DORA (Digital Operational Resilience Act) Compliance Management

The Digital Operational Resilience Act (DORA) is a landmark EU regulation designed to ensure that the financial sector can withstand, respond to, and recover from all types of ICT-related disruptions.

Here is an expansion on each of its five pillars:

1. ICT Risk Management
This pillar acts as the core framework for the entire regulation. It requires financial entities to maintain a robust, well-documented ICT risk management system that is integrated into their overall corporate strategy. This includes identifying critical functions, mapping the assets that support them, and implementing continuous monitoring. The goal is to move away from reactive security and toward a proactive stance where risks are identified and mitigated before they can cause systemic failure.

2. ICT Incident Reporting
DORA streamlines the way financial institutions handle and report digital disruptions. Under this pillar, organizations must establish processes to detect, manage, and notify authorities of ICT-related incidents. By creating a standardized reporting template and strict timelines, the regulation ensures that regulators can track emerging threats across the entire financial ecosystem. This collective visibility helps prevent a single localized glitch from turning into a widespread financial crisis.

3. Digital Operational Resilience Testing
To ensure that “resilience” is more than just a buzzword, DORA mandates regular, risk-based testing of ICT systems. This includes basic assessments like vulnerability scans and more complex exercises like Threat-Led Penetration Testing (TLPT) for significant entities. These tests are designed to expose weaknesses in an organization’s defenses under “live” conditions, forcing firms to prove they can actually maintain operations during a sophisticated cyber-attack.

4. Third-Party Risk Management
A major focus of DORA is the “supply chain” of financial services. Since many banks and insurers rely on the same handful of cloud providers and software vendors, a failure at one provider could impact the entire market. This pillar requires firms to conduct deep due diligence on their partners, maintain a register of all third-party dependencies, and ensure that contracts include specific “exit strategies” and service level agreements (SLAs) that align with DORA’s resilience standards.

5. Information Sharing on Cyber Threats
The final pillar encourages a “safety in numbers” approach to cybersecurity. DORA provides a legal framework for financial entities to voluntarily exchange cyber threat intelligence and “indicators of compromise” with one another. By sharing information about new malware or phishing tactics, the industry can create a collective defense mechanism where an attack on one firm helps strengthen the defenses of all others.