Modern organisations are built on complex digital ecosystems, where a single point of software failure can paralyse entire operations overnight. Under King V, boards are explicitly responsible for governing technology risk, ensuring business continuity and safeguarding long-term organisational value. In this environment, software escrow emerges as a critical governance safeguard, providing organisations with a structured, legally enforceable mechanism to retain access to mission-critical software when it matters most, transforming a potentially existential risk into an opportunity for managed exit.
Consider a large medical insurance company that suddenly loses access to the service integrating its ERP platform with its medical administration systems. Remove one critical piece and the entire operation grinds to a halt.
Most companies plan for disruption. They maintain backups, redundancies and disaster-recovery strategies. But what happens if the developer of a critical component goes bankrupt, is acquired or withholds access to the software, its updates or its technical documentation? Even when the software is internally owned, disputes with external contractors or internal developers can leave organisations locked out of their own systems.
These failures are not merely technical. They can result in prolonged downtime, months of stalled operations while disputes are resolved and significant damage to reputation and revenue. In the meantime, business‑critical systems remain offline and cause serious revenue losses.
“Business revenue depends on mission‑critical software,” says Anthony Watson, CEO of ESCROWSURE. “That can include group risk management systems, banking platforms, policy administration systems or emergency management tools – systems that simply cannot afford downtime without serious operational consequences.”
As businesses have evolved from relying on single applications to highly customised, interdependent software environments, the risk surface has expanded dramatically. At the same time, corporate governance frameworks around the world such as King V have placed increased emphasis on the identification and management of systemic risk. Software fragility, Watson argues, is now the focus of that risk management
The King V Code on Corporate Governance, issued by the Institute of Directors in South Africa (IoDSA), explicitly addresses data, information and technology – encompassing all software systems that underpin modern operations. As a result, the governance principles set out in King V apply directly to the management and protection of business-critical software.
“Principle 8 of King V requires organisations to assess risks that affect long‑term viability, define a risk appetite and implement business continuity measures,” Watson explains. “Principle 10 requires boards to govern technology and manage the risks of outsourced solutions and third‑party providers. That’s precisely where software escrow fits.”
So how can organisations ensure continued access to critical software if something happens to a supplier or developer? The globally accepted best practice is software escrow.
Unpacking software risk
Through a tripartite legal agreement between the software provider, the beneficiary institution and an independent escrow agent, the provider deposits source code, technical documentation and, where relevant, deployment or hosting information with a trusted third party. The escrow agent securely stores and verifies these materials and releases them only if clearly defined contractual conditions are met.
Typical release triggers include:
- Vendor insolvency or business closure
- Permanent withdrawal of support
- Material breach of service obligations
- Failure to maintain or update the software
- Breach of agreed continuity or uptime guarantees
If a trigger event occurs, the institution gains access to the materials required to keep essential systems operational.
Many organisations underestimate how exposed they are, says Watson.
“We’ve worked with long-standing banking clients who only placed decade‑old systems into escrow after audits flagged them as a governance risk,” he says. “In another case, a client insisted that a new developer escrow their software because a previous dispute had already cost them months of downtime and millions in losses.”
Crucially, escrow also provides documented proof that an organisation has identified and mitigated material technology risks – an increasingly important consideration for auditors, regulators and boards.
Escrow providers establish the legal mechanisms and procedural safeguards that balance intellectual property protection with operational continuity. In cloud and software as a service environments, escrow arrangements can extend to platform configurations and, in some cases, provide interim operational support while organisations transition to alternative solutions.
Escrow as a governance safeguard
Software risk is not confined to IT departments. It affects boards, executives, compliance officers and the developers who support enterprise systems, yet it can be overlooked.
“The real blind spot is the risk of unforeseen software supplier failure,” says Watson.
“Organisations are familiar with the stress of a network outage or data corruption. These events are disruptive and costly, but they are usually reversible. Connectivity can be restored and data can be recovered.
"The loss of access to software itself is different. It is harder to resolve, slower to fix and far more likely to place boards and executives on the wrong side of their governance obligations.”
Software escrow does not eliminate digital risk. But it transforms an existential threat into a managed risk, aligning operational resilience with the expectations set out in King V and similar governance frameworks.
For organisations that depend on complex digital systems, escrow is no longer a niche technical precaution. It is a governance tool that ensures continuity, accountability and trust when software failure would otherwise bring the business to a standstill.
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