DORA - Digital Operational Resilience Act

DORA - Digital Operational Resilience Act

The rapid digitization of the European financial sector in recent decades has made technology integral to financial operations, ushering in new risks. Financial institutions have attempted to address these risks through controls and contingency plans, but many struggle to establish robust defenses against ICT-related risks. Operational resilience efforts have often been disorganized, resulting in weak controls and inadequate backup plans. Additionally, insufficient management information leaves board members and senior managers unaware of elevated ICT risks. Recent high-profile disruptions at European banks have underscored the industry's vulnerability.

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To address this, the European Council aims to enhance operational resilience while harmonizing national regulations. The Digital Operational Resilience Act (DORA) provides a comprehensive framework for managing ICT risks in European financial institutions. DORA consists of five pillars covering ICT risk management, incident reporting, resilience testing, third-party risk, and information sharing. Compliance with DORA is challenging and necessitates a purposeful, business-led technology strategy and integrated risk management aligned with critical services.

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The potential benefits of improved operational resilience are significant, including reduced financial losses, smoother system implementation, maintained customer service levels, enhanced brand value, lower risk management costs, and reduced regulatory risk. Building digital operational resilience is no longer optional and requires engagement from all levels of the organization, including business lines, senior management, and boards.

Why is DORA relevant to you?

​This regulation shifts its focus beyond merely ensuring the financial stability of firms. It extends to guaranteeing their ability to maintain resilient operations in the face of severe disruptions, particularly those stemming from cybersecurity and information and communication technology (ICT) issues.

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DORA introduces a unified supervisory approach applicable to a diverse array of financial market participants. This includes entities such as credit institutions, payment institutions, account information service providers, electronic money institutions, investment firms, insurance companies, crypto-asset service providers, exchanges and clearing houses, alternative fund managers, pension providers, credit rating agencies, and more. By doing so, DORA aims to foster convergence and harmonization in security and resilience practices across entities operating within the European Union (EU).

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