The Digital Operational Resilience Act (DORA) is a significant regulatory framework introduced by the European Union to enhance the operational resilience of digital systems within the financial sector. The regulations went into effect on January 17, 2025.
As technology becomes increasingly integral to financial services, the need for robust cybersecurity measures and resilient digital infrastructures has never been more critical. Here’s a detailed guide on how organizations can navigate DORA with confidence and bolster their digital operational resilience.
1. Understand the Scope and Requirements of DORA
You should thoroughly understand DORA’s scope and the specific requirements it imposes on financial entities. DORA aims to consolidate and strengthen IT risk management across the financial sector. It applies to a wide range of entities, including banks, insurance companies, and investment firms, as well as critical third-party service providers, such as cloud computing services.
Organizations must assess whether they fall under the scope of DORA and understand the obligations it entails, such as incident reporting, digital operational resilience testing, and management of ICT third-party risks.
2. Conduct a Comprehensive Risk Assessment
Under DORA, financial entities are required to identify, document, and manage all risks related to their information and communication technology (ICT) systems and services. Conducting a comprehensive risk assessment is crucial.
This involves mapping out all digital assets, evaluating the risks associated with each asset, and understanding the potential impact of ICT disruptions on the organization’s services and operations. The risk assessment should be an ongoing process, with regular updates to reflect new technologies, processes, and emerging threats.
3. Strengthen ICT Security Measures
Enhancing ICT security is a core component of DORA. Organizations need to implement robust security measures to protect their digital infrastructure and data from cyber threats. This includes deploying advanced cybersecurity technologies in areas such as risk identification, protection and prevention, detection, response and recovery, and finally backup. Leveraging the approach popularized in many best practices and standards (e.g., NIST CSF), DORA provides a series of outcomes for organizations to prioritize and address cybersecurity risks but does not specify actions for meeting those outcomes.
DORA is very adamant about the importance of testing. You should conduct regular security audits and penetration testing to identify and address vulnerabilities but also test and document your organization’s operational resilience. Confirm that your security policies and procedures are up-to-date and in line with the industry’s best practices.
4. Develop an Incident Response Plan
DORA requires financial entities to establish and maintain an effective incident response plan. This plan should outline the procedures to be followed in the event of an ICT-related incident so that you have a quick and organized response that minimizes impact. The plan should include clear roles and responsibilities, communication strategies, and recovery procedures. Conduct regular training and simulation exercises so that the response team is well-prepared to handle potential incidents.
5. Enable Resilience of Critical Functions
Your critical functions must be able to withstand and recover from ICT disruptions. This involves designing systems and processes that are resilient and can continue to operate under adverse conditions. Redundancies should be built into critical systems, and backup solutions should be implemented to maintain data integrity and availability. Additionally, you must clearly define recovery objectives and regularly test your recovery plans to prepare your employees.
6. Manage Third-Party Risks
With the increasing reliance on third-party service providers, managing ICT third-party risks is a key requirement of DORA. Organizations should conduct thorough due diligence when selecting third-party providers and continuously monitor their performance and compliance with internal ICT risk management framework and relevant security standards. Contracts with third-party providers should include clear terms regarding data protection, incident reporting, and audit rights. You also should have a contingency plan in case the third party fails to deliver the required service.
7. Implement Governance and Oversight
Effective governance and oversight are essential for compliance with DORA. This includes establishing a governance framework that defines the roles and responsibilities of all parties involved in managing ICT risks. Senior management should be actively involved in overseeing the organization’s digital operational resilience. Provide regular reports to senior management, detailing risk management efforts, incident reports, and compliance with DORA requirements.
8. Prepare for Reporting and Auditing
DORA mandates regular reporting on various aspects of digital operational resilience. Organizations should have mechanisms in place to collect the necessary data and generate reports in a timely manner. This includes reports on ICT risk management, incident reports, and audit findings. Additionally, organizations should be prepared for external audits by regulators or independent auditors, keeping all documentation and evidence of compliance readily available.
9. Foster a Culture of Resilience
Finally, fostering a culture of resilience within the organization is crucial. This involves raising awareness about the importance of digital operational resilience and training employees on their roles in maintaining it. A resilient culture encourages proactive identification and management of ICT risks and promotes continuous improvement of resilience strategies.
By following these steps, organizations will not only align with DORA but will also enhance their overall digital operational resilience, protecting themselves and their customers from the adverse effects of ICT disruptions. As digital transformation continues to evolve, staying ahead in terms of compliance and resilience will provide a competitive edge and better position a company for long-term sustainability.
Learn more about how you can prepare for the Digital Operational Resilience Act in our Exploring DORA blog series:
Read More from This Article: Exploring DORA: 9 steps on the path to compliance
Source: News