Eight challenges organisations face with DORA

Less than one year to DORA, the countdown begins

5th February 2024BlogAJ Thompson

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DORA regulation challenges: overcoming the hurdles of compliance with the five pillars

As the financial sector continues to undergo significant digital transformation, ensuring operational resilience has become a crucial priority. To address the challenges posed by cyber threats and disruptions, the European Union introduced the Digital Operational Resilience Act (DORA). This comprehensive regulation aims to fortify the operational resilience of financial institutions within the EU. However, compliance with DORA is not without its hurdles. In this article, we will explore the key challenges that companies need to overcome to become DORA regulation-compliant and provide strategies for successfully navigating these obstacles.

1. Gaining executive buy-in: the importance of top-level engagement

The first and perhaps most critical challenge is gaining executive buy-in. According to DORA regulation, top management is accountable for monitoring, approving, reviewing, and setting the direction for operational resilience. Their active involvement is essential for the success of any compliance program. By onboarding high-level executives early on, organisations can ensure the identification and validation of critical functions, prioritise threat scenarios, and establish the necessary pace for compliance efforts. However, to achieve this, it is crucial to provide executives with a comprehensive understanding of DORA’s requirements and their expected role in achieving compliance.

2. Strengthening third-party risk management

Another significant challenge lies in enhancing third-party risk management. Many large financial institutions rely on numerous third-party providers, making it crucial to prioritise and focus on the most critical ones. While current practices may already integrate some requirements, DORA regulation demands a more comprehensive approach. Financial services must ensure that their suppliers comply with the regulation’s operational resilience requirements. This includes working on potential exit strategies and conducting joint testing when relevant. Embracing this shift in approach may redefine how businesses interact with their suppliers, demanding a proactive operational resilience risk management strategy from all involved parties.

3. Testing for resilience

Testing is a crucial aspect of DORA compliance. Organisations need to structure and regularly test their resilience strategies to assess risks and the effectiveness of their resilience measures. Developing a strategic vision for testing is essential, as current tests are often managed in silos, focusing on specific areas such as vulnerability, penetration, or business continuity. To meet DORA requirements, organisations must ensure proper coverage of critical functions over the years within their testing approach. Moreover, DORA regulation mandates conducting threat-led penetration tests in live production at least once every three years, including with ICT third-party providers.

4. Developing robust risk management frameworks: identifying, assessing, and mitigating risks

One of the core pillars of DORA is the establishment of robust risk management frameworks. Financial institutions must identify, assess, and mitigate operational risks effectively. This includes integrating cybersecurity measures, developing incident response plans, and regularly testing resilience strategies. While some organisations may already have existing risk management frameworks in place, aligning them with DORA’s requirements and ensuring consistency across the organisation may pose a challenge. It is crucial to review and enhance existing frameworks to meet the specific demands of DORA.

5. Reporting obligations: timely and transparent incident reporting

DORA mandates timely and transparent reporting of significant incidents to the relevant authorities. This reporting approach is vital for maintaining transparency, facilitating coordinated responses, and allowing for swift intervention in potential crises. Financial institutions must establish robust reporting mechanisms and processes to ensure compliance with the regulation’s requirements. This involves the development of clear incident reporting procedures and the implementation of systems that enable accurate and timely reporting.

DORA regulation compliance with third-party cyber risk managment

6. Collaboration and information sharing: building a resilient ecosystem

DORA emphasises the importance of collaboration and information sharing within the financial sector. Financial institutions are encouraged to collaborate with industry peers, industry associations, forums, and other relevant stakeholders. By sharing insights, best practices, and lessons learned, organisations can collectively navigate the challenges of DORA compliance. This collaboration also helps advocate for responsible and effective implementation of DORA, fostering a unified and resilient European financial landscape.

7. Compliance roadmap: a detailed plan for success

To ensure a smooth and successful DORA compliance journey, organisations must develop a detailed compliance roadmap. This roadmap should outline the necessary steps, timelines, responsibilities, and milestones for achieving compliance. By clearly defining these aspects, organisations can track progress effectively and mitigate any potential compliance gaps. The compliance roadmap serves as a guiding document for the entire organisation, ensuring a systematic and structured approach to DORA compliance.

8. Monitoring and continuous improvement: ensuring ongoing compliance

DORA compliance is not a one-time effort but an ongoing commitment. Organisations must implement a robust monitoring system to track ongoing compliance and performance. Regular assessments should be conducted to evaluate the effectiveness of DORA compliance efforts and identify areas for improvement. By continuously monitoring and improving compliance measures, organisations can ensure continued alignment with evolving regulatory requirements.

Overcoming compliance hurdles with the Digital Operational Resilience Act (DORA) is crucial for financial institutions. Click To Tweet

For expert guidance and support in achieving DORA compliance, contact us. Our team at Northdoor has extensive experience in IT and cybersecurity, and we are here to ensure your organisation’s success in meeting the challenges of DORA.

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