Is the Cloud a Viable Hedge Fund BCP/DR Solution?Cloud computing based information technology and business continuity and disaster recovery("BCP/DR") solutions have becoming increasingly popular in recent years among the hedge fund andprivate equity communities. Indeed, many investors seeking to perform operational due diligence onfund managers may have come across more and more funds utilizing the cloud as of late.It is important for investors to understand exactly what the cloud is and both the challenges andopportunities it presents to fund managers, particularly in relation to BCP/DR.What is the cloud?In the context of evaluating fund BCP/DR infrastructures, thecloud can effectively be thought of by investors as an internetbased offsite solution.There are three types of cloud computing, all of which aretypically classified with the ending, "as a service." They are: Platform as a service ("PaaS") - under this model service providers provide a computing platform solution to funds such as an operating system or web server. Software as a service("SaaS") - this model allows funds to run and access applications on cloud based servers. Infrastructure as a service ("IaaS") - under this model service providers offer funds access to virtual machines, storage space and data centers via the internet.How do fund managers utilize the cloud for BCP/DR planning?Hedge funds and private equity funds are increasingly incorporating cloud based components intotheir BCP/DR plans in several ways: Data storage - increasingly it is cost effective for firms to archive data offsite on cloud based servers. This reduces expenditures on new servers and frees up office space for other equipment and personnel Data backup - Cloud based data storage centers typically serve a high volume of customers and are therefore designed to handle large scale data transfers. These facilities are also typically designed with BCP/DR planning in mind, and may be more robust in both equipment and design than an individual fund manager’s system Application backup - Fund managers may utilize cloud based solutions to serve as a backup location from which applications could continue to be run, in the event of a business disruption or disaster type event. The continued operation of applications during such an event may be particularly critical for quantitative or high-frequency trading strategies.