Reduce Data Center Insurance Premiums

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Uptime Institute President Lee Kirby and Stephen Douglas, Risk Control Director for CNA, an insurance and risk control provider for the software and IT services industry recently coauthored an article for Data Center Knowledge: Lowering Your Data Center’s Exposure to Insurance Claims. In this follow on, Kirby discusses how companies can reduce insurance premiums by providing insurance providers with an Uptime Institute Tier Certification of Operational Sustainability or Management & Operations Stamp of Approval.

Uptime Institute has provided data center expertise for more than 20 years to mission-critical and high-reliability data centers. It has identified a comprehensive set of evidence-based methods, processes, and procedures at both the management and operations level that have been proven to dramatically reduce data center risk, as outlined in the Tier Standard: Operational Sustainability.

Organizations that apply and maintain the Standard are taking the most effective actions available to protect their investment in infrastructure and systems and reduce the risk of costly incidents and downtime. The elements outlined in the Standard have been developed based on the industry’s most comprehensive database of information about real-world data center incidents, errors, and failures: Uptime Institute’s Abnormal Incident Reporting System (AIRS). Many of the key Standards elements are based on analysis of 20 years of AIRS data collected on thousands of data center incidents, pinpointing causes and contributing factors. The Standards focus in on specific behaviors and criteria that have been proven to decrease the risk of downtime.

To assess and validate whether a data center organization is meeting this operating Standard, Uptime Institute administers the industry’s leading operations certifications. These independent, third-party credentials signify that a data center is managed and operated in a manner that will reduce risk and support availability. There are two types of operations credentials:

Tier Certification of Operational Sustainability (TCOS) is for organizations that have been designed and built to meet Tier Topology criteria. Earning a TCOS credential signifies that a data center upholds the most stringent criteria for quality, consistency, and risk prevention in its facility and operations.

The Management & Operations (M&O) Stamp of Approval is for any existing data center that does not have Tier Certification for Design and Construction. The M&O assessment evaluates management, staffing, and procedures independent of topology, and ensures that the facility is being operated to maximize the uptime potential and minimize the risks to the existing infrastructure.

Both credentials are based on the same rigorous Standards for data center operations management, with detailed behaviors and factors that have been shown to impact availability and performance. The Standards encompass all aspects of data center planning, policies and procedures, staffing and organization, training, maintenance, operating conditions, and disaster preparedness. Earning one of these credentials demonstrates to all stakeholders that a data center is following the principles of effective operations and is being managed with transparency following industry best practices.

The process for a data center to receive either TCOS or the M&O Stamp of Approval includes review of each facility’s policies and documentation, but also includes on-site inspections and live demonstrations to verify that critical systems, backups, and procedures are effective—not just on paper but in daily practice. It’s analogous to putting a vehicle operator through a live driving test before issuing a license. These credentials offer the only comprehensive risk assessment in the data center industry, zeroing in on the risk factors that are the most critical.

The data center environment is never static; continuous review of performance metrics and vigilant attention to changing operating conditions is vital. The data center environment is so dynamic that if policies, procedures, and practices are not revisited on a regular basis, they can quickly become obsolete. Even the best procedures implemented by solid teams are subject to erosion. Staff may become complacent, or bad habits begin to creep in.

Just as ‘good driver’ discounts use an individual’s track record as a reliable indicator of good ongoing behaviors (such as effective maintenance and safe driving habits), periodic data center recertification (biannually at a minimum) provides a key indicator of ongoing effective facility management and operational best practices. Uptime Institute’s data center credentials have built-in expiry periods, with reassessment required at regular intervals.

There is tremendous value for organizations that hold themselves to a consistent set of standards over time, evaluating, fine tuning, and retraining on a routine basis. This discipline creates resiliency, ensuring that maintenance and operations procedures are appropriate and effective, and that teams are prepared to respond to contingencies, prevent errors, and keep small issues from becoming large problems.

Insurance is priced competitively based on the insurers assessment of the exposure presented. Data center operations credentials provide the consistent benchmarking of an unbiased third party review that can be used by service providers at all levels of the data supply chain to demonstrate the quality of the organization’s risk management efforts. This demonstration of risk quality allows infrastructure and service providers to obtain more competitive terms and pricing across their insurance programs.

When data centers obtain the relevant Uptime Institute credential, it results in a level of expert scrutiny unmatched in the industry, giving insurance companies the risk management proof they need. Insurers can validate risk level to a consistent set of reliable Standards. As a result, facilities with good operations, as validated by TCOS or M&O Stamp of Approval, can benefit from reduced insurance costs. When a data center has a current certification, underwriters can be assured that it has withstood the rigorous evaluation of an unbiased third-party, meets globally-recognized Standards, and that its management has taken effective steps to maintain uninterrupted performance and mitigate the risk of loss.


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