What is DORA? How to prepare your business for compliance
Digital resiliency is one of the financial sector’s most significant challenges today.
Resiliency refers to an organization’s ability to detect, respond and recover from any digital threats or disruptions in their operations, including cyberattacks, data breaches, system failures, human errors, and other risks.
Resiliency is essential to the continuity of operations and financial data protection. For this reason, the European Union has recently introduced the Digital Operational Resilience Act (DORA), which sets out requirements for digital resilience within financial services organizations.
DORA in the EU and UK
By 2025, DORA will come into force in the EU and UK. This law will require all financial firms to have appropriate digital operational resilience capabilities.
DORA has been introduced to ensure that all financial institutions can detect, respond to, and recover from digital operational incidents with minimal disruption and damage. It sets out specific requirements for financial organizations, including having robust risk management processes, effective monitoring and communication systems to identify threats quickly, and detailed plans for recovering operations after an incident.
DORA addresses various aspects of operational risk, including cyber risks, IT security, outsourcing, and third-party risks.
What are the key pillars of DORA?
DORA has several key objectives:
- Strengthen the stability and reliability of the financial system in the digital age by addressing various aspects of operational risk, including cyber risks, IT security, outsourcing, and third-party risks, among others.
- Promote regulatory consistency and harmonization within the EU’s financial services sector by setting uniform standards and practices for digital operational resilience.
- Improve the transparency and accountability of financial institutions by requiring firms to carry out regular tests and assessments to demonstrate their resilience to operational threats.
- Ensure the proper functioning of the internal market for financial services by enabling financial institutions to operate across borders with greater ease and efficiency.
With DORA, financial institutions will be held to higher resilience standards and must conduct regular tests and assessments to demonstrate their ability to cope with unforeseen events. Financial institutions must take DORA seriously, as the consequences of failing to comply could be severe – including hefty fines and reputational damage.
Here are five reasons why financial entities should prioritize compliance with DORA:
- Avoid hefty fines: Financial entities failing to comply with DORA could face significant financial penalties and regulatory sanctions, harming their bottom line and reputations.
- Enhance operational resilience: DORA encourages financial entities to adopt robust processes and controls for managing cyber and operational risks, which can help to reduce the likelihood and impact of digital disruptions.
- Increase customer trust: By complying with DORA, financial entities can demonstrate their commitment to protecting the security of their customer’s personal and financial data, which can enhance customer trust and loyalty.
- Improve regulatory consistency and harmonization: DORA aims to promote a uniform set of standards and practices for digital operational resilience across the EU’s financial services sector, which can help to reduce regulatory fragmentation and improve cross-border cooperation.
- Future-proof your business: By embracing DORA, financial entities can stay ahead of the curve and future-proof their business against emerging cyber and digital risks, which can help to ensure their long-term viability and competitiveness.
Challenges of complying with DORA
While DORA aims to improve the stability and reliability of financial systems, compliance with its requirements can also pose several challenges to financial entities, such as:
- Complex regulatory framework: Financial entities must navigate a complex legal and regulatory framework to comply with DORA, which may involve adapting their existing compliance frameworks or implementing new ones.
- Operational complexity: Complying with DORA requires financial entities to manage various operational risks across multiple business lines, which can be complex and time-consuming.
- Costly infrastructure upgrades: Financial entities may need to invest heavily in digital infrastructure and cybersecurity measures to meet DORA requirements, which could be expensive and distract from other strategic priorities.
- Resource constraints: Compliance with DORA may require additional resources, skilled professionals, and expertise that may be in short supply, especially for smaller financial institutions.
- Inter-jurisdictional issues: Financial entities operating across borders may face challenges reconciling different regulatory standards and requirements, making compliance with DORA more complex
Despite these challenges, financial entities cannot afford to ignore DORA. Non-compliance is not an option, and financial entities must find ways to balance the challenges of compliance with the benefits of a more digitally secure and resilient financial system.
Outpost24 and DORA compliance
Outpost24 offers a comprehensive product suite that can help financial institutions comply with the DORA requirements.
- Cyber threat intelligence: Outpost24’s Threat Compass solution offers automated, actionable, and targeted threat intelligence to help you discover how your businesses is being targeted by threat actors, and if it is already exposed.
- Web Application Security: Outpost24’s Pen Testing as a Service (PTaaS) solution includes continuous monitoring to help secure your web applications, and be compliant with DORA’s cyber risk management requirements.
- Risk-based vulnerability management: Outpost24’s Risk-Based Vulnerability Management solution diagnoses network and cloud security issues with actionable insights based on relevant risk to advance your organization’s security remediation activities.
- Managed Services: Outpost24’s Managed Services provides complete and continuous expert guidance to reduce your attack surface. Working as an extension of your security team, Outpost24’s Managed Services makes it easier to achieve compliance with DORA and other regulatory frameworks.
By leveraging Outpost24’s product suite and services, financial institutions can improve their digital operational resilience, reduce risk exposure, and enhance compliance with DORA and other regulatory frameworks.