TABLE OF CONTENTS
With the enforcement of the Digital Operational Resilience Act (DORA), the financial regulatory landscape in the EU is all set to be reshaped. Introduced by the European Region, DORA mandates a robust and unified framework for managing Information and Communication Technology (ICT) risks for financial entities. Effective from January 17, 2025, the regulation aims to ensure that the financial sector in EU region remains resilient through ICT-related disruptions such as cyberattacks, data breaches, or third-party service outages.
Non-compliance with DORA can lead to significant financial penalties, regulatory scrutiny, and reputational damage. This guide dives into the core requirements of DORA, its implications for financial institutions, and a step-by-step roadmap to navigate the compliance journey.
What is the Digital Operational Resilience Act (DORA)?
DORA is a regulatory framework, introduced by the European Union, aimed at strengthening digital operational resilience for financial institutions. It applies to a number of entities, including banks, insurance companies, investment firms, and critical third-party ICT service providers.
Key Objectives:
- Ensure continuity of financial services during ICT-related disruptions.
- Harmonise digital risk management requirements across the EU.
- Improve incident response and communication between firms and regulators.
The main aim of DORA is shifting the focus from reactive incident management to proactive risk mitigation and continuous operational resilience.
Assess Your Organisation’s Current DORA Maturity
The Five Pillars of DORA
DORA regulatory framework is built on the principle that financial entities across the EU must demonstrate not only technical compliance but also a culture of resilience throughout their operations. Here’s a look at the five key pillars of DORA and their requirements:
1. ICT Risk Management
- Establish, document, and maintain a robust ICT risk management framework that’s fully integrated with the overall risk management processes.
- Identify all ICT-related risks and evaluate their potential impact.
- Implement security policies, tools, and controls to protect systems, data, and processes.
- Deploy monitoring tools and processes to quickly identify anomalies and potential security incidents.
- Develop detailed response and recovery plans specifically for ICT disruptions.
- Regularly review and update the regulatory framework to address evolving threats.
2. ICT Incident Reporting
- Develop a system to classify incidents based on specific criteria including number of affected clients, duration, geographic spread, and data loss.
- Clear thresholds to determine which incidents qualify as “major” and require regulatory reporting.
- Detailed information about the incident, its impact, root causes, and mitigation.
- Comprehensive internal logs of all incidents.
- Clear protocols for informing customers and stakeholders about incidents that affect services.
3. Digital Operational Resilience Testing
- Conduct regular vulnerability assessments and security tests.
- Conduct threat-led penetration testing (TLPT) using advanced techniques that simulate real-world attacks.
- Must cover critical systems, applications, and infrastructure components.
- Formal process for addressing vulnerabilities identified during testing.
- Test reports must be documented and available for regulatory review.
4. ICT Third-Party Risk Management
- Comprehensive assessment of potential ICT service providers before engagement.
- Mandatory clauses in service agreements covering security measures, audit rights, service levels, and termination provisions.
- Identification and management of risks arising from dependency on major ICT service providers.
- Development of comprehensive exit plans for critical service relationships.
- Ongoing monitoring of service provider performance and compliance.
- Additional requirements for providers designated as “critical” based on their importance.
- Controls over how service providers may further outsource services.
5. Information Sharing
- Participation in frameworks to share information about emerging threats, vulnerabilities, and attack techniques.
- Formation of collaborative structures to enhance preparedness against threats.
- Exchange of effective strategies, controls, and mitigation techniques.
- Guidelines for how financial entities should contribute to and benefit from information-sharing arrangements.
- Ensure necessary safeguards to protect sensitive information
- Framework for how supervisory authorities coordinate and share information across borders.
DORA as a Strategic Advantage
DORA is not only a mandate but also a paradigm shift for financial organisations to move away from siloed risk control to unified digital operational resilience. It presents an opportunity for financial institutions to strengthen their current risk frameworks to ensure greater transparency, resilience, and competitive advantage.
To comply with DORA, organisations must build an integrated framework that covers:
- Mapping of ICT assets and dependencies.
- Risk identification, categorisation, and mitigation.
- Incident detection, classification, and response.
- Vendor governance and performance monitoring.
- Ongoing resilience testing and improvement.
- Board-level oversight and audit readiness.
Step-by-Step Guide to Achieving DORA Compliance
1. Map Critical Business Processes and ICT Dependencies
- Identify where ICT systems support operations.
- Document dependencies at the task level to pinpoint potential failure points.
2. Establish an ICT Risk Management Framework
- Define risk categories specific to ICT.
- Link risks to operational processes and assign clear ownership.
3. Embed Controls at the Task Level
- Define preventive and detective controls within mapped processes.
- Test their effectiveness against potential disruptions and refine where needed.
4. Capture and Classify ICT Incidents
- Use a centralised platform to log incidents with severity ratings and linked processes.
- Ensure escalation paths are predefined.
5. Conduct Root Cause Analysis and Update Procedures
- Perform post-incident reviews to identify the root cause.
- Update both the incident management process and affected business process accordingly.
6. Establish Third-Party Governance Structures
- Map which vendors support which processes.
- Define and monitor SLAs, breach notification workflows, and access controls.
7. Simulate Operational Disruptions and Test Resilience
- Run ICT disruption scenarios to validate process robustness.
- Document results and feed insights into continuous improvement.
8. Maintain Audit-Ready Logs and Documentation
- Version-control all process, risk, and control changes.
- Maintain exportable logs for DORA-aligned regulatory reviews.
9. Enable Board-Level Risk Oversight
- Use dashboards and reports to provide senior leaders with insights into ICT risk posture and resilience measures.
10. Continuously Improve Resilience
- Implement feedback loops to adapt controls and processes based on real-world incidents and testing outcomes.
How BPM Can Simplify and Accelerate Compliance
Business Process Management (BPM) platforms such as PRIME BPM can not only empower financial institutions to meet regulatory requirements, like DORA, but also help create a foundation for embedding compliance into day-to-day activities. From providing complete ICT visibility to linking risks and controls at the task level to maintaining audit-ready records, PRIME BPM empowers organisations to meet key regulatory requirements from a single integrated interface.
Explore the complete functionalities of PRIME BPM to simplify your DORA compliance journey and take a 15-day Free Trial.