Digital resilience is finally becoming recognized for the importance it deserves. The idea refers to the capacity of an organization to maintain essential operations during disruptions – which we can think of as worst-case scenarios like cyberattacks or even natural disasters.
The Digital Operational Resilience Act (DORA), is not a suggestion. It is mandatory. It’s a new EU regulation designed to reinforce the digital backbone of the financial sector and ensure stability.
Although many firms may roll their eyes at more red tape and hoop-jumping, DORA is important. It’s looking to standardize how financial firms manage digital risk across the bloc, and with cyber threats escalating, operational disruptions are actually more frequent.
Key Pillars of the Digital Operational Resilience Act (DORA)
DORA rests on a few key pillars.
ICT Risk Management
First, comprehensive ICT risk management is priority mandatory. Organizations must identify, assess and then mitigate all ICT-related risks. Clear lines of responsibility are essential.
Incident Reporting
Second, incident reporting is needed. ICT incidents must be reported to authorities promptly and a structured response protocol is required.
Resilience Testing
Third, DORA mandates digital operational resilience testing. This includes vulnerability assessments penetration testing and scenario analysis – companies like Tarlogic help to find system weaknesses.
Third Party Risk
Fourth, third-party risk management is heavily emphasized. Financial institutions are now required to perform due diligence on ICT service providers. Robust contracts and constant oversight are needed too.
Information Sharing
Finally DORA encourages information sharing. This allows for collaborative threat intelligence exchanges strengthening collective defenses.
Who is Impacted by DORA?
DORA directly affects regulated financial entities, and it has increase the demand for banking cybersecurity solutions. Banks insurance firms, investment companies and payment service providers are all in scope. But its reach is actually far broader than that, with third-party ICT service providers being included, as stated above. These are the essential technology partners that financial firms depend on. So, any organization supporting the financial ecosystem will feel DORA’s impact.
Supply Chain Impact
Even smaller companies offering cloud solutions or cybersecurity services are affected, with the intention to create a ripple effect – many businesses need to be aware of and understand the legislation as DORA’s influence is wider than some might assume.
What Must Organizations Do?
Frameworks and Reporting
A key implication is to begin establishing a strong risk management frameworks, with a focus on risk identification mitigation and clear accountability, along with an incident response processes. Regulators must be informed promptly of any significant cyber incident.
Testing and Due Diligence
Resilience testing will require frequent and thorough testing of systems and processes, with robust third-party management due diligence and continuous oversight is also vital. Remember, contracts must clearly define responsibilities.
Organizational Culture
It’s important not to overlook the size of these implications, and the likely need for a culture change. Digital resilience awareness needs to be embedded at all levels of a business, achieved through training and awareness programs.
Implementing DORA isn’t without challenges, and investment will be needed. Smaller institutions may struggle with the resources, though they can often have an adaptive potential for fast change. Outside assistance is likely needed for both small and large firms, and adjacent industries need to take note – because they may be next.
