailed insights into whether the cloud provider meets established criteria for system security, offering reassurance about the provider's commitment to safeguarding data.

When organizations use cloud services, they inadvertently share the same infrastructure with numerous other clients of the cloud provider. This shared environment can lead to a phenomenon where the cyber threats or vulnerabilities specific to one industry or organization inadvertently become a risk to all other organizations using the same cloud service. This cross-exposure happens because attackers targeting one company on the cloud can potentially exploit vulnerabilities that might affect the entire cloud infrastructure, thereby posing a threat to other companies sharing that infrastructure, regardless of their industry or individual security measures.

For example, suppose a cloud provider hosts both a financial institution and a retail company on the same infrastructure. The financial institution might be targeted by sophisticated cyber threats aiming at financial fraud or data theft specific to the banking sector. If an attacker exploits a vulnerability in the cloud provider's infrastructure while targeting the bank, this same vulnerability could be used to access or compromise the retail company's data, even though the retail company is not the primary target and operates in a completely different industry with different types of sensitive information. This scenario illustrates how the security and risk profile of one company can indirectly impact others sharing the same cloud computing environment.



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