##ourcing can provide significant opportunities for banks but it also increases their risk exposure. this demands robust governance, comprehensive risk assessments and thorough pre - outsourcing analyses. our supervisory expectations should not be seen as regulatory hurdles in this regard but as strategic enablers to enhance resilience, operational continuity and data protection in banks'cloud strategies. i wish you a wonderful rest of the conference today. 3 / 4 bis - central bankers'speeches gartner ( 2024 ), " gartner forecasts worldwide public cloud end - user spending to surpass $ 675 billion in 2024 ", press release, 20 may. 4 / 4 bis - central bankers'speeches

elizabeth mccaul : supervisory expectations on cloud outsourcing speech by ms elizabeth mccaul, member of the supervisory board of the european central bank, at the kpmg cloud conference 2024, frankfurt am main, 17 october 2024. * * * introduction it is my great pleasure to speak today at the kpmg cloud conference 2024. it is a pity that i cannot be with you in person, but i am sure that you are having a wonderful conference. there is no doubt that cloud outsourcing offers opportunities to scale operations efficiently, reduce costs and enhance flexibility by leveraging cloud providers'advanced infrastructure and services. indeed, using the cloud can be a viable strategy for banks to reduce the complexity of their it operations, which would be a welcome development. but it also introduces new risks and new challenges, including preparing it systems for use in a cloud environment. in particular, it presents risks related to it and data security and vendor lock - in which, if not properly managed, could lead to operational vulnerabilities and business disruptions. i would like to make three main points in my speech today. first, cloud outsourcing is rapidly transforming the banking sector, with a significant rise in adoption and expenditure. but it also increases banks'risk exposure, which demands heightened responsibility and robust governance frameworks. second, when adopting cloud strategies, banks should retain full accountability for outsourced services, ensuring clear roles, rigorous risk management and appropriate it security measures. third, our supervisory expectations should not be seen as regulatory hurdles, but as strategic enablers to enhance resilience, operational continuity and data protection in banks'cloud strategies. relevance of the cloud cloud services are transforming the economic landscape and reshaping traditional business models. according to a report by gartner, worldwide end - user spending on public cloud services is forecast to grow by 20. 4 % to total usd 675. 4 billion in 20241, driven largely by sectors like banking. in our own stocktake, we have found that essentially all significant institutions under our supervision use cloud services. cloud services account for approximately 15 % of all outsourcing contracts, with half of these contracts covering the outsourcing of critical or important functions. moreover, cloud expenses are among the fastest - rising outsourcing costs. but with this growth comes increased responsibility. 1 / 4 bis - central bankers'speeches third - party risk management, including cloud outsourcing, is high on the list