Pricing of Insurance Policies Against Cloud Storage Price Rises

When a company migrates to cloud storage, the way back is neither easy nor cheap. The company is then locked up in the storage contract and exposed to upward market prices, which reduce the company’s pro t and may even bring it below zero. The authors propose a protection means based on an insurance contract, by which the cloud purchaser is indemnified when the current storage price exceeds a predefined threshold. By applying the financial options theory, they provide a formula for the insurance price (the premium).

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Cornell University