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Digital Operational Resilience Act (DORA): Ensuring Compliance with New EU Regulations

Growing Cyber Threats to Financial Institutions

Cyberattacks are becoming increasingly frequent and sophisticated, posing significant risks to financial stability. According to the International Monetary Fund (IMF), nearly 20% of recorded cyber incidents in the past two decades have affected the global financial sector, causing direct losses of approximately $12 billion.

Recognizing the need to strengthen cybersecurity in the financial industry, the European Union introduced the Digital Operational Resilience Act (DORA). This regulation mandates strict cybersecurity measures to ensure that financial organizations can withstand, respond to, and recover from IT disruptions.

In this article, we will explore DORA's objectives, key requirements, compliance strategies, penalties for non-compliance, and how DefendSphere helps financial institutions and their service providers meet these new standards.

DORA is an EU regulation aimed at enhancing the resilience of financial organizations against cyber threats.

It establishes stringent requirements for:

IT risk management,
incident reporting,
operational resilience testing,
third-party risk management.

While DORA shares similarities with GDPR and NIS2, it specifically focuses on the operational resilience of the financial sector.

The regulation came into effect on January 16, 2023, and compliance becomes mandatory on January 17, 2025. Financial institutions must prepare for this deadline in time.

Who Must Comply with DORA?

DORA applies to a wide range of financial organizations, including:

banks,
investment firms,
insurance companies,
payment institutions,
crypto-asset firms.

Additionally, critical IT service providers, such as cloud services and cybersecurity companies, are also required to comply with DORA.

Key DORA Requirements

IT Risk Management Framework

Financial organizations must:

identify business functions reliant on IT and associated risks,
continuously monitor threats and vulnerabilities,
develop risk mitigation strategies,
regularly update security measures.

Incident Detection and Reporting

Companies must:

promptly detect and remediate IT incidents,
report significant incidents to regulatory authorities,
analyze incidents to prevent recurrence.

Operational Resilience Testing

Mandatory measures include:

regular penetration testing and vulnerability assessments,
IT system audits,
continuous improvement of cyber defenses.

Third-Party Risk Management

Financial institutions must:

monitor risks posed by IT service providers,
include DORA compliance obligations in contracts,
maintain a registry of third parties and conduct audits.

Governance and Oversight

Company leadership must:

clearly define cybersecurity responsibilities,
oversee IT risk mitigation strategies,
regularly review compliance measures.

Cyber Threat Intelligence Sharing

Organizations should participate in industry initiatives to share threat intelligence.

Consequences of Non-Compliance

Failure to comply with DORA may result in severe penalties:

fines of up to 2% of global annual revenue,
fines of up to €1,000,000 for executives,
fines of up to €5,000,000 for IT service providers,
public reprimands and potential business restrictions.

Beyond financial penalties, non-compliance can lead to loss of customer trust and increased regulatory scrutiny.

How DefendSphere Supports DORA Compliance

According to a McKinsey (2024) study, only one-third of financial organizations are confident in their readiness for January 2025. Many companies struggle with implementing new security measures.

DefendSphere offers an automated and cost-effective solution for DORA compliance, helping organizations:

identify compliance gaps,
automate audit and risk assessment processes,
implement real-time threat monitoring,
manage third-party risks and ensure their compliance with DORA.

With DefendSphere, financial institutions can not only meet regulatory requirements but also enhance their IT resilience without excessive costs.

Conclusion

DORA significantly raises cybersecurity standards for the EU financial sector. With the compliance deadline approaching, organizations must act swiftly to implement the necessary measures.

DefendSphere Simplifies this Process, Reducing Costs and Enhancing Cybersecurity Effectiveness