Cloud Outsourcing and Exit Risk:

Cloud is no longer just infrastructure, it’s a concentration risk.

A new ECB supervisory guide brings long-awaited clarity to how financial institutions should approach outsourcing to cloud service providers (CSPs). Pulling together scattered requirements from DORA and its technical standards, this document signals that regulators expect better cloud exit planning and alignment with overall risk strategy.

In this blog, Wayne Scott, Escode’s Global Regulatory Compliance Solutions Lead, breaks down what the ECB’s new guidance means, why it matters now, and how regulated firms can take meaningful steps to address the risks of cloud reliance,  particularly during exit scenarios.

Context: Exit Risk and Cloud Concentration in Focus

Financial institutions have embraced the cloud, but regulators remain uneasy, and for good reason.

The European Central Bank (ECB) has now issued a supervisory guide aimed at consolidating existing cloud outsourcing expectations from across the Digital Operational Resilience Act (DORA) and related frameworks. While the guidance contains little that’s technically new, it provides an authoritative roadmap that flags specific areas of regulatory concern.

Cloud exit risk is still a blind spot.

Section 2.4 and its subsections highlight that cloud exit strategies are underdeveloped, raising serious operational resilience concerns across the sector. This echoes insights from recent Escode and CeFPro industry studies, which show that many firms lack tested, executable exit plans for cloud-hosted critical software.

Insight: A Shift Toward Exit Planning Maturity

The ECB’s move reflects a broader regulatory shift: from outsourcing compliance to exit execution readiness.

• Section 2.1.2 flags the risks posed by multi-tenant environments, where shared infrastructure could complicate exits or data portability.
• Section 2.1.3 reinforces that cloud risk must align with an FI’s broader risk strategy, not operate as a separate, lower-priority stream.
• Section 2.4 lays out detailed expectations for exit strategy governance, testing, and contractual enforceability.

This is a clear nudge to both financial institutions and their software vendors: Exit is not an afterthought. It must be planned, documented, tested, and supported by partners who understand regulatory accountability.

Actionable Takeaways

What should financial institutions and their software vendors do now?

1. Reassess Your Cloud Exit Plans
Revisit the documentation, feasibility, and contractual strength of your current exit strategies, this is especially true for critical applications.

2. Align Cloud Risk with Enterprise Risk
Make sure cloud outsourcing is embedded in your firm’s overall risk posture. Fragmented treatment can lead to compliance gaps.

3. Understand Your CSP’s Multi-Tenant Risk Profile
Clarify how your data and services are isolated, or not, from other tenants, and what that means during an exit scenario.

4. Engage Software Escrow Partners Early
Third-party support, like software escrow with verified release conditions adds a layer of legal and operational confidence regulators now expect.

Ready to secure your supply chain with software escrow? Book a free consultation with our experts today.