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Leveraging Multi-Cloud to Address Cloud Concentration Risk

Can there be too much of a good thing when it comes to the cloud? 

Cloud technology continues to bring great benefits to the financial services (FS) sector.  

Key advantages include improved business processes, enhanced productivity, and streamlined software development. Many cloud-native applications and solutions are even developed with these benefits in mind, designed to simplify the complexity of cybersecurity while also maintaining stable business continuity. 

However, as with all innovative technologies, diversification is important and FS firms must consider the best practices for adopting, implementing, and maintaining a cloud solution, with careful consideration to the inherent risks of single cloud concentration. 

With the right approach, FS providers can effectively implement cloud solutions by establishing a multi-cloud approach that mitigates the risk of cloud concentration. 

Defining Cloud Concentration Risk

For your FS organization to successfully manage your cloud concentration risk, the first crucial step is to have a clear understanding of what, exactly, this type of risk entails. 

Cloud concentration risk occurs when a business only utilizes one cloud service or service provider. The risk is generally considered to be higher when all of a business’s cloud capabilities lie within a singular service but it can also present challenges when working with a single provider as well. 

When your firm relies too heavily on one service or provider, you are at risk of disrupted operations should that provider experience downtime or other technical difficulties. This risk is heightened if your business operates in multiple domestic or international regions, as you may be unable to execute key financial services within the limits created by operating in multiple time zones at once. 

Along with cloud concentration risk, this can also present the challenge of vendor lock-in wherein your firm becomes too dependent on one cloud vendor and can no longer easily switch between vendors or introduce new services without significant costs. 

This makes it vital to put careful consideration into your cloud strategy and make sure you have a backup plan in place to keep your business afloat should your primary cloud service or provider fail. 

What is a Multi-Cloud Strategy & How Does it Impact Cloud Concentration? 

If the main problem contributing to cloud concentration risk is too much reliance on a single cloud service or provider, then the obvious solution is to employ multiple cloud solutions. 

Multi-cloud describes an approach to cloud computing that spreads out your cloud needs across several different solutions. Not all of these solutions need to be active at once. Rather, you can treat certain services or providers as backup options should your primary provider come up short. 

Like a well-diversified portfolio, a multi-cloud approach helps minimize and mitigate the risk of concentrating a firm’s operations within a single cloud environment. 

Additionally, you can decide whether to work with one or multiple providers, depending on your business risk appetite and the extent of your cloud needs. For some businesses, utilizing multiple cloud services from one provider can prove to be more cost-effective, as well as simplify the process of keeping a cloud environment well synchronized. 

The best practice for maintaining consistent business continuity, however, is to work with multiple providers — this helps you create a more diverse cloud strategy overall that builds flexibility and resilience into your digital infrastructure. 

How to Deploy a Multi-Cloud Strategy as a Financial Services Organization

One of the greatest advantages of a multi-cloud strategy is the flexibility it provides to your organization, allowing you to choose the right method of deployment for your specific needs. 

Undoubtedly, the most common use case for a multi-cloud approach is to leverage a different cloud environment for each business application you move to the cloud. 

However, there are other beneficial methods to explore as well.

For example, your business could work with one or multiple cloud service providers to create a parallel cloud environment. These environments would rely on the same data and resources as one another but would be housed within separate systems — essentially providing you with twin environments that can swap in for each other should one face an outage. 

Another use case for a parallel cloud environment is creating identical yet separate environments for each of the regions you work in. By utilizing a parallel multi-cloud strategy in this way, you ensure that even if one region’s cloud server goes down, the other regions you operate in still have access to a functional cloud environment. In turn, your team can focus entirely on getting a single region’s cloud environment back up and running instead of trying to do the same task for every region you work in. 

Moreover, each of these separate cloud environments can also be tailored for the specific regions they service, making it easier to adhere to a wide variety of compliance regulations found in different jurisdictions around the world. 

Why the Multi-Cloud Approach is Vital to Enhancing Business Resiliency 

Traditional digital infrastructures that supported a business’s digital services relied on physical hardware.

As a result, businesses had to establish geographic redundancy by maintaining multiple separate computer networks, as well as replica data centers for those networks to function. This redundancy ensured that a business’s digital resources were protected in natural disasters or other emergency scenarios in which one data center may be damaged or destroyed entirely. 

Cloud computing offers an immediate solution to this risk, as the infrastructure is completely digital and based within a virtual space — though, as we have covered, the geographic risk is then replaced by cloud concentration risk instead. 

A multi-cloud approach gives your organization the right opportunity to achieve the same redundancy you would with a physical infrastructure, all while still gaining the many benefits cloud technology has to offer. Multi-cloud enables your business to overcome downtime and cloud outages with ease, all while continuing to provide top-notch services and products to your clients.  

Key Takeaways for Addressing Cloud Concentration Risk

To answer the question posed at the beginning of this article — no, there is not too much of a good thing when it comes to cloud technology.

In fact, to build a truly resilient and flexible cloud strategy, the more cloud services the better.

There is, of course, the initial challenge of sourcing and implementing the right multi-cloud solutions. 

To combat cloud concentration risk, I propose a two-fold approach: 

  1. First, FS firms must create a well-rounded, diversified approach to adopting a multi-cloud solution. To achieve this, firms should focus not only on implementation but also ensuring their organization as a whole has a strong understanding of why multiple clouds are being leveraged to prevent not only cloud concentration but also vendor lock-in.

  2. For the second part of my proposal for combatting cloud concentration risk, an FS firm needs to shift its risk mitigation strategy to address the need for digital redundancy. As we discussed earlier, cloud solutions come with a far lower risk of the systems being physically disrupted. Instead, FS firms must consider how those risks translate within the digital space. Working with an experienced cloud solution provider with a proven track record of success implementing multi-cloud solutions can be immensely advantageous for establishing a resilient cloud-based infrastructure fortified by the redundancy of a multi-cloud approach. 


The process of mitigating cloud concentration risk can be greatly simplified when you choose the right technology partner for your firm’s specific needs. In turn, your chosen provider can assist you in ensuring your cloud-based solutions are fully optimized and that your firm has the ability to more easily connect with a wider range of cloud vendors. 

Ultimately, finding the ideal technology partner is the final puzzle piece to gaining the most value, efficiency, and security from your multi-cloud endeavors. 

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Yaniv Zecharya

Yaniv Zecharya

CTO & CoFounder


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22 Feb


Tel Aviv

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