What is DORA?
The Digital Operational Resilience Act (DORA) is a significant EU regulation designed to bolster the digital resilience of the financial sector. Effective from January 16th 2023, DORA will be applicable starting January 17th 2025, a date which also marks when the three European Supervisory Authorities will start their oversight activities.
DORA seeks to ensure that financial entities can endure, respond to and recover from all types of Information and Communication Technology (ICT) – related disruptions and threats. This regulation standardises the rules for digital operational resilience across the EU, creating a unified framework for managing ICT related risks.
How does DORA affect firms in the UK and EU?
The application of DORA will impact firms in both the UK and the EU, as strict requirements on ICT and third party risk management as well as incident reporting will be imposed. Robust frameworks to manage these risks will need to be established and carry out regular resilience testing.
Furthermore, the monitoring and response capabilities of firms needs to be developed and strengthened. For UK firms, it is important to act quickly and ensure compliance with DORA, especially for those that have operations within the EU financial market, so as to continue their cross-border operations seamlessly and to steer clear from any regulatory discrepancies.
Main Principles of DORA
DORA is built on several key principles however the main domains are the follows:
- ICT Risk Management: Establishing comprehensive frameworks for managing ICT risks
- Incident Reporting: Mandatory reporting of major ICT-related incidents to competent authorities
- Digital Operational Resilience Testing: Regular testing of digital operational resilience, including advanced testing scenarios
- Third-Party Risk Management: Oversight and management of risks associated with ICT third-party service providers
- Information Sharing: Facilitating the exchange of information and intelligence on cyber threats
What is the difference between Operational Resilience and DORA?
The UK’s Operational Resilience regulations and DORA in the EU share a number of common objectives and requirements. These regulatory tools often align in their approach to improve the resilience of financial institutions. Both sets of regulations aim to ensure that firms can withstand, adapt to, and recover from disruptions, with a focus on critical business functions and ICT services. Some key areas where they overlap:
- Identification of Important Business Services: UK firms are already required to identify their most important business services to manage operational resilience effectively. Similarly, DORA mandates that firms identify critical or important functions supported by ICT services.
- Mapping: Both regulations require firms to map out dependencies associated with their important services. In the UK, firms identify which ICT services, whether provided internally or by third-party vendors, are critical to their IBSs. This mapping aligns with DORA’s requirements for understanding the interdependencies of critical functions and the ICT services supporting them.
- Scenario Testing: DORA introduces specific requirements for testing the resilience of ICT services. On the other hand, UK firms, may already have established testing protocols to demonstrate their ability to remain resilient under various scenarios.
DORA places more emphasis on the third parties and has direct requirements for third party providers when compared to the UK’s operational resilience requirements. In the UK, where a firm relies on a third party for the delivery of an important business service, that firm would be expected to have sufficient understanding of the people, processes, technology, facilities and information that support the provision of that service by the third party so as to allow the firm to comply with its regulatory obligations.
Challenges and Non-Compliance
Several of the challenges that DORA compliance present to firms include the complexity of establishing and maintaining robust ICT risk management frameworks and the resources required to ensure continuous monitoring and timely incident reporting.
Besides the challenges associated with meeting DORA regulatory requirements, non-compliance may lead to:
- Regulatory Penalties
- Operational Disruptions and Vulnerabilities
- Reputational Damage
Moving Forward
Whilst there are common elements between the UK’s Operational Resilience regulations and t DORA, firms need to thoroughly understand the full scope of DORA to identify specific gaps or new requirements.
This understanding will enable them to determine where their current operational resilience practices align with DORA and where additional work is needed.
Notably, DORA places a stronger emphasis on the role of ICT in operational resilience. Therefore, firms may need to expand their focus on ICT-specific resilience measures to meet DORA’s broader regulatory scope, although other organisational functions, such as risk and compliance have a significant contribution to the establishment of a DORA framework.
How Complyport can help
Complyport offers comprehensive compliance solutions tailored to meet DORA’s requirements. Our services include:
- Gap Analysis and Risk Assessment: Identifying areas that need improvement to meet DORA standards;
- Development and Implementation of DORA Compliance Framework: Developing bespoke DORA compliance frameworks which outline the policies, procedures and technical controls needed to achieve and maintain compliance;
- Technical Support on DORA Requirements: Assisting with the implementation of technical controls such as ICT risk management and governance, incident reporting and response, digital operational resilience testing, penetration testing and establishing threat intelligence mechanisms;
- Third-Party Risk Assessment: Assessing your vendors’ security and ensuring they comply with DORA, including reviewing your contractual agreements on the use of ICT services provided by ICT Third-Party Service Providers;
- Training and Awareness: Educating staff on best practices for digital operational resilience;
- Ongoing Support and Maintenance: Helping stay up to date with regulatory changes and ensuring your compliance framework remains effective; and
- Special bundle for microenterprises.
Complyport stands out for its deep expertise in regulatory compliance and its commitment to personalised service. With a dedicated ICT/cybersecurity team, we offer a seamless path to DORA compliance, ensuring that your company not only meets regulatory requirements but also strengthens its overall operational resilience. Partner with Complyport for expert guidance, proactive solutions, and peace of mind in navigating the complexities of DORA.
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