DORA compliance was introduced in response to growing cybersecurity threats and incidents that exposed vulnerabilities in the financial sector. For example, the 2018 cyberattack on the European Central Bank’s payment system and the widespread 2017 WannaCry ransomware attack highlighted the need for stronger digital resilience measures. These events demonstrated how quickly ICT-related disruptions can escalate, affecting financial institutions, markets, and customer trust.
Trustpair helps financial institutions meet DORA compliance by enhancing third-party risk management and ensuring secure payment processes. With its advanced platform for verifying bank account ownership and preventing vendor fraud, it helps organizations manage ICT risks and ensure systems can withstand and recover from disruptions, meeting DORA’s requirements. Contact an expert to learn more!
What is DORA compliance?
The Digital Operational Resilience Act (DORA) is a regulation introduced by the European Union aimed at ensuring the operational resilience of financial institutions in the face of growing digital risks. It sets clear requirements for financial entities, including banks, investment firms, and insurers, to manage and mitigate risks associated with Information and Communication Technology (ICT) systems.
DORA focuses on several key areas: risk management, incident reporting, resilience testing, and the oversight of third-party ICT service providers. It mandates that organizations put in place comprehensive strategies to prevent and respond to ICT-related disruptions, such as cyberattacks or system failures, ensuring that they can maintain critical functions even during emergencies.
The regulation also emphasizes the need for financial institutions to assess and manage risks arising from their relationships with third-party providers, ensuring that external services do not compromise operational stability. Achieving DORA compliance is crucial for safeguarding customer data, minimizing financial losses, and ensuring business continuity.
Key requirements of the DORA compliance
DORA establishes clear guidelines for financial institutions and their ICT service providers to enhance digital operational resilience. The key requirements include:
- ICT risk management: Financial entities must identify, assess, and mitigate ICT risks through comprehensive risk management frameworks that address vulnerabilities across systems, networks, and processes.
- Incident reporting: Organizations are required to report ICT-related incidents, such as cyberattacks or system failures, to regulatory authorities within specified timeframes. This ensures transparency and allows for coordinated responses to minimize impacts.
- Resilience testing: Regular operational resilience testing, including penetration tests and scenario analysis, is mandatory to ensure financial institutions can withstand disruptions and recover critical functions promptly.
- Third-party risk management: Financial entities must evaluate and monitor risks arising from their ICT service providers. Contracts with third-party providers must include provisions for compliance with DORA, ensuring no external vulnerabilities jeopardize operational stability.
- Information sharing and oversight: Organizations are encouraged to share threat intelligence and collaborate with authorities and peers to strengthen overall resilience across the sector.
By meeting these requirements, financial institutions can safeguard their operations, protect customer data, and maintain trust in a rapidly evolving digital landscape.
Steps to receive DORA compliance for your organization
Achieving DORA compliance requires a tailored approach to ensure your organization meets regulatory requirements while strengthening operational resilience. Here’s how to get started:
- Map and assess ICT risks: Conduct a detailed audit of your ICT systems, such as payment processing platforms and customer data storage. For instance, identify risks like outdated software that could be vulnerable to ransomware attacks or assess dependencies on critical third-party providers.
- Establish a risk management framework: Develop a strategy to monitor, mitigate, and respond to ICT risks. For example, implement multi-factor authentication (MFA) to prevent unauthorized access to sensitive financial data and establish protocols for managing phishing attempts targeting employees.
- Set Up incident reporting procedures: Create a process for identifying and reporting ICT-related incidents, such as a data breach or DDoS attack. For example, ensure your team can notify the relevant regulatory authority, like the Financial Conduct Authority (FCA), within the required timeframe to comply with DORA standards.
- Conduct targeted resilience testing: Test your systems through realistic scenarios. For instance, simulate a supplier’s ICT failure and measure how quickly your organization can reroute payments or recover operations without significant downtime.
- Strengthen third-party oversight: Assess the risk levels of your ICT vendors. For example, evaluate a cloud service provider’s disaster recovery plans and ensure their security measures align with DORA requirements. Regularly monitor their compliance through automated tools to reduce dependency risks.
- Implement governance controls: Assign specific roles to manage DORA compliance, such as appointing an operational resilience officer to oversee testing and reporting. Additionally, establish a committee to review ICT risks and audit responses quarterly.
- Leverage advanced technology solutions: Use platforms like Trustpair to automate vendor risk assessments, verify bank account ownership, and ensure payment security. For example, the platform can help identify fraudulent account details before transactions are processed, aligning with DORA’s operational resilience goals.
- Train and empower employees: Organize cybersecurity workshops for employees to recognize and report ICT threats, such as phishing emails targeting sensitive financial accounts. Build an organizational culture that prioritizes resilience and regulatory compliance.
The role of ICT Party Risk in achieving operational resilience
Managing ICT party risk is a cornerstone of achieving operational resilience under DORA. Financial institutions increasingly rely on third-party ICT service providers for critical functions, from cloud storage to payment processing. However, these dependencies can also create vulnerabilities. A single failure or cyberattack affecting a provider can cascade into widespread disruptions.
Imagine a scenario where your cloud service provider suffers a ransomware attack, locking you out of critical customer data for days. Without proper risk management and contingency plans, your operations could grind to a halt, causing financial losses and regulatory penalties.
Risk management checklist: Is your ICT vendor relationship resilient?
- Does your vendor have robust incident response protocols in place?
- Are they regularly conducting resilience testing, including penetration testing?
- Do your contracts include provisions for DORA compliance and incident reporting?
- Is your organization monitoring its adherence to agreed security standards?
- Have you reviewed their disaster recovery and business continuity plans?
If you answered “no” to any of the above, your vendor relationships may need immediate attention.
Proactive steps for managing ICT party risk
- Conduct thorough due diligence: Before onboarding a provider, assess their operational resilience measures. Look for certifications like ISO 27001 or SOC 2 compliance.
- Monitor performance in real-time: Use advanced monitoring tools to track vendor activities ensuring ICT risks are addressed promptly and operations stay secure.
- Diversify critical services: Avoid over-reliance on a single provider. For instance, split your payment processing across multiple platforms to minimize downtime risks.
To conclude
DORA compliance is vital for financial institutions to enhance resilience and protect operations. By addressing ICT risks and strengthening third-party oversight, organizations can meet regulatory requirements and ensure stability.
Trustpair allows organizations to track vendor activities and spot potential risks in real time. Its platform improves oversight, reduces ICT vulnerabilities, and helps maintain operational continuity in line with DORA requirements.
