FILE PHOTO: A man passes the Bank of England in the City of London financial district on June 11, 2021 in London, England. Reuters / Henry Nichols / FILE PHOTO
8 October 2021
LONDON (Reuters) – The Bank of England has new rules to remove operational risk from banks relying on outsourced “cloud” computing from Amazon, Google, Microsoft and others to serve their customers.
“Regulated companies have a primary responsibility to manage the risks arising from outsourcing and third-party dependence,” the BoE’s Financial Policy Board said in a statement.
“But a focus on the provision of certain third-party services may result in the need for additional policy measures requiring legislative changes to mitigate financial stability risks.”
The solution should include the ability to designate certain third parties as “critical”. That is, it must meet the “restoring force” criteria to be tested on a regular basis.
The Bank of England and the Financial Conduct Authority said they would publish a discussion paper on the issue next year. The measure is similar to EU law, which is currently undergoing an approval process.
“These important third-party trials and field exercises may be conducted in collaboration with foreign financial regulators and other relevant UK authorities,” the BoE said.
The BoE has already alerted the cloud and now the bank’s “exit strategy” or how soon to switch to an alternative cloud provider or internal backup when the cloud goes down to avoid confusion. I’m checking if I can. Consultant KPMG told the client.
This has already prompted banks to think more seriously about the cloud business case for some services, and whether it gets the green light from regulators.
“An effort to replicate this service on-premises or in another cloud really doubles the cost,” said Mark Korns, director of technical consulting at KPMG.
Corns said that banks that moved to the cloud early will need to “modify” the resilience requirements.
“What we are seeing is a more tentative approach to move to the cloud. Currently, we are getting this clear guidance from regulators. Banks are doing what regulators are doing. We want to understand if and how. There’s leverage,” Korns says.
(Reporting by Hugh Jones, Edited by Lewis Havens)
Bank of England announces new rules needed to cover risks of cloud computing
Source link Bank of England explains new rules needed to cover risks from cloud computing