What is DORA?
The Digital Operational Resilience Act (DORA) is set to revolutionise the financial services industry. Designed to enhance the operational resilience of financial institutions, DORA introduces a comprehensive framework for managing ICT risks, incident reporting, business continuity, and third-party risk management.
Don't be confused with DORA, the 4-key metrics!
Unfortunately the DevOps Research & Assessment has the very same acronym, DORA, so please don't be confused between the two. DORA compliance is different to DORA metrics.
This EU regulation entered into force on 16th January 2023 and will apply as of 17th January 2025.
DORA is for the EU, so why would it apply to the UK?
While DORA is an EU regulation, it does have implications for UK companies, particularly those operating in the financial sector or providing ICT services to EU financial institutions.
- EU-based Financial Institutions and ICT Service Providers: These entities are directly subject to DORA and must comply with its requirements.
- UK Financial Institutions with EU Operations: UK firms that operate within the EU, or provide services to EU clients, will need to adhere to DORA's provisions to ensure smooth operations and regulatory compliance.
- UK Financial Institutions and ICT Service Providers: Even if not directly subject to DORA, UK firms may still benefit from aligning with its principles. This is because DORA sets a high bar for operational resilience and cybersecurity, and adopting its standards can enhance the overall security posture of UK organisations.
- UK Regulators: UK regulators, such as the Bank of England, Prudential Regulation Authority, and Financial Conduct Authority, are likely to incorporate DORA's principles into their own regulatory frameworks. This may result in increased scrutiny of UK firms' operational resilience and cybersecurity practices.
What are the key requirements of DORA?
DORA mandates several key requirements for financial institutions:
Robust ICT Risk Management:
- Risk Identification and Assessment: Financial institutions must identify, assess, and prioritise ICT risks, including cyber threats, operational failures, and natural disasters.
- Risk Mitigation Strategies: Organisations must implement effective risk mitigation strategies, such as security controls, incident response plans, and business continuity plans.
Incident Reporting and Management:
- Incident Reporting: Financial institutions are required to report significant ICT incidents to relevant authorities within specific timeframes.
- Incident Response: Organisations must have well-defined incident response plans to effectively manage and mitigate the impact of incidents.
Business Continuity Management:
- Business Impact Analysis (BIA): Conduct regular business impact analysis to identify critical business functions and assess their potential impact on the organisation.
- Business Continuity Plans (BCPs): Develop and maintain comprehensive business continuity plans that outline strategies for recovering critical operations in the event of disruptions.
Third-Party Risk Management:
- Due Diligence: Conduct thorough due diligence on third-party service providers to assess their security practices and compliance with DORA requirements.
- Contractual Obligations: Ensure that contracts with third-party providers include robust security and compliance provisions.
- Monitoring and Oversight: Establish effective monitoring and oversight mechanisms to manage third-party risks.
Strategies for DORA Readiness
To achieve DORA readiness, financial institutions should consider the following strategies:
- Assess the organisation's current practices against DORA requirements.
- Identify areas where improvements are needed and develop a roadmap for addressing gaps.
Strengthen ICT Risk Management:
- Implement a robust ICT risk management framework, including policies, procedures, and controls.
- Conduct regular risk assessments and vulnerability scans.
- Train employees on cybersecurity best practices.
Enhance Incident Response Capabilities:
- Develop comprehensive incident response plans.
- Conduct regular incident response drills and simulations.
- Establish effective communication channels for incident reporting and escalation.
Improve Business Continuity Planning:
- Conduct regular business impact analyses.
- Develop and maintain up-to-date business continuity plans.
- Test and validate business continuity plans through regular exercises.
Strengthen Third-Party Risk Management:
- Conduct thorough due diligence on third-party providers.
- Establish strong contractual obligations with third-party providers.
- Monitor and oversee third-party performance.
Final thoughts
DORA (the EU Act) presents significant challenges and opportunities for financial institutions. By proactively addressing DORA requirements, organisations can enhance their operational resilience, mitigate risks, and protect their reputation. By working closely with experts, financial institutions can successfully navigate the DORA landscape and ensure a secure and resilient future.
This EU regulation entered into force on 16th January 2023 and will apply as of 17th January 2025.
