DORA: Α crucial regulation for organizations in the EU financial sector

The Digital Operational Resilience Act, or DORA, is a crucial regulation that applies to a range of organizations operating within the European Union. As part of the EU digital finance package, DORA is designed to support the potential of digital finance in terms of innovation and competition while mitigating associated risks among EU member states. DORA applies to 20 different types of financial entities, including banks, insurance companies, cryptocurrency asset service providers, and investment firms, as well as critical third parties that provide ICT-related services to financial entities. DORA aligns with the Commission's priorities to make Europe fit for the digital age and build a future-ready economy that works for the community.

The timeline requirements tighten as DORA came into effect on January 16, 2023 and will be enforced in less than a year, from January 17, 2025. It is now imperative for organizations to fulfill DORA assessment and gap analysis and move to implementing a risk-based approach focused on compliance monitoring. This regulation covers six critical areas (ICT risk management, ICT third-party risk management, Digital operational resilience testing, ICT-related incidents, Information sharing) and offers the following significant benefits to financial organizations:

Enhanced Cybersecurity & Operational Resilience:

• Risk Mitigation: DORA establishes a comprehensive framework for managing digital risks in financial markets. It will enhance and streamline the financial entities' conduct of ICT risk management, establish a thorough testing of ICT systems, increase supervisors' awareness of cyber risks and ICT-related incidents faced by financial entities. This helps organizations identify, assess and address potential threats to their IT infrastructure and operations.
• Improved Incident Response: DORA mandates organizations to develop and implement robust incident response plans. This ensures a faster and more effective response to security incidents, minimizing disruption and financial losses. The proposal will create a consistent incident reporting mechanism that will help reduce administrative burdens for financial entities and strengthen supervisory effectiveness.
• Third-Party Risk Management: DORA emphasizes the importance of managing risks associated with third-party vendors who provide critical IT services as introduce powers for financial supervisors to oversee risks stemming from financial entities' dependency on ICT third-party service providers. This encourages organizations to select and partner with vendors who prioritize strong cybersecurity practices.

Increased Transparency & Accountability:

• Clear Expectations: DORA sets clear expectations for how organizations should manage digital operational resilience. This helps organizations understand their obligations and ensures consistency across the EU financial sector.
• Improved Stakeholder Confidence: By demonstrating compliance with DORA, organizations can build trust with investors, customers and regulators. This can lead to a competitive advantage in the marketplace.

Standardized Practices:

• Harmonization: DORA aims to establish a consistent strategy for digital operational resilience throughout the EU. This approach ensures that all financial institutions have the same set of rules to follow, making it easier for organizations operating across multiple EU countries to comply. However, it also allows individual member states and their regulatory authorities to impose their own measures and penalties for non-compliance. Additionally, DORA can act as a best practice framework for organizations outside the EU financial sector, helping them improve their overall cybersecurity posture.

Overall, DORA plays a critical role in promoting the resilience, security and stability of the digital ecosystem, benefiting organizations, consumers and society as a whole. By adhering to DORA requirements and embracing a culture of operational resilience, organizations can better navigate the evolving threat landscape, stay secure against cyber risks and sustain their business operations in an increasingly digital and interconnected world, while demonstrating accountability and building trust with stakeholders.

The European Commission recognizes a significant association between NIS 2 and DORA regulatory Directives. It is noteworthy that all entities that don't fall under DORA's scope shall comply with the NIS 2 Directive. Furthermore, both Directives emphasize the importance of an ongoing process requiring continuous monitoring and updates on regulatory compliance needs within each entity.

Neurosoft has taken steps to meet those two mandatory regulations that call for digital transformation and enhanced security measures to ensure business resilience and continuity against disruptive cyberattacks. As a result, we have upgraded our services by utilizing a GRC platform that fully serves the needs of continuous compliance monitoring and multi-framework support. Simultaneously, recognizing our team members as our most valuable investment, through this platform we enable them to efficiently identify blind spots and gaps of each organization, which in turn allows them to focus their attention on designing and implementing the mitigation plan without any hindrances.

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