As the enforcement date for the Digital Operational Resilience Act (DORA) approaches, banks must ensure they are ready to meet compliance requirements by today, January 17, 2025. With this in mind, in this blog post, we delve into what DORA compliance entails and what are the key areas where DORA impacts these functions.
What is DORA?
Adopted by the European Parliament in 2022, DORA aims to standardise and enhance the management of ICT risks across the financial sector. The regulation focuses on:
- Risk Management: Establishing stringent internal controls and governance for ICT risk management.
- Operational Resilience Testing: Requiring regular testing to ensure digital operational resilience.
- Incident Reporting: Mandating timely reporting of ICT-related incidents.
- Third-Party Risk Management: Ensuring rigorous oversight of third-party ICT service providers.
- Information Sharing: Encouraging collaboration and information sharing on cyber threats and vulnerabilities.
Importance of DORA Compliance for ALM & Treasury
Ensuring your ALM and Treasury provider is DORA compliant is vital for maintaining operational resilience and meeting regulatory requirements. Let’s explore the key areas where DORA impacts these functions.
Enhanced ICT Risk Management
To comply with DORA, banks must implement systems for online monitoring of ICT-related risks. Continuous monitoring helps identify and mitigate potential disruptions promptly. Regular stress testing is crucial for evaluating the impact of potential ICT disruptions, ensuring the bank can withstand various threat scenarios. Additionally, developing comprehensive response and recovery plans for ICT incidents is essential, with these plans being tested and updated regularly to ensure effectiveness.
Incident Reporting and Response
Treasury functions must establish clear protocols for detecting, reporting, and responding to ICT-related incidents to ensure swift action and minimise the impact of disruptions. Reporting systems should be integrated with broader risk management and operational frameworks for seamless incident management and regulatory compliance. Training treasury staff on incident identification and response procedures is critical, with regular drills and updates to maintain a high level of preparedness.
Third-Party Risk Management
Thorough assessments of third-party ICT providers are necessary to ensure compliance with DORA standards, including evaluating their risk management practices and resilience measures. Specific contractual clauses must be included to enforce third-party compliance, outlining responsibilities and expectations for ICT risk management. Regularly monitoring and reviewing third-party performance and resilience ensures ongoing compliance and identifies areas for improvement.
Conclusion
With the DORA compliance deadline here, financial institutions must be prepared to tackle digital resilience head-on. By embracing the requirements, financial institutions can turn DORA into a strategic advantage, laying the groundwork for sustained resilience and a competitive edge in the future.