In a highly digitalized financial environment, digital operational resilience, financial cyber resilience, and cybersecurity are strategic priorities, as they ensure continuous operations, the protection of services, and defense against cyberattacks.
The DORA Regulation (EU 2022/2554) establishes a mandatory framework to strengthen operational resilience in the European financial sector. Its goal is to ensure that banks, insurers, payment institutions, and other similar organizations can prevent, withstand, respond to, and recover from technological incidents, ensuring the continuity of critical financial services.
The DORA regulation is applicable from January 17, 2025, so entities must immediately begin adapting their processes, internal controls, and regulatory compliance (DORA compliance).
Fundamentals and Objectives of the DORA Regulation
What is DORA and what is its purpose?
The Regulation is part of the EU Digital Finance package and establishes homogeneous requirements in five key areas to unify technological risk management, supervise critical ICT providers, and reduce regulatory fragmentation in the European financial sector:
- ICT risk management and governance.
- ICT incident management and notification.
- Digital operational resilience testing, including TLPT (Threat-Led Penetration Testing).
- Management of third-party ICT provider risks.
- Cyber threat information sharing in trusted environments.
Strategic Goals of the Digital Operational Resilience Regulation
- Strengthen operational resilience against ICT risks.
- Standardize management, testing, and reporting criteria across the EU.
- Ensure the continuity of financial services and data protection.
- Reduce systemic risk derived from technological dependencies and external providers.
Scope of the DORA Regulatory Framework
The DORA Regulation (EU 2022/2554) is directly applicable in all EU member states and applies to the financial entities listed in its article 2(1), including banks, insurers, investment service firms, fund managers and custodians, payment and electronic money institutions, and market infrastructures. Entities authorized within the EU must comply with DORA, even if they operate globally.
Third-party critical ICT service providers may be subject to direct supervision by a Lead Overseer (a supervisory agent appointed by the Joint Committee of the European Supervisory Authorities, with the role carried out by one of them: EBA, ESMA, or EIOPA). These include cloud service providers, payment ecosystem actors (processors, gateways, and messaging networks, e.g., SWIFT), as well as critical data providers, trading platforms, and market connectivity providers.
Furthermore, the framework applies with proportionality and covers both intragroup and third-party relationships: entities must inventory all outsourced ICT services (including those provided by non-EU suppliers), assess concentration risk, and ensure mandatory contract clauses (audit rights, business continuity, localization—which does not require data residency in the EU, data transfer, and cooperation with authorities), with periodic reporting to their competent authority.
Although there is no formal certification for the Regulation, evidence of DORA compliance is required through internal cybersecurity audits, documented reviews, and periodic reporting to the competent authorities.
Key Components for DORA Compliance
Data Governance and ICT Risk Management
DORA establishes a framework for ICT risk management, which includes identifying critical assets and recovery after major incidents. Entities must maintain up-to-date business continuity plans (BCP) and disaster recovery plans (DRP) to ensure digital operational resilience.
ICT Incident Management and Notification
- Classification using DORA taxonomy to categorize incidents by type and impact.
- Rapid notification to the competent authorities (RTS/ITS).
- Integration with necessary cybersecurity tools for DORA compliance (SIEM/SOAR, MDR) through cyber incident and crisis management.
Digital Operational Resilience Testing
Organizations must continuously perform vulnerability tests, crisis simulations, and backup restoration, along with TLPT (Threat-Led Penetration Testing) and evaluation of external ICT services when needed.
ICT Third-Party Risk Management
Due diligence must be carried out on providers, with contractual clauses that include audit rights, business continuity, and cooperation with authorities. Concentration risk must also be managed, and exit plans should be established.
Cyber Threat Information Sharing
Encourage all financial entities, including smaller ones, to participate in cybersecurity intelligence forums to share, in secure environments, TTPs (tactics, techniques, and procedures used by attackers) and IOCs (indicators that a system has been compromised) to improve incident detection and response, identify security breaches, and strengthen cyber resilience.
Benefits of the Digital Operational Resilience Regulation (DORA)
The regulation establishes a unified and demanding framework for the digital operational resilience of the European financial sector, offering strategic and operational advantages for entities that implement it:
- Reduction of cyber and operational risk: Enhanced ability to prevent, detect, and respond to ICT incidents.
- Increased trust from customers, investors, and partners: Organizations that comply with this framework generate more security and reputation.
- Regulatory harmonization in the EU: Establishes homogeneous criteria in risk management, testing, and reporting, avoiding regulatory fragmentation.
- Optimization of existing frameworks: Allows leveraging existing standards (ISO, NIST, TIBER-EU), reducing costs and redundancies.
- Regulatory priority for the financial sector: The Regulation takes precedence over NIS2 in overlapping areas but requires coordination with data protection regulations and sector-specific standards.
- Advanced planning and preparation: Helps identify gaps, prioritize controls, strengthen third-party management, and automate detection and incident response with documented evidence for supervisors.
Preparing for DORA compliance is crucial to reducing risks, avoiding penalties, and ensuring the continuity of critical financial services. In an increasingly digital world exposed to cyber threats, adopting a pragmatic approach is essential: leveraging existing controls, prioritizing gaps, strengthening third-party management, and automating detection and incident response, with documented evidence for regulators.
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