by Panagiota Lagou – ADACOM Senior Manager in Cybersecurity Consulting
Today, digital operations form the backbone of business infrastructure. Ensuring resilience against cyber threats is paramount. The Digital Operational Resilience Act (DORA) represents a significant step in fortifying the financial sector's digital defenses against major economic threats.
As financial institutions’ systems within the European Union (EU) are prime and lucrative targets for cybercriminals, DORA regulation emerges to transform the way the financial sector guards against and overcomes the ever-evolving cybersecurity threat landscape.
The Genesis of DORA
The Digital Operational Resilience Act (DORA) is a legislative initiative by the European Union that entered into force on 16 January 2023 and was applied on 17 January 2025. It aims to enhance the digital resilience of the financial sector by addressing the increasing frequency and sophistication of cyber threats and ensuring that financial entities can withstand, respond to, and recover from such incidents without significant disruption.
DORA was conceived in response to the growing digital interconnectedness of financial services and the corresponding rise in cyber threats. It builds upon existing regulations but introduces a more comprehensive framework tailored to the complexities of the digital age. The initiative reflects the EU's recognition that operational resilience is critical not just for individual institutions but for the stability of the entire financial system.
DORA’s Overview
DORA covers 20 distinct categories of financial entities, such as banks, insurance providers, investment firms, cryptocurrency asset service providers, and crucial third parties that supply Information and Communication Technology (ICT) related services to financial businesses. DORA complements NIS2 Directive and aligns with the Commission's goal for a digital, innovative and secure European market.
DORA establishes a unified approach based on five pillars to digital operational resilience for financial entities, emphasizing robust risk management frameworks to handle ICT risks. It mandates a standardized process for reporting ICT-related incidents to regulators and ensures operational continuity through effective continuity plans.
Third-party service providers, especially those offering critical ICT services, play a crucial role under DORA. Chapter V of DORA addresses the management of ICT third-party risk to guarantee that providers are resilient and reliable. This pillar mandates that financial entities conduct due diligence by evaluating their third-party providers' resilience and security practices.
Additionally, banks and financial institutions must implement continuous monitoring to ensure their providers maintain high resilience standards over time. Contracts with third-party providers must also include specific provisions to comply with DORA requirements, ensuring that all parties adhere to regulatory standards.
Objectives Toward Operational Resilience
DORA represents a significant advancement in the EU's approach to digital operational resilience, aiming to:
● Enhance Digital Resilience: Ensure that financial entities are well-prepared to withstand and recover from cyber incidents. This includes implementing robust cybersecurity measures, creating comprehensive incident response plans, regularly testing and updating these protocols to address emerging threats, and maintaining trust in the financial system.
● Standardize Practices: Create a uniform approach to digital resilience across the European Union. This involves establishing common standards and guidelines that all financial entities must follow, thereby reducing inconsistencies in cybersecurity practices. Standardization facilitates better coordination and communication among entities, regulators, and other stakeholders, making managing and mitigating risks collectively easier.
● Protect Consumers: Financial entities are required to implement stringent data protection measures to safeguard consumers’ data and maintain trust in the financial system. These measures ensure that sensitive information is secure from breaches and unauthorized access.
● Support Market Stability: Prevent systemic risks that could destabilize financial markets. Cyber incidents can have far-reaching impacts, potentially affecting multiple institutions and causing widespread disruption.
Benefits Beyond Compliance
The importance of DORA cannot be overstated. As financial services become increasingly digital, the potential impact of cyber incidents grows. DORA aims to mitigate these risks, ensuring that financial entities are protected and can recover swiftly from any disruptions.
The DORA brings numerous benefits to the financial sector, starting with enhanced security. By mandating comprehensive risk management and incident reporting, DORA significantly bolsters the security posture of financial entities, ensuring they are better equipped to handle cyber threats.
Additionally, the Act's emphasis on continuity plans and regular testing strengthens resilience, enabling organizations to withstand and recover swiftly from disruptions. This proactive approach protects individual entities and safeguards the broader financial ecosystem.
Moreover, DORA's implementation fosters standardization across the EU, reducing regulatory fragmentation and establishing a level playing field for all financial institutions. This uniform approach to digital resilience simplifies compliance and enhances coordination among entities. As mandated by DORA, increased resilience and transparency play a crucial role in bolstering consumer trust in financial services, ensuring that customers feel secure and confident.
Ultimately, by protecting the financial system from severe disruptions and cascading failures, DORA contributes to overall market stability and confidence, promoting a robust and reliable financial environment.
Adoption Guidelines for Financial Businesses
To adopt DORA effectively while ensuring compliance with other related regulations such as NIS2 and GDPR, financial institutions should go through the following steps:
● Assess Current Capabilities: Evaluate existing ICT risk management and resilience practices and identify any gaps.
● Develop a Compliance Strategy: Create a detailed plan to meet DORA requirements, including timelines and resource allocation.
● Enhance Governance Structures: Establish or update governance frameworks to oversee ICT risk management including risk originating from third-party providers.
● Implement Robust Risk Management: Develop and implement comprehensive ICT risk management policies and strategies.
● Regular Testing and Monitoring: Conduct regular resilience testing and continuous monitoring of ICT systems.
● Engage Third-Party Providers: Ensure third-party providers are aware of and comply with DORA requirements.
● Training and Awareness: Educate staff on DORA requirements and the importance of digital resilience.
Enhance Operational Resilience with DORA
Looking forward, the EU is going to develop and publish the all too important technical standards to specify how competent authorities and market participants shall comply with the obligations laid down in the regulation. Businesses that proactively adopt and integrate DORA's principles and standards will be better positioned to navigate future challenges.
DORA is a strategic initiative that enhances the security, stability, and trust in the financial system. Business leaders should view it as an opportunity to strengthen their digital defenses and ensure long-term operational resilience.
Contact ADACOM’s experts to arrange a consultation on how to comply with DORA and make your organization resilient to evolving cyber threats.