Is your trust in your online service providers based on faith or science. Or perhaps you don't trust them at all, but it's more convenient to pretend you do. David Cruickshank examines your options.

Where on the Internet is your data stored? Hotmail, Yahoo or AOL probably store some of your emails. Natwest, HSBC, LLoydsTSB or Barclays might provide you with online payment facilities and bank statements. Google might store your online calendar, Flickr your photos and Plaxo your contact details as well as those of your friends, family and associates. Amazon or eBay probably has your credit card number and home address and British Airways your passport number.

Do you trust these businesses? Do you need to trust them in order to store your information on their servers? What if your trust was misplaced?

According to the positive-thinking Presbyterian minister Frank Crane, "You may be deceived if you trust too much, but you will live in torment if you do not trust enough".

When it comes to the Internet, I tend to agree with Frank. When each of us considers signing up for a hosted service, we weigh up the advantages and disadvantages of using that service. Our conscious or subconscious minds operate like seesaws, effectively settling for the heavy-weight in the cost-benefit comparison. Advantages of hosted services usually include convenience and cost whilst disadvantages often include risk and performance. So when we choose to trust an online service, we are effectively admitting that the benefits of using it outweigh the perceived risks of allowing another organisation to store the data we are sharing with it.

So what do I risk when I store my data with a hosted service provider such as Hotmail, Google, HSBC or Plaxo?

• I lose access to my data permanently
• I'm not given access to my data when I need it
• My data is corrupted and irretrievable in its original, complete form
• My private data is made public
• My private data is stolen
• My private data is used fraudulently

Each of these outcomes could be triggered by a number of different causes. Company insolvency, system failure, human error and malice are all causes for consideration and we have no visibility or control of the likelihood of any of them occurring within a service provider's organisation.

It all sound pretty bleak, doesn't it? Surely the risks of any of these eventualities occurring are too high? Wouldn't it be wiser to protect against online fraud, leaks, theft, insolvency and corruption by keeping our data offline?

When AOL released information on 20 million search queries without the permission of half a million of its users last year, you would think it would have stalled the growth of Internet activity while we all took a deep breath? Quite the opposite, Internet growth marches on unabated with UK online Christmas spend in 2006 rising 50% from 2005 (according to data from IMRG, the e-retailing industry body).

So, why, with such significant risks, do we choose to trust more and more hosted service-providers and their rapidly-expanding array of offerings?

The answer is freedom. The Internet enables us to do more of what we like, when we like, from where we like. In that way, the Internet industry is not dissimilar to the automotive industry in that it satisfies our hunger to discover, access, explore and benefit from a far larger resource pool, albeit virtual, than we could before. Given that the risks of having our identity stolen, our company's business data corrupted or our credit card defrauded are far greater online, we seem to be saying through our actions that sacrificing the freedom provided by the Internet would be too great a torment for us to tolerate. I think Frank Crane might have enjoyed the Internet.

About the Author

David Cruickshank is a Director of Farrellsoft Limited, providers of Business IT Online (www.businessitonline.com ), an online suite of software applications and resources for small businesses.