I'd say this has nothing with regulatory compliance to do at all. The real truth is that modern organizations are way too attached to cloud solutions. And this runs across all parts of the organization with Saas and PaaS whether it's email (imagine Google Workspace having a major issue), AWS, Azure, Okta…
I've had the discussions so many times and the answer is always – the risks doesn't matter because the future is cloud and even talking about self hosting anything is naive and honestly we need to evaluate your competence for even suggesting it.
(Also the cloud would maybe not be this fragile if it wasn't for lock-in with different vendors. If you read the TOS it says basically on all cloud services that you are responsible for the backup – but getting your data out of the service is still pain in the ass – if possible at all)