The European Central Bank has published a speech by Frank Elderson, ECB Executive Board member and Supervisory Board Vice-Chair, on banks’ operational resilience. Operational resilience has become a key priority for regulators globally. Mr Elderson notes that EU’s Digital Operational Resilience Act, which applies from January 17, 2025, will significantly enhance IT and cyber risk management. However, the ECB’s cyber resilience stress test earlier this year illustrated that there is scope for improvement, and the ECB appeals to Eurozone banks to prioritize operational and cyber resilience.
Mr Elderson also referred to cloud outsourcing risk where, in order to gain better insight into risk controls at cloud service providers, ECB banking supervision has started conducting on-site inspections of CSPs. The ECB recently consulted on a draft guide on outsourcing cloud services to cloud service providers, with the aim of clarifying the ECB’s expectations for the banks it supervises. Noting that concentration risk may arise where financial institutions outsource critical functions to a common critical service provider, the ECB encourages prudential supervisors to coordinate with other…
