Third, in a payments industry that is experiencing a period of rapid change in technology, Cloud technologies are growing in importance. The Bank is taking steps to facilitate its adoption, including issuing a supervisory statement later this year. The use of a Cloud model is an evolution of, and a key element in, the supply chain for many financial institutions – including those who access CHAPS. We believe the use of Cloud technologies has the potential, if used appropriately, to minimise end-to-end risk and improve operational resiliency of the CHAPS system, taken as a whole. As the operator of CHAPS we want to enable our current and potential Direct Participant to realise these benefits in a safe and controlled way, without compromising the resilience of the CHAPS ecosystem. We are assessing the risks that the use of Cloud technology  8 9  https://www.nist.gov/cyberframework https://www.fca.org.uk/publication/research/technology-cyber-resilience-questionnaire-cross-sector-report.pdf 4  All speeches are available online at www.bankofengland.co.uk/news/speeches  4  presents to the CHAPS system, and the nature of mitigating controls that we require. In due course, we expect to propose new controls for Cloud usage as it relates to CHAPS. Policy Development  Development and implementation of requirements must be supported by strong and innovative policy thinking. The Bank works collaboratively on policy with other FMIs and central banks internationally. Some work-streams focus on resilience, others support greater innovation: and increasingly we look to combine the two.

All insurance industry professionals need to become more astute at assessing risks, and competency needs to be upgraded at all levels in the company. Regulators must also keep pace. In supervising individual insurers, regulators need to look beyond insurance risks and protecting policy-holders. From a broader systemic perspective, greater engagement of insurers in financial markets raises important questions concerning their impact on financial stability. How well are insurers managing this new portfolio of risks? What are the spillover effects of an insurance company failure in this environment of inter-linkages? Traditionally, regulators associate systemic risk with the failure of large banks. The events of Sep 11 have turned the spotlight onto the importance of the insurance industry as a whole, and even of individual insurance players. A number of recent failures and near failures of insurance companies have revealed just how wide an economic impact insurers have. The high-profile collapse of a few major insurers such as HIH and Independent, left businesses without essential insurance cover, and critical services without professional indemnity coverage. Economic activity in these sectors might have ground to a halt, had the government not stepped in. But by stepping in, the governments created a new source of moral hazard. These issues have been extensively debated. The IMF has concluded that the insurance industry, while not systemically critical, has taken up a definite systemic relevance. We need to understand better the nature of insurance companies' financial activities and their possible impact on global financial stability.