Achieving DORA Compliance in Your Organization

What is DORA (Digital Operational Resilience Act)?

DORA is a groundbreaking EU regulation designed to enhance the operational resilience of the financial sector. It aims to tackle the challenges posed by increasing digitalization and connectivity.

The central goal of DORA is to set uniform requirements for the security of networks and information systems within the financial sector. It covers not only financial institutions but also critical third parties providing ICT-related services, like cloud platforms and data analytics. These requirements are standardized across all EU member states.

Who Does DORA Impact?

DORA’s impact is far-reaching, affecting various entities within the financial ecosystem. It applies to financial entities such as banks, insurance companies, investment firms, and crypto-asset service providers. Additionally, critical third parties offering IT and cybersecurity services to financial companies are also under its purview.

Furthermore, the DORA cybersecurity regulation aligns with the Network and Information Security (NIS2) directive, addressing potential overlaps and ensuring comprehensive cybersecurity requirements for critical infrastructure.

What is the DORA Compliance Timeline?

DORA officially came into force on 17 January 2023, and its provisions will apply from 17 January 2025. Additionally, the European Commission is set to review the adequacy of strengthened requirements for statutory auditors and audit firms in terms of digital operational resilience by 17 January 2026.

What Are the Next Steps?

To ensure DORA compliance, EU member states will incorporate the required aspects of the regulation into their national legislation. European Supervisory Authorities (ESAs), including the European Banking Authority (EBA), the European Securities and Markets Authority (ESMA), and the European Insurance and Occupational Pensions Authority (EIOPA), will develop technical standards that apply to all financial institutions. National competent authorities will oversee and enforce compliance where necessary.

What Does DORA Mean for EU Financial Operations?

DORA sets clear standards, norms, and guidelines to guide financial organizations in managing IT and cyber risks. It emphasizes the importance of reporting, communication, and assessments within standardized formats.

Five Pillars of DORA Compliance

DORA encompasses five pillars:

1. ICT Risk Management: This foundational pillar revolves around the establishment of rigorous internal governance and control mechanisms dedicated to the effective management of ICT (Information and Communication Technology) risk. It is the keystone in ensuring that these institutions maintain a robust risk management framework within their digital infrastructure.
2. ICT-Related Incident Management, Classification, and Reporting: The second pillar of the DORA rule focuses on the detection, management, and reporting of ICT-related incidents. It requires the implementation of well-defined incident response and management processes, akin to having a vigilant security detail at the gates to address and report any anomalies promptly.
3. Digital Operational Resilience Testing: This pillar is analogous to a stress test for the digital architecture of financial institutions. It aims to evaluate an institution’s preparedness in handling cybersecurity incidents, identify vulnerabilities, and ensure swift corrective measures. It’s the rigorous examination of the digital fortress to ensure it can weather any cyberstorm.
4. Managing ICT Third-Party Risk: In this context, it’s akin to scrutinizing those with access to the digital premises. This pillar emphasizes the critical significance of assessing vulnerabilities associated with third-party engagements. It ensures that entities sharing the digital space adhere to stringent security protocols, minimizing potential risks.
5. Information Sharing: The fifth pillar promotes a collaborative approach to establishing a digital neighborhood watch. It encourages the exchange of cyber threat information and intelligence among financial entities. This cooperative strategy strengthens the collective resilience of the entire community, mitigating potential threats through shared knowledge.

How to Prepare for DORA Compliance Now

To prepare for DORA compliance, financial institutions can take proactive steps. These recommendations include:

• ICT Risk Management: Evaluate current governance and risk management techniques. Increase funding for threat detection and enhance cybersecurity awareness training.
• Incident Reporting: Assess the maturity of incident management and reporting, recognize near-miss situations, and improve incident response capabilities.
• Board-Level Buy-In: Involve board members in compliance discussions early to secure their support for necessary DORA process changes.
• Resilience Testing: Develop the skills required for resilience testing, including board member training sessions on techniques and implications for repair.
• Third-Party Risk Management: Concentrate on improving contract mapping and third-party vulnerability assessment. Ensure the implementation of fault-tolerant architecture to minimize the impact of critical provider disruptions.

What Are the Penalties for Non-Compliance with DORA?

Non-compliance with DORA can lead to several consequences, including administrative fines, remedial measures, public reprimands, withdrawal of authorization, and the obligation to compensate customers or third parties for damages incurred due to non-compliance.

The Role of Supervisory Authorities in Enforcing DORA

Supervisory authorities, both at the national and EU levels, play a crucial role in enforcing DORA. They are responsible for evaluating operational resilience, conducting on-site inspections, imposing penalties, offering guidance, and promoting coordination among financial institutions to ensure consistent compliance.

DORA Compliance Checklist

Preparing for compliance with the Digital Operational Resilience Act (DORA) requires a series of crucial steps to ensure financial entities are well-prepared to meet the new regulatory requirements. Here is a comprehensive checklist:

1. Gap Analysis:

• Evaluate your existing ICT-related risk and governance procedures and mechanisms in light of DORA’s requirements.
• Determine if your organization is eligible for any exemptions from specific DORA requirements.
• Identify the procedures and mechanisms that will be affected by DORA and plan the necessary steps to ensure compliance.
• Ensure that you have the required policies, procedures, programs, protocols, and tools in place for assessing and managing ICT-related risks.

2. Assess Contracts with Service Providers:

• Identify existing contracts with service providers that fall under the contractual arrangement requirements introduced by DORA.
• Evaluate necessary changes to be made in these contracts to align with DORA’s requirements.
• Initiate negotiations with relevant service providers to implement the required revisions.

3. Identify Critical ICT Third-Party Service Providers:

• Assess which third-party service providers are likely to be designated as ‘critical’ (e.g., cloud service providers).
• Contact these service providers to understand their intentions and plans for DORA compliance.
• Ensure that service providers without an EU presence consider establishing a subsidiary in the EU or seek alternative solutions.

4. Categorize ICT Third-Party Service Providers:

• Evaluate the types of service recipients and the likelihood of being designated as ‘critical’ ICT third-party service providers.
• Stay informed about the evolving definition of ‘critical’ entities, especially in areas like cloud service provision.
• Prepare to comply with DORA’s regulatory framework, which may require EU presence or the establishment of an EU subsidiary.

5. Familiarize with DORA:

• Remember that DORA comes into effect on 17 January 2025.
• Stay informed about any additional technical standards and detailed requirements introduced by competent authorities.
• Begin familiarizing your organization with DORA’s provisions to prepare for compliance proactively.
• Be ready to make significant efforts and adjustments, including reviewing existing procedures and contracts.

6. Continuous Monitoring:

• Regularly monitor DORA’s developments and any updates to regulatory requirements.
• Stay in touch with regulatory authorities and industry experts to remain up-to-date.
• Be prepared to adapt and make necessary changes to maintain compliance as DORA regulations evolve.

Explore DORA with Centraleyes

The two-year window for DORA implementation passes swiftly, and a prompt start is essential for success. Commencing preparations early will allow your organization to navigate the evolving regulatory landscape with confidence and establish a resilient operational framework.

Centraleyes stands ready to be your trusted partner on this journey. Our expertise and solutions are tailored to simplify the complexities of DORA compliance. We offer a comprehensive platform to guide financial entities through the compliance journey, from gap analysis to continuous monitoring and action. 

By choosing Centraleyes, you can streamline your path to DORA compliance, enhancing your operational resilience in the ever-changing digital environment.

Time is of the essence—begin your DORA preparations now to secure the resilience and security of your financial operations in the digital age.