Understanding the Digital Operational Resilience Act and How to Prepare Your Organization for Compliance

DORA applies: 17 January 2025

The European Union’s Digital Operational Resilience Act (DORA) is set to remodel the way financial institutions and their service providers approach operational resilience. With increasing reliance on digital technologies and a rapidly evolving cyber threat landscape, DORA establishes a unified regulatory framework to ensure that financial entities can withstand, respond to, and recover from operational disruptions. The big question is: Is your organization ready?

What Is DORA and Why Does It Matter?

DORA was introduced to address the growing complexity of digital ecosystems in the financial sector. The act emphasizes the importance of:

• Cyber Resilience: Mitigating and responding to cyber threats.
• ICT Risk Management: Comprehensive strategies for managing risks associated with Information and Communication Technology.
• Incident Reporting: Establishing clear protocols for reporting significant incidents.
• Third-Party Risk Management: Ensuring that external service providers adhere to robust resilience standards.

With compliance deadlines approaching, organizations must act swiftly to align their operational practices with DORA’s requirements.

Key Requirements of DORA

To prepare for DORA, financial entities need to focus on five core areas:

• ICT Risk Management: Develop frameworks for identifying, assessing, and mitigating ICT risks. This includes robust business continuity and disaster recovery plans.
• Incident Reporting: Establish processes for timely and accurate reporting of ICT-related incidents to regulators, minimizing potential harm to stakeholders.
• Digital Operational Resilience Testing: Conduct regular testing, including penetration tests and vulnerability assessments, to ensure systems are resilient against cyber threats.
• Third-Party Risk Management: Evaluate and monitor risks associated with third-party providers to ensure they meet resilience standards.
• Information Sharing: Encourage collaborative information sharing within the industry to improve threat intelligence and collective defence mechanisms.

Steps to Ensure Your Organization Is DORA-Ready

Here are actionable steps to prepare for DORA compliance:

1. Perform a Gap Analysis

• Assess your current ICT risk management framework against DORA requirements.
• Identify gaps in incident reporting, resilience testing, and third-party management.

2. Strengthen Governance and Accountability

• Assign responsibility for DORA compliance to a dedicated team or individual.
• Develop clear policies and procedures to embed operational resilience into your organizational culture.

3. Enhance Incident Response Capabilities

• Review and refine your incident reporting processes.
• Ensure that incident data can be communicated quickly and accurately to regulators.

4. Collaborate with Third-Party Providers

• Engage with your critical service providers to align their resilience practices with DORA standards.
• Include resilience requirements in contracts and service level agreements.

5. Invest in Training and Awareness

• Educate employees and stakeholders about DORA’s requirements.
• Conduct regular simulations to test and improve your response capabilities.

Benefits of Embracing DORA

Beyond compliance, adopting DORA’s principles offers long-term benefits:

• Enhanced Resilience: Stronger systems and processes reduce downtime and disruptions.
• Improved Reputation: Demonstrating operational resilience builds trust with clients and stakeholders.
• Regulatory Confidence: Proactively addressing compliance reduces the risk of fines and penalties.

Conclusion: Don’t Wait Until It’s Too Late

The clock is ticking for organizations to align with DORA’s requirements. Preparation is not just about avoiding penalties but about building a robust, future-proof framework that ensures operational resilience in an increasingly digital world.