Top 5 Things to Consider When Reviewing a Software Licence Agreement or SaaS Agreement
Key Risks to Consider
When reviewing a software licence agreement or SaaS agreement, the most important risks to assess are:
- Supply chain attacks and vendor compromise
- Vendor outages and business interruption.
- Limited control over vendor resilience .
- Vendor bankruptcy or insolvency
- Data access, portability and exit risk
Vendor insolvency is often the most overlooked risk, and can be directly mitigated by software escrow, SaaS escrow and AI escrow.
Why These Risks Matter
Modern software agreements are no longer just about functionality or pricing. They create critical dependencies on third-party vendors for day-to-day operations.
If those dependencies fail, the impact is not contractual, it is operational.
1. Supply Chain Attacks and Vendor Compromise
If a SaaS vendor is compromised, attackers may gain access to your systems through integrations, APIs or shared infrastructure.
This risk is increasing as attackers target widely used SaaS providers to achieve scale.
What to look for:
- Security certifications such as ISO 27001 or SOC 2
- Access controls and identity management
- Incident response and breach notification obligations
2. Vendor Outages and Business Interruption
Reliance on SaaS means your operations can stop if the vendor experiences downtime, infrastructure failure or a cyber incident.
Even short outages can disrupt revenue, customer service and internal processes.
What to look for:
- Uptime guarantees and service credits
- Disaster recovery and business continuity provisions
- Defined RTOs and RPOs
3. Limited Control Over Vendor Resilience
With SaaS, you are outsourcing operational responsibility but retaining accountability.
You cannot directly control how resilient the vendor’s systems are, or how they respond under stress.
What to look for:
- Transparency around architecture and hosting
- Subcontractor and cloud provider dependencies
- Audit rights or assurance reporting
4. Vendor Bankruptcy, Insolvency or Failure Exit Strategy (Critical but Often Overlooked)
Vendor failure risk refers to the loss of access, support and operational continuity when a software provider ceases trading, enters administration or breaches of contract.
If a vendor becomes insolvent:
- Access to the platform may stop immediately
- There is no obligation for services to continue
- Key technical personnel and system knowledge may no longer be available
- Intellectual property may be tied up in legal proceedings
- Rebuilding or replacing the system becomes slow, costly or impossible
At this point, contractual protections alone are not enough. You may have legal rights, but no practical path to continuity or data access. You should plan for the worst, and test your recovery plan or exit strategy regularly.
How Software Escrow, SaaS Escrow and AI Escrow Mitigate This Risk
Software escrow, SaaS escrow and AI escrow are continuity mechanisms designed specifically to mitigate vendor failure risk.
They work by ensuring that, if a defined release condition such as insolvency occurs:
- Critical materials (source code, deployment scripts, documentation) are securely held can be released to the beneficiary
- Access credentials or environment configurations can be released
- The beneficiary can rebuild, maintain or transition the application independently
For modern SaaS and AI systems, this can also include:
- Cloud environment configurations and infrastructure templates
- Container images and deployment pipelines
- API documentation
- AI models, weights and supporting data where appropriate
More advanced SaaS escrow arrangements may include:
- Replicated or standby environments
- Documented build and deployment processes
- Verification services to confirm usability of deposited materials
The outcome is simple: instead of relying on a vendor that no longer exists, you retain a viable path to continuity.
5. Data Access, Portability and Exit Risk
If the relationship ends, your ability to recover and use your data becomes critical.
Many agreements do not clearly define how data is returned, in what format, or how long you have access.
What to look for:
- Clear data export rights and usable formats
- Transition assistance obligations
- Defined post-termination access periods
Final Thought
When reviewing a software licence agreement or SaaS agreement, most risks focus on performance, security or service levels.
But the most important question is often:
If this vendor fails tomorrow, or doesn’t deliver on the contract, what happens next?
For most risks, you are managing probability.
For vendor insolvency, you are planning for certainty.
And that is where software escrow, SaaS escrow and AI escrow become a critical part of modern risk management.
To continue the conversation about how modern software escrow, SaaS escrow and AI escrow can support operational continuity and reduce vendor risk, speak to The Escrow Company team.
With over a decade of experience supporting organisations globally, we help transform vendor dependency into a structured, tested continuity strategy.
To keep up to date with The Escrow Company follow us on LinkedIn.
