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Understanding the Dora Compliance: A Comprehensive Guide - Information Security Consulting Company - VISTA InfoSec
Technology is always brimming with advancements, and it is more prominent in the financial sector. As financial institutions increasingly rely on digital infrastructure to enhance operations, customer experience, and security, they also face growing challenges in mitigating the risks that come with it, such as cyber threats, system failures, and other operational vulnerabilities. To face these digital risks, the European Union introduced the Digital Operational Resilience Act (DORA), a regulation designed to ensure that financial entities can withstand and recover from digital disruptions. So, what exactly is DORA, how does it help mitigate risks and maintain resilience within the financial sector, and how can businesses effectively prepare for its requirements? Let’s see. This guide will help you to get an overview of DORA so that you can effectively navigate its compliance requirements and enhance your organization’s digital resilience in the financial sector. What you need to know about DORA? Due to the advancement of technology, there is always stiff competition among organizations serving in the same sector, and this also applies to financial entities. As per a survey conducted by Dragonfly Financial Technologies at the beginning of the year 2024, 92% of banks planned to maintain or increase their technology investments in 2024. Since banks are a crucial part of the financial ecosystem, their actions have a ripple effect on other financial entities, so this shows how crucial it is for financial institutions to stay ahead in their digital transformation journey. At the same time, it shows the need for secure systems and frameworks to counter the digital threads that come along with the advancements in technology. Digital Operational Resilience Act is a new regulation (EU) 2022/2554, published in 2022 in the Official Journal of the EU, and came into force on 16 January 2023. It is a security based framework designed to strengthen the digital resilience of financial institutions by ensuring they can withstand and recover from IT-related disruptions such as cyberattacks, system outages, and data breaches. By implementing DORA, the EU seeks to create a unified approach across its member states, ensuring a higher level of digital operational resilience and mitigating the risk of widespread disruption in the financial system. The financial entities operating within the EU, as well as third-party service providers outside the EU that engage with financial institutions located within the EU, are required to comply with DORA by 17 January 2025. After this deadline, non-compliance could lead to legal consequences and penalties, including fines of up to 2% of an entity’s annual global turnover or periodic penalties based on average daily turnover until compliance is achieved. The purpose of DORA Compliance At its core, the purpose of DORA compliance is to ensure that financial institutions maintain high levels of digital operational resilience and aims to: Protect the Financial System: DORA ensures that financial institutions remain operational, even in the face of major digital incidents. Promote Confidence: By setting strict standards, DORA builds consumer and market confidence in the stability of financial services. Harmonize Regulations: DORA creates a uniform set of rules across the EU, eliminating the inconsistent regulatory frameworks currently in place. Who will DORA apply to? DORA applies to a wide range of financial entities that are either based in the European Union or operate within its financial ecosystem. Here are the 21 entities that fall under the scope of DORA: Banks Credit Institutions Payment Service Providers Electronic Money Institutions Investment Firms Asset Management Companies Insurance Companies Reinsurance Firms Central Securities Depositories (CSDs) Credit Rating Agencies Securities Trading Venues Central Counterparties (CCPs) Pension Funds Investment Funds Crowdfunding Platforms Payment Systems Data Reporting Services Providers Financial Market Infrastructures (FMIs) Credit Unions Financial Holding Companies Outsourced ICT Providers for Financial Institutions 5 Pillars of DORA Compliance 1. ICT Risk Management The first pillar of the DORA ICT risk management implies that financial entities must implement strong risk management frameworks to identify, assess, and mitigate risks related to Information and Communication Technology (ICT). This includes regular risk assessments, controls, and monitoring mechanisms to address vulnerabilities and threats. 2. Incident Reporting DORA mandates timely and standardized reporting of significant ICT-related incidents, such as cyberattacks or system failures. This ensures that supervisory authorities are informed promptly and can respond effectively to mitigate further impact. 3. Digital Operational Resilience Testing Financial institutions must regularly test their operational resilience through various means, such as penetration testing, vulnerability assessments, and simulation exercises. This ensures that systems can withstand and recover from disruptions. 4. ICT Third-Party Risk Management Since financial entities often rely on third-party service providers (such as cloud services), DORA ensures that these providers will meet resilience standards, by including comprehensive risk assessments, contractual obligations, and regular monitoring of third-party services. 5. Information Sharing DORA encourages financial institutions to share information related to cyber threats and vulnerabilities with one another and relevant authorities to improve collective security. This helps create a collaborative environment for managing emerging risks in the financial ecosystem. These pillars work together to create a DORA framework that enhances the overall digital resilience of financial institutions, ensuring they are prepared for any technological disruption. How VISTA InfoSec can help you achieve DORA compliance? Achieving full compliance with DORA’s regulatory requirements can be a complex and resource-intensive process. This is where VISTA InfoSec’s expert consulting and audit service comes into play. As a trusted name in cybersecurity and compliance (since 2004), we offer tailored solutions to help financial institutions navigate the complexities of DORA. Our DORA Compliance and audit service includes a thorough gap assessment to identify areas where your organization may fall short, followed by the development of risk management frameworks, operational resilience testing, and then third-party risk assessments. We also assist with setting up incident reporting structures and ongoing monitoring, ensuring your organization remains compliant with evolving regulations and resilient against digital threats ensuring your organization not only meets DORA’s stringent standards but also strengthens its overall digital operational resilience. When your organization is fully ready, our independent audit arm, will then conduct
DORA Compliance Checklist: Essential Steps for Successful Implementation
DORA is an EU-based regulation that is going to be effective from January 17, 2025. It is a digital security framework that works alongside the General Data Protection Regulation (GDPR) to provide strong security protection to financial entities and ICT service providers from cybercrimes. Generally, every financial entity and ICT service provider inside or outside the EU that does business with the EU entities has to comply with DORA. This is because the DORA framework is designed to help the entities not only to stand and recover from digital disruptions, it is to keep the organization safe from digital threats so that they can grow and stay stable. Discover more about DORA in our comprehensive guide on DORA and its 5 Pillars. If you are running a financial institution and wondering how to apply DORA in your existing infrastructure and want to learn about the DORA compliance checklist. You are in the right place, today we are going to explore the DORA compliance checklist and how to implement the new regulation successfully. The DORA compliance checklist The DORA compliance checklist is a thorough and proactive approach designed to make compliance easier to adopt for financial organizations and ICT third-party service providers. It helps the organization systematically address potential vulnerabilities and enhance cyber resilience. Below we have the standard checklist for the DORA compliance, so let’s get started. 1. Define the scope of compliance As per Article 2, there are a number of financial entities and non-financial entities like ICT- third-party service providers that fall under the DORA scope. To determine whether your organization is subject to DORA, it is important to identify the systems, processes, and any services offered that fall under the DORA regulatory requirements. 2. Conduct a DORA gap analysis Conducting a DORA gap analysis is essential for evaluating the effectiveness of your current ICT risk management and operational measures in relation to the requirements outlined in Article 6 of DORA. This comprehensive assessment identifies any discrepancies between your existing frameworks and the regulatory standards, enabling you to pinpoint areas that require enhancement. 3. Develop a remediation plan Once gaps are identified, the next step is to create a roadmap for addressing them. This roadmap should outline necessary remediation actions, timelines, and responsible parties. 4. Identify key third-party ICT providers DORA compliance places a significant emphasis on third-party risk management as outlined in Article 28. Identifying the critical ICT providers and ensuring they comply is essential for ensuring the resilience of your supply chain. 5. Implement a threat led penetration testing (TLPT) strategy Threat-led penetration testing, or TLPT, is vital for testing the resilience of your ICT systems against emerging threats. This testing ensures your organization’s ability to respond to real-world cyberattacks. 6. Develop an incident response plan An effective incident response plan is crucial for promptly managing and mitigating ICT disruptions. DORA Article 17 requires institutions to have a robust strategy for addressing incidents and restoring normal operations. 7. Continuous ICT system monitoring Continuous monitoring of ICT systems is a key requirement under Article 11 of DORA. Financial entities must have proactive measures in place to detect and respond to potential risks and vulnerabilities in real-time. 8. Understand the responsibilities for ICT risk management According to Article 5, the board of directors is accountable for ensuring the integration of ICT risk management into the organization’s governance. This means that board members must be involved in overseeing and approving all ICT risk management strategies. 9. Review and update compliance efforts regularly DORA compliance is not a one-time effort; it requires ongoing updates to ICT risk management and resilience strategies as new threats emerge. Regular reviews and audits ensure your systems and processes stay aligned with regulatory changes. Best practices for implementing the DORA compliance 1. Engage leadership and cross-departmental teams Ensure that leadership, including the board of directors, is actively involved in the DORA compliance process. Collaboration between departments, such as IT, compliance, risk, and legal, is crucial for a unified approach to managing ICT risks. 2. Integrate compliance into daily operations Embed the DORA requirements into your organization’s operational processes. This could be from risk assessments to incident response, by incorporating these practices into day-to-day workflows you strengthen your organization’s resilience. 3. Invest in advanced cybersecurity solutions Given the evolving threat landscape, make sure to invest in advanced cybersecurity tools for real-time monitoring, anomaly detection, and automated response which can make DORA compliance more effective and sustainable. 4. Conduct regular training and awareness programs Employees should be well-versed in identifying and responding to cyber threats and this could be achieved by giving regular trainings so that staff remain aware of new threats and the role they play in maintaining cybersecurity standards. 5. Strengthen third-party risk management As third-party ICT providers play a crucial role in DORA compliance, establish a robust due diligence and assessment program. Plus, make sure to continuously monitor these providers to ensure they meet the required standards and maintain transparency in their security measures. 6. Prioritize data integrity and confidentiality Strengthen the data protection and privacy protocols, especially for sensitive financial information, also ensure that data handling practices align with GDPR and DORA requirements to prevent breaches and unauthorized access. 7. Develop a comprehensive communication plan Establish a clear communication strategy to inform stakeholders, clients, and regulators immediately in the event of an ICT incident. Having a transparent approach will reinforce trust and will help you manage reputational risk. 8. Prepare for compliance audits Document all compliance efforts meticulously, from gap analyses and risk assessments to remediation actions. This documentation will facilitate smoother audits and demonstrate proactive compliance with DORA requirements. 9. Adapt to emerging threats with a dynamic strategy Cyber threats are continually evolving, so a rigid compliance approach may fall short. Therefore, adopt a flexible, adaptive approach to update your resilience strategy regularly, leveraging insights from past incidents and emerging threat intelligence. 10. Engage qualified external auditors for regular assessments DORA highlights the need for entities to periodically review and adjust