The Financial Stability Board (FSB) published on December 9, 2019, its report on financial institutions’ increasing reliance on third parties to provide cloud computing services (the Report). Established by the G-20 in April 2009 to promote international financial stability, the FSB is an international body that assesses vulnerabilities in the global financial system and coordinates the work of national financial authorities and international standard-setting organizations to develop and promote appropriate regulatory and supervisory policies.
The Report outlines the benefits from the increasing use of third-party cloud computing services, focusing primarily on cost savings, improved competition and cybersecurity, and increased operational resilience. It notes, though, the new challenges that the current scale of use may pose, such as the significant and systemic effects that an operational failure of critical third-party infrastructure could have. This is due to the highly concentrated cloud computing sector and the increasingly complex network of third-party suppliers and dependencies.