Contract Design And Strategy Research Of Cloud Computing Service Supply Chain Based On Insurance Mechanism

The rapid development of cloud computing brings new opportunities and challenges for the emerging service industry. In order to improve the overall efficiency of operation, more theoretical support to the cloud computing service supply chain composed by the cloud service integration provider, customer and functional cloud service provider is needed. Taking into account that cloud computing service outage events are sporadic and destructive, cloud service integration provider can not only maximize its revenue through an effective contract design, but also transfer risk to the cloud insurance institution by buying related insurance.Based on the analysis of current situation in cloud computing service practice, and the summary of related research in cloud computing risk control and loss compensation, supply chain coordination contract, business disruption insurance and cyber insurance, the main content of this paper is refined. After establishing the contract model, two kinds of methods including comparative static analysis and numerical simulation analysis are used to discuss the strategy in three situations, which are distinguished by whether buying insurance or not and who is actually insured.Several conclusions have been achieved. Firstly, the contract models have equilibrium solutions in the three different situations with certain relationship between parameters; That is the cloud service integration provider and the customer could refer to the models to choose their optimal strategies. Secondly, loss compensation ratio, which is a key parameter has different effects on the optimal decision and expected revenue or utility of the cloud service integration provider and the customer under different service disruption risk. Thirdly, compared to the situation without insurance, cloud service integration provider buying himself insurance can make him to become the only benefit party and the expected gain is related to the loss compensation ratio and the security utility perception factor of the customer. Last but not the least, the cloud service integration provider buying insurance for his customer can benefit both of them and the advantage of this type of insurance is very obvious under certain service disruption risk. The conclusions of this paper enrich the theory of cloud computing service supply chain contract to a certain extent, support the cloud service integration provider with many management implications and lay a theoretical foundation for the rise of the cloud computing insurance market.