With the increasing reliance on digital systems, particularly in finance, the EU's Digital Operational Resilience Act (DORA) represents a significant regulatory advancement to secure the financial sector against ICT (Information and Communication Technology) risks and cyber threats. Let’s dive into what DORA is, its purpose, and what it means for financial institutions.
The Digital Operational Resilience Act (DORA) is a regulation from the European Union that sets requirements for resilience and risk management across financial entities and third-party ICT service providers. As part of the EU's Digital Finance Package, it complements regulations like the GDPR by explicitly focusing on the financial sector’s ability to operate securely in an increasingly digital environment.
DORA aims to ensure financial entities can withstand IT-related disruptions, from minor incidents to major cyberattacks. The regulation extends to banks, investment firms, insurers, crypto companies, and even outsourced IT service providers that these entities rely on.
Digital resilience is critical in the financial industry, where a single cyberattack or system failure could lead to severe financial losses, data breaches, and regulatory fines. The rapid rise of digital services, cyber threats, and complex supply chains has made traditional risk management frameworks insufficient. DORA provides a harmonised approach to managing IT risks within the financial sector, ensuring that resilience standards are consistent across the EU and making the industry less susceptible to disruptions.
DORA outlines a range of requirements designed to strengthen resilience at every stage of IT risk management:
DORA’s impact extends beyond compliance requirements, changing how financial entities view and manage IT risk. Entities will need to invest in new technologies, update systems, and train staff to meet DORA’s stringent requirements, ultimately creating a more robust culture of digital resilience.
For IT providers, DORA brings increased scrutiny. Providers working with EU financial firms will be subject to the EU’s regulatory framework, which could mean adapting services or facing penalties for non-compliance.
DORA represents a pioneering approach to digital resilience, setting an example that could influence regulatory frameworks worldwide. Non-EU countries may adopt similar policies, especially where financial institutions and IT providers operate internationally. DORA’s standards could also serve as a benchmark for other industries that rely on critical IT infrastructures.
DORA is a forward-looking regulation that anticipates the evolving landscape of digital finance. Financial institutions and IT providers can ensure compliance and enhance their ability to thrive in a secure, resilient, and interconnected digital economy by preparing for its requirements.
DORA goes into effect in January 2025, leaving entities a window to prepare. By embracing these regulations, the financial sector can lead by example, safeguarding its operations and, ultimately, its customers.
DSP can play a pivotal role in helping companies meet DORA’s requirements by providing critical IT infrastructure support aligned with the regulation. DSP offers tailored risk management solutions, such as real-time monitoring, incident reporting, and robust threat detection, which help companies proactively address digital risks. Additionally, DSP has the expertise to implement security assessments, allowing companies to meet DORA standards while ensuring continuous operational continuity. This support enhances companies' overall resilience and regulatory readiness. Contact us today to discuss your company's existing IT security.