Cloud outsourcing: a multigroup analysis of cloud risk and governance effectiveness of EU, US, and Canadian financial institutions

Jamelia M. Anderson-Princen ()
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Jamelia M. Anderson-Princen: University of Tilburg

Risk Management, 2025, vol. 27, issue 4, No 3, 32 pages

Abstract: Abstract One of the most important challenges facing financial institutions that outsource cloud technologies is the ability to devise efficient control structures. For this study, I surveyed senior cloud risk experts at large financial institutions in the US, the EU, and Canada to capture their concerns regarding 37 different risks in outsourcing. I employed a multigroup model to test for transaction misalignment and the overall degree of efficiency in managing risks. Empirical results reveal that institutional risk is a primary risk factor, and that all groups face similar risk and governance challenges, even in the face of divergent legal regimes and institutional practices. Additionally, the results showed that US institutions were among the most inefficient in the governance process. These findings indicate that hybrid transactions are difficult to govern owing to the incomplete nature of cloud contracts, the fragmented nature of the regulation, and the presence of institutional risk.

Keywords: Cloud outsourcing; Incomplete contracts; Internal governance; Transaction cost theory; Transaction misalignment; CB-SEM - multigroup analysis (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1057/s41283-025-00168-6

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