DORA simply explained: How companies in the financial sector can remain compliant in the long term
Product, 03/12/2024
How financial companies and financial services companies can enhance their digital operational resilience through sustainable risk management
With the Digital Operational Resilience Act (DORA) the EU has created a regulation to help financial sector companies strengthen their resilience against disruptions in information and communication technology (ICT). At first glance, DORA may seem complex, but upon closer inspection it reveals a clear and structured roadmap to minimize risks and ensure security. The key to planning appropriate measures lies in continuous review and systematic updates.
Digital age: Opportunity and risk for Financial and Financial Services Companies
The digital transformation has profoundly changed the financial sector. While new technologies like cloud computing and artificial intelligence increase opportunities they also bring about new risks. Participants are increasingly exposed to cyber-attacks such as phishing, ransomware and DDoS attacks. At the same time, dependencies on complex ICT systems and external service providers are growing. ICT encompasses all technologies used for the processing, storage and transmission of information.
This development poses dangers to smooth operations, customer trust and ultimately the stability of the entire financial system. The EU regulation DORA, which must be fully implemented from January 2025, addresses these very issues.
What's behind DORA
DORA measures are designed not only to prevent ICT disruptions but also to ensure that companies can quickly resume operations in the event of a crisis. A core message of the regulation is that companies must know and realistically assess their ICT risks and be capable of enduring emergencies.
DORA requires each financial institution to adopt a comprehensive and risk-based approach to ICT security. This approach allows for targeted and responsible use of operational flexibility, which is crucial to meeting the diverse demands of different sectors. For example:
- For banks, disruptions in payment systems are highly relevant as they can cause significant financial losses and reputational damage.
- For insurance companies, protecting sensitive data, which can be attractive to cybercriminals, is central.
- For financial service providers, the wide range of services and interfaces they offer creates a considerable attack surface.
Central Measures for DORA Compliance
To meet the requirements of DORA, financial institutions need to be active on several levels. The key steps include:
- Risk Management: Systematically identify and assess ICT risks; establish technical, organizational and personnel measures to mitigate risks.
- Create detailed emergency plans: To respond quickly to ICT disruptions.
- Report major ICT security incidents: To the relevant supervisory authorities this promotes transparency and helps to identify systemic risks early on.
- Conduct regular cybersecurity exercises and simulations: To train employees and test the effectiveness of the measures taken.
- Check external service providers and partners for security gaps: Ensure they meet the same strict requirements as your own company.
Long-term DORA compliance with permanent solutions
All of these measures require more than just one-time efforts. New technologies, changing legal frameworks and increasingly sophisticated threats make it essential to regularly review and update security measures. To remain compliant in the long term, companies must understand that ensuring DORA compliance is an ongoing process.
By adopting these measures, companies can:
- Identify and mitigate risks early on,
- Strengthen customer trust and
- Avoid severe penalties or reputational damage.
Do you lack the internal resources to implement DORA measures successfully and continuously?
Let us support you as an external specialist while you continue to focus on your core business. Specifically, we can review and elevate the following areas:
- Instructions Management
- Outsourcing Management
- Business Continuity Management (BCM)
- Corporate & Regulatory Compliance
- Governance
- Incident Management
- IT Risk Management
- Crisis Management
- Third Party Risk Management
- Resilience
Partner with us, a reliable expert in the regulatory environment, for the design, implementation, and operation of secure and appropriate ICT systems. Feel free to speak with our experts Dr. Rainer Knippschild.