What is a Stressed Exit?
A stressed exit is withdrawing from an outsourcing arrangement following the failure or insolvency of the service provider. A non-stressed exit is moving away from an agreement in a more planned and managed way due to strategic, commercial or performance reasons.
Stressed or non-stressed exits can happen with any third-party outsourcing arrangement, but the terms typically refer to large outsourcing arrangements where the service provider is critical to an organizations core business.
Stressed exit and the cloud
As organizations move more of their core services to the cloud, outsourcing arrangements with cloud service providers are coming under increasing scrutiny. The concern is that organizations could become too reliant on cloud service providers and therefore encounter significant disruptions in the event of a stressed exit.
Minimizing the impact of stressed exits
Identifying plans to mitigate exits, particularly stressed exits, form a key part of Business Continuity Planning (BCP) to ensure an organization is operationally resilient. The ability to ensure sudden unplanned disruptions do not impact core customer services is critical to protect against any loss of revenue or reputational damage.
In regulated industries, such as financial services, BCP’s are also a regulatory requirement. Failure to properly document and test exit plans can result in potential punitive action from regulatory bodies.
Teradata take on stressed exit
Businesses must shift their thinking to future-proof their cloud strategies. Hybrid and multi-cloud infrastructure can help increase operational resilience by introducing agility, flexibility and choice to critical infrastructure decisions.