Cloud outsourcing in the financial sector: An assessment of internal governance strategies on a cloud transaction between a bank and a leading cloud service provider

Research output: Contribution to journalArticleScientificpeer-review

Abstract

Cloud applications are becoming central and critical to the delivery of financial services. Despite their significance, banks face increased exposure to transaction risks related to the use of cloud services and internal and external pressures to improve their risk management practices. In this study, we use a unique data set from a bank’s cloud register to examine the effectiveness of internal governance on an ongoing cloud outsourcing transaction between a bank and cloud service provider. We employ structural equation modeling and a simple linear regression to test for transaction misalignment and causes of governance inefficiencies. We find that a strong degree of misalignment is largely due to poor design of internal controls and a weak control system that does not provide acceptable indications of residual risk likelihood. The findings indicate that cloud risks are driven not only by agency costs, but also by firm-specific risks which contribute to a number of transaction uncertainties and governance misalignment.
Original languageEnglish
Pages (from-to)905-935
Number of pages31
JournalEuropean Business Organization Law Review
Volume23
Issue number4
DOIs
Publication statusPublished - Dec 2022

Fingerprint

Dive into the research topics of 'Cloud outsourcing in the financial sector: An assessment of internal governance strategies on a cloud transaction between a bank and a leading cloud service provider'. Together they form a unique fingerprint.

Cite this