The Digital Operational Resilience Act (DORA) is a pivotal regulatory framework aimed at fortifying the digital resilience of financial institutions. Compliance with DORA necessitates a comprehensive focus on five key pillars. Here’s an in-depth look at these pillars and what they entail for financial institutions striving for compliance.

1. Risk Management

Principles and Requirements

Effective risk management is the cornerstone of DORA compliance. Financial institutions must establish robust principles and requirements for managing ICT risks. This involves setting up and maintaining resilient ICT systems and tools designed to minimize the impact of any ICT-related risks.

Key Activities

• Identification and Classification: Identify, classify, and document important assets to understand their significance and potential vulnerabilities.
• Continuous Monitoring: Implement continuous monitoring to detect and establish prevention measures against ICT risks.
• Anomaly Detection: Establish prompt detection mechanisms for anomalous activities to ensure quick response and mitigation.
• Recovery Plans: Develop and maintain recovery plans that include yearly testing to ensure preparedness and effectiveness in the event of an incident.

2. Incident Management

Early Warning and Reporting

DORA mandates the establishment of early warning systems and the reporting of major ICT-related incidents to authorities. This ensures that incidents are managed efficiently and transparently.

Reporting Process

• Log Classification: Streamline the classification of logs to determine major incidents based on criteria specified by the European Supervisory Authorities.
• Incident Reports: Upon identification of an ICT-related incident, you are required to submit an initial report, followed by intermediate and final reports to provide comprehensive updates and resolutions.

3. Digital Operational Resilience Testing

Basic and Advanced Testing

To ensure systems can withstand disruptions, DORA requires both basic and advanced digital operational resilience testing. This rigorous testing framework is designed to uncover vulnerabilities and enhance system robustness.

Testing Requirements

• Annual ICT Testing: Conduct annual ICT testing of tools and systems to verify their resilience.
• Threat-Led Penetration Testing: Perform advanced threat-led penetration testing to simulate real-world cyber attacks and identify weaknesses.
• Third-Party Cooperation: Ensure full cooperation from third-party service providers during the testing period to validate the resilience of the entire ecosystem.

4. Third-Party Risk Management

Managing External Risks

DORA emphasizes the importance of managing risks associated with third-party ICT service providers. Financial institutions must have comprehensive oversight of their third-party relationships.

Management Strategies

• Complete Register: Maintain a complete register of all third-party providers and their activities.
• Risk Monitoring: Continuously monitor risks relevant to third-party suppliers to ensure they do not compromise your institution’s resilience.
• Contract Revisions: Revise all contracts with third parties to include necessary clauses such as full-service descriptions and information on data processing locations.

5. Information Sharing

Cyber Threat Intelligence Exchange

DORA encourages financial institutions to exchange cyber threat intelligence, fostering a collaborative approach to threat detection and mitigation.

Information Sharing Arrangements

• Inter-Entity Arrangements: Establish agreements between financial entities to share cyber threat intelligence, enhancing collective security.
• Supervisory Authority Guidance: Utilize anonymized information and intelligence provided by supervisory authorities to stay informed about current threats and vulnerabilities.

Final Thoughts

Compliance with DORA is not merely a regulatory obligation but a strategic imperative for financial institutions aiming to fortify their digital operational resilience. By focusing on the five pillars of DORA—Risk Management, Incident Management, Digital Operational Resilience Testing, Third-Party Risk Management, and Information Sharing—financial institutions can significantly enhance their ability to withstand and recover from ICT-related disruptions.

Embracing these principles ensures not only regulatory compliance but also the trust and confidence of customers and stakeholders in an increasingly digital financial landscape. Stay informed, stay resilient, and make DORA compliance a top priority for your financial institution.