Abstract
Service Level Agreements are employed to set availability commitments in cloud services. When a violation occurs as in an outage, cloud providers may be called to compensate customers for the losses incurred. Such compensation may be so large as to erode cloud providers’ profit margins. Insurance may be used to protect cloud providers against such a danger. In this paper, closed formulas are provided through the expected utility paradigm to set the insurance premium under different outage models and QoS metrics (no. of outages, no. of long outages, and unavailability). When the cloud service is paid through a fixed fee, we also provide the maximum unit compensation that a cloud provider can offer so as to meet constraints on its profit loss. The unit compensation is shown to vary approximately as the inverse square of the service fee.
Highlights
Service Level Agreements (SLA) are typically employed by cloud providers to provide guarantees on the quality of their services to end customers [1,2,3,4,5,6]
The second countermeasure instead relies on buying an insurance policy, whereby the insurer takes on the risk of paying all claims by customers in return for the premium to be paid by the cloud provider, which acts as the insured
We show that the maximum unit compensation is related to the service fee through an approximate inverse square law
Summary
Service Level Agreements (SLA) are typically employed by cloud providers to provide guarantees on the quality of their services to end customers [1,2,3,4,5,6]. The second countermeasure instead relies on buying an insurance policy, whereby the insurer takes on the risk of paying all claims by customers in return for the premium to be paid by the cloud provider, which acts as the insured. The correct premium has been computed for the case where the outage phenomenon is described by a Poisson process for occurrence of outages and by the generalized Pareto distribution for their duration. We again consider the problem of correctly determining the insurance premium against cloud outages. We obtain closed formulas for the insurance premiums for all the combinations of outage model and QoS metric
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