The DORA Act: What MSPs Need to Know

The Digital Operational Resilience Act (DORA) is a hot topic in the European Union's cybersecurity and regulatory landscape, and it’s something MSPs need to keep on their radar. Set to come into full effect in January 2025, DORA is the EU’s attempt to establish a harmonized framework for digital resilience within the financial sector. But why should this matter to you, the MSP? Let’s unpack the essentials.

What is DORA?

DORA is designed to ensure that financial entities can withstand, respond to, and recover from ICT (Information and Communication Technology) disruptions and threats. The regulation applies not only to banks, insurers, and investment firms but also to their ICT service providers—including MSPs. If you provide IT services to financial institutions in the EU, you may fall within its scope.

The core pillars of DORA include:

1.?ICT Risk Management:?Financial entities must implement robust frameworks to identify, manage, and mitigate ICT risks.

2.?Incident Reporting:?Timely reporting of significant ICT-related incidents is mandatory.

3.?Digital Operational Resilience Testing:?Regular testing of ICT systems for vulnerabilities is required.

4.?ICT Third-Party Risk Management:?Financial entities must assess and monitor the resilience of their ICT service providers.

5.?Information Sharing:?Encourages the sharing of cyber threat intelligence between financial entities.

What Does This Mean for MSPs?

As an MSP, your clients in the financial sector will rely on you to help them meet their DORA obligations. Here are the key implications:

1.?Increased Scrutiny:?Expect more rigorous due diligence and contractual requirements from your financial clients. These may include demonstrating compliance with frameworks like ISO 27001 or SOC 2, providing evidence of regular security audits, sharing documentation of incident response plans, and ensuring business continuity strategies are in place. Additionally, clients might request detailed penetration testing results and certifications that verify your adherence to high cybersecurity standards. You’ll need to demonstrate your own resilience measures, including security certifications, incident response plans, and continuity strategies.

2.?Compliance Obligations:?If you’re deemed a “critical ICT third-party provider,” you may face direct oversight by EU regulatory bodies. This designation typically applies to providers whose services are essential to the operational resilience of financial institutions. Factors such as the volume of services provided, the criticality of those services to clients’ operations, and the geographical scope of your activities are key considerations. For example, MSPs managing core banking systems or offering cybersecurity solutions that directly impact a financial institution’s ability to meet?regulatory requirements are more likely to fall into this category. This could involve audits, resilience testing, and mandatory reporting.

3.?Opportunities for Differentiation:?While compliance may sound burdensome, it’s also a chance to stand out. By offering tailored DORA-compliant solutions, MSPs can differentiate themselves in the market. For instance, you could develop specialized services such as continuous resilience testing, advanced incident reporting capabilities, or bespoke risk management frameworks aligned with DORA requirements. These proactive measures not only demonstrate your commitment to compliance but also position you as a partner who understands the unique challenges of highly regulated industries. By showcasing your expertise and readiness, you can build trust and win new business in the financial sector. MSPs that proactively adapt to DORA can position themselves as trusted partners for highly regulated sectors.

4.?Collaboration is Key:?DORA emphasizes the importance of partnerships. This could be an opportunity to deepen relationships with clients and demonstrate your value as more than just a service provider—you’re a strategic partner in their resilience journey. For example, consider an MSP that worked closely with a mid-sized bank to implement a comprehensive incident response strategy, ensuring compliance with emerging regulations while significantly reducing response times during a simulated cyberattack. Another scenario might involve an MSP assisting a financial firm in overhauling its risk management framework, providing tailored solutions that not only met DORA requirements but also uncovered previously unknown vulnerabilities. These success stories highlight how MSPs can move beyond transactional relationships to become indispensable advisors.

Steps MSPs Can Take Now

1.?Assess Your Own Resilience:?Review your internal security posture and ensure it aligns with DORA’s principles. Are your systems tested, monitored, and prepared to handle incidents?

2.?Understand Client Obligations:?Familiarize yourself with what DORA requires of financial entities. This will help you align your services to meet their needs.

3.?Enhance Reporting Capabilities:?Invest in tools and processes that facilitate timely and accurate incident reporting.

4.?Strengthen Contracts:?Be prepared to update agreements with financial clients to address DORA’s requirements, such as incident response timelines and testing protocols.

5.?Educate Your Team:?Ensure your staff understand the implications of DORA and are equipped to support compliance efforts.

Looking Ahead

While DORA’s primary focus is on financial entities, its ripple effects will be felt across the MSP landscape. By embracing the regulation as an opportunity rather than a burden, MSPs can not only mitigate risks but also strengthen their value proposition. At Pax8, we’re committed to helping our partners navigate this evolving landscape, providing the tools and insights needed to thrive.

If you’re supporting financial clients or looking to expand into this sector, now is the time to prepare. The clock is ticking toward 2025 - are you ready for DORA?