Your Guide to Understanding the Digital Operational Resilience Act

The Digital Operational Resilience Act (DORA), set to take effect in early 2025, is a European Union initiative designed to strengthen the financial sector’s defenses against digital disruptions and cyber threats. DORA’s primary goal is to enhance the security and resilience of the financial system by mandating comprehensive incident reporting, regular testing of ICT systems, and stringent oversight of third-party ICT service providers. This EU regulation ensures that financial institutions can effectively manage and mitigate cyber risks, fostering a uniform approach to operational resilience throughout the EU member states.

 

Before the introduction of DORA, ICT risk management practices across EU member states varied widely, leading to a disjointed regulatory environment. Whilst frameworks like the NIS2 directive address a broader spectrum of sectors, they didn’t specifically target the financial sector or carry the enforcement authority of regulation. This lack of consistency underlined the need for a unified oversight framework to ensure all financial entities met high cybersecurity and operational resilience standards.

 

DORA establishes Regulatory Technical Standards (RTS) for managing ICT risks to boost cybersecurity and operational resilience. Financial institutions must implement solid risk management frameworks, assess and mitigate ICT risks regularly, and promptly report significant ICT-related incidents using standardised procedures.

 

The regulation also mandates routine testing of ICT systems, including advanced threat-led penetration testing for critical systems. It enforces strict supervision of critical ICT third-party service providers to ensure compliance. The DORA is intricately linked with the European Supervisory Authorities (ESAs). These bodies play a crucial role in implementing and enforcing DORA by developing technical standards and guidelines that ensure consistent application. 

 

Download your copy of the full guide for an in-depth explanation of the act and compliance considerations.