Navigating the requirements and implications of the Digital Operational Resilience Act (DORA) for financial organisations
What is Digital Operational Resilience Act (DORA)?
The financial sector faces a critical need to adapt to the Digital Operational Resilience Act (DORA) in order to mitigate potential criminal charges resulting from non-compliance. DORA, which is currently an EU-wide regulation, is highly relevant to UK businesses and is expected to be integrated into UK law in the near future.
The Digital Operational Resilience Act (DORA) aims to bolster cybersecurity measures and protect businesses in the financial sector from cyber threats. In this blog post, AJ Thompson, Chief Commercial Officer of Northdoor plc, highlights the importance of embracing DORA to ensure the resilience of financial organisations against cyber-attacks. He will delve into the essential aspects of DORA and explore how financial organisations can adequately prepare to adhere to its requirements, ensuring compliance and fortifying their operational resilience.
Understanding the implications of DORA for UK financial companies
The financial sector faces an escalating threat from cybercriminals due to the sensitive data it holds, making robust cybersecurity practices imperative. The DORA regulation provides a specific set of criteria and instructions that dictate how UK-based financial organisations must manage ICT and cyber risks. Unlike previous regulations, DORA emphasises continuous monitoring, reporting, and assessments, transforming cybersecurity into an ongoing process rather than a one-time compliance effort.
DORA's monitoring is stricter than before, focusing on regular reporting, communication, and assessments. Compliance is an ongoing process that requires unwavering vigilance and adherence to the regulation. Click To TweetFive Pillars of the DORA regulation
DORA is built upon five core pillars that financial companies must prioritise:
1.) ICT Risk Management:
Implementing robust risk management strategies to identify, assess, and mitigate ICT-related risks within the organisation.
2.) ICT-related Incident Reporting:
Ensuring swift and comprehensive reporting of incidents to facilitate prompt responses and minimise the impact of cyber threats.
3.) Digital Operational Resilience Testing:
Conducting regular testing of digital resilience measures to validate their effectiveness and identify areas for improvement.
4.) ICT Third-Party Risk:
Managing risks associated with third-party providers and supply chains to safeguard the entire ecosystem and prevent attacks through interconnected systems.
5.) Information Sharing:
Encouraging secure information sharing among industry peers to enhance collective awareness of evolving cyber threats and facilitate a proactive defense against cybercriminals.
While all these pillars hold critical importance for financial organisations, special attention must be given to the acknowledgement of third-party threats and the significance of information sharing. Cyber-criminals have increasingly targeted supply chains and exploited the relationships between ICT companies and their clients to breach key systems. Sharing experiences and information about cyber threats become pivotal to staying ahead of evolving attack techniques and defending against criminals effectively.
Preparing for DORA implementation
Although DORA’s enforcement is slated for 2025, financial organisations cannot afford to delay their preparations. Currently, the European Supervisory Authorities (ESA), in collaboration with the European Central Bank, are developing the regulatory and technical standards for DORA. To ensure compliance by January 2025, financial companies must act promptly and commence their preparation efforts. Beginning early provides ample time to establish resilient processes, adapt existing frameworks, and stay ahead of potential threats, ultimately ensuring a smooth transition to meet DORA requirements.
Consequences of non-compliance
Non-compliance with DORA carries severe consequences for financial companies. While some uncertainties surround the specific penalties, the introduction of the regulation indicates significant repercussions. Potential fines, possibly equivalent to one day’s trading, may be imposed for non-compliance. Furthermore, unlike some other regulations, DORA incorporates a criminal element, with charges likely to be brought against companies and individuals failing to adhere to the regulation. These consequences underscore the urgency for the financial sector to prioritise compliance and take the necessary steps to align with DORA.
Partnering with IT consultancy and cybersecurity experts:
So, how can the financial sector prepare for DORA?
Depending on the size and perceived risk of cyber-crime, financial institutions have between one to two years to ensure compliance. Navigating the complexities of DORA requires specialised expertise. Many financial organisations are turning to IT consultancy and cybersecurity firms to assist them in their compliance efforts. These external experts possess in-depth knowledge of regulatory requirements, conduct comprehensive risk assessments, and implement effective cybersecurity measures. Moreover, it allows financial companies to proactively monitor the threat landscape, identify vulnerabilities, and establish robust defences against cybercriminals.
Embracing DORA: enhancing financial sector resilience
DORA is a significant milestone in strengthening the digital operational resilience of the financial sector. Financial organisations must recognise its importance and promptly comply with its requirements. By prioritising cybersecurity, embracing the five pillars of DORA, and leveraging the expertise of IT consultancy and cybersecurity specialists, companies can protect sensitive data, fortify systems, and effectively combat the evolving threat landscape. Adhering to DORA ensures compliance and enhances overall sector resilience, safeguarding businesses and customers from cyber-attacks.
At Northdoor, we understand the complexities of DORA and offer specialised expertise to help financial organisations navigate their requirements. By partnering with these professionals, financial companies can alleviate the burden on their in-house teams and gain confidence in achieving compliance. Discover how our services can fortify your digital resilience and protect sensitive data in the ever-evolving cybersecurity landscape.
To learn more about the implications of DORA and how your financial institution can ensure compliance and resilience, contact us.