TY - JOUR
T1 - Cloud outsourcing in the financial sector
T2 - An assessment of internal governance strategies on a cloud transaction between a bank and a leading cloud service provider
AU - Anderson, Jamelia
PY - 2022/12
Y1 - 2022/12
N2 - 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.
AB - 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.
U2 - 10.1007/s40804-022-00252-4
DO - 10.1007/s40804-022-00252-4
M3 - Article
SN - 1566-7529
VL - 23
SP - 905
EP - 935
JO - European Business Organization Law Review
JF - European Business Organization Law Review
IS - 4
ER -