Corporate data centers quash cloud concentration risk

In recent conversations with both regulators and some enterprises, a concept borrowed from the financial sector has been discussed with growing frequency: concentration risk. In finance, the term refers to the level of risk arising from the concentration of capital or processes in a single, or a few, large organizations. Now regulators and management teams at some companies are starting to worry about the concentration of processing and data in a few big public cloud companies.

Risk is a calculation of two variables: the probability of an event occurring, and the potential consequences if it happens. Concentration risk arises when a single event, such as an outage at a cloud provider, could affect many companies with serious (and possibly systemic) repercussions, such as a critical failure in the banking industry.