Will legislation change how finance uses public cloud?

The global IT outage in July 2024 revealed just how vulnerable many financial institutions are to failure by one or more of their key third-party IT providers (see Global IT outages raise the question: who bears responsibility?). While the outage had an impact on many industries, the finance sector suffered the second highest level of direct financial losses, with 16 out of 21 Fortune 500 banks losing more than $1.15 billion, according to data from Parametrix Insurance.

The incident underscores the importance of managing the risk of cloud-based software and IT services, including the outsourcing of data center operations to public cloud providers. Financial institutions are apprehensive about the public cloud, according to findings from the Uptime Institute Global Data Center Survey 2024. This is because they need to balance reliability and resiliency concerns while meeting the requirements of the EU’s Digital Operational Resilience Act (DORA) that came into force in 2023 and will apply from January 17, 2025.