The Financial Times reported that UK financial regulators are preparing to step up scrutiny of cloud computing providers “amid growing fears that an outage or hack of their services could seriously disrupt a banking system that increasingly relies on them “. According to the article, the UK’s Prudential Regulation Authority (PRA) is considering a joint discussion paper with the FCA and the Bank of England in 2022, a joint approach consistent with their previous operational resilience initiatives. The Discussion Paper would examine the operational risk implications of UK regulated financial institutions increasing their reliance on cloud-based services, particularly from a range of hyperscale cloud providers.

The risk of concentrating services with a handful of IT service providers has been known for many years, so it is not surprising that regulators should take a closer look at this specifically for the cloud. Because of their size and…

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