Cloud outsourcing reliance could cause systemic risks
Increasing reliance on cloud computing services represents a growing systemic risk that may require regulatory action, said European Securities and Markets Authority (ESMA).
According to research recently released by ESMA, while utilizing cloud servicing could build resilience for any firm, it could also lead to liabilities.
The paper warned that “a single CSP (cloud service provider) outage could generate simultaneous firm-level outages, posing systemic risk.”
ESMA stated that “CSPs need to be significantly more resilient than firms” to reduce these instances.
Additionally, it suggested building and deploying independent backup cloud services — mandated by regulators —to act as support when problems ensue.
“Backup requirements may need to be imposed by policy-makers however, as the systemic risk is an externality to individual firms,” the paper concluded.
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