DORA will apply to a wide range of financial entities, from banks to insurers and investment firms, but also their critical technology suppliers, bringing IT firms within the remit of financial regulators for the first time. Many of those in scope may not be ready.
The imperative for DORA is clear. The extent to which financial services businesses rely on technology, particularly as digital transformation, leaves them vulnerable to failure in the event of a serious cyber attack, potentially leading to systemic problems. The European Commission’s data suggests attacks on financial institutions rose 38% during the Covid-19 pandemic.
Still, securing digital resilience is not straightforward. And while the DORA regulation, agreed upon provisionally by the Council of the EU and the European Parliament in May, will need to be implemented individually by the EU’s member states, time is starting to run out to prepare for compliance. The new regime is likely to be up and running by 2024, with significant penalties for compliance failures, including the potential for a fine of up to 1% of the business’s turnover. Reputational damage and erosion of customer trust could be even more expensive.
Where should the focus be as compliance work accelerates? There are three areas in particular that many businesses will find especially challenging:
Risk managementThe risk management regime in DORA will require firms to have robust and resilient processes for managing their IT assets. But many organisations currently lack a clear view of what those assets include. Visibility of the endpoints in their systems has diminished over time as their networks have expanded and become more complex – and as staff have moved to remote working. Real-time visibility is especially lacking. |
Network SecurityThis includes penetration testing and vulnerability assessment. Under DORA, firms will have to set out how to monitor and manage their IT assets' vulnerability on an ongoing basis. And while many firms are already doing this work on their most critical assets, this typically falls short of the comprehensive and systematic assessment that the new regulation requires. Remedying the shortfall may not be straightforward. |
Threat intelligence sharing.DORA requires firms to share more intelligence about cyber threats and other dangers than ever before. Very few organisations are currently set up to share such intelligence at the level of detail required, including technical data and high-level information. |
Closing these gaps may require significant remedial work and a move to cyber solutions that provide the functionality required for DORA compliance. And financial services firms must be confident their third-party suppliers are making the same effort.
For chief information security officers (CISOs), the stakes are high. Board awareness of DORA is beginning to increase, prompting senior leaders to ask demanding questions about their cyber security functions. External scrutiny is mounting up, too, as regulators prepare for full-scale implementation. The countdown to compliance has begun.
The Central Bank of Ireland (CBI) has released its third annual “Regulatory and Supervisory Outlook” report, highlighting the key trends facing the financial sector in Ireland.
Welcome to our latest data protection newsletter, where we highlight key developments across data protection and AI. This edition brings together the essential updates and insights your organisation needs to stay informed and compliant.
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