Financial regulators need to work across borders and sectors to track risks that can spread through shared technology, supply chains and markets, Financial Conduct Authority Chair Ashley Alder said in a speech published Oct. 23.
Alder delivered the address at the Michael D. Gill Lecture on Oct. 13. The FCA said the published text was prepared in advance and might differ from his remarks. He called for regulators to build a shared picture of emerging risks, test cross-border scenarios together and agree in advance on data-sharing and crisis arrangements. He said cooperation need not mean identical rules or reduced regulatory sovereignty.
His argument draws on disruptions that have reached beyond financial firms. Microsoft estimated that a faulty CrowdStrike update in 2024 affected 8.5 million Windows devices, less than 1% of all Windows machines. Parametrix estimated $5.4 billion in direct losses for U.S. Fortune 500 companies, excluding Microsoft, and said insurance would cover no more than 10% to 20% of the estimated loss.
Climate-related property risk offers another route into the financial system, Alder said, as insurance costs affect homeowners and can have implications for property values, mortgages and credit portfolios. U.S. Treasury data for 2018-2022 found that homeowners in the highest-risk fifth of ZIP Codes paid an average of $2,321 in annual premiums, 82% more than those in the lowest-risk fifth.
The U.K. already has a framework for oversight of designated critical third parties. The regime took effect Jan. 1, 2025, and regulations naming its first four providers came into force July 13, 2026: Amazon Web Services EMEA SARL, Google Cloud EMEA Limited, Microsoft Ireland Operations Limited and Oracle Corporation UK Limited. Financial firms remain responsible for assessing and managing risks from their third-party providers.
The Bank for International Settlements developed and tested a cross-border prototype through Project Aperta. It connected open-finance networks in the United Kingdom, the United Arab Emirates, Brazil, Hong Kong and India; the BIS says legal and regulatory changes would be needed before deployment.
Alder made the case amid pressure to simplify regulation in pursuit of competitiveness and growth. He cited International Monetary Fund projections for 2027 real GDP growth of 4.0% in China, 2.3% in the United States and 7.0% in India, whose projection uses a fiscal-year basis. “Growth built on unseen or misunderstood dependencies is just deferred instability,” he said in the prepared text.
The Financial Stability Board’s 2020 review found that greater resilience among major banks helped the financial system absorb the COVID-19 economic shock. Alder’s speech proposed no new rule or implementation timetable.
