Cloud computing worries APRA

The trend toward cloud computing is ringing alarm bells at APRA, with the financial regulator writing to banks and insurers to remind them about the need to conform to established policies on outsourcing.

Puay Sim, general manager of the supervisory support division, wrote in a letter to banks and insurers that "assessments of cloud computing proposals typically lack sufficient consideration" of a range of factors required by the policy.

These included "a detailed understanding of the extent and nature of the business processes (including those pertaining to decision-making and support), the technology architecture and the sensitive information (customer or other) impacted by the outsourcing arrangement."

Sim reminded regulated entities that they "are required to consult with APRA prior to entering into any offshoring agreement involving a material business activity", so there must be a few arrangements that APRA is seeking to unwind.