Building Resilience with DORA: 5 Pillars and Actions for Financial Services

Introduction 

The financial services sector faces a constant barrage of evolving cyber threats and digital risks. In response, the European Union (EU) has introduced the ground breaking Digital Operational Resilience Act (DORA). This act establishes a comprehensive framework with five key pillars designed to strengthen the digital defences of financial organisations and their technology partners. 

DORA goes beyond simply ticking compliance boxes. It sets clear technical standards for cyber security and digital risk management, aiming to foster a culture of long-term resilience within the financial sector. 

This article equips you with the knowledge to conquer the new challenges of financial security. We’ll guide you through the five pillars of DORA, explaining their significance and empowering you with actionable steps to achieve compliance. By the end, you’ll be well on your way to building a more secure digital future for your financial organisation. 

The Five Pillars of DORA   

DORA establishes a comprehensive framework built on five critical pillars, each designed to fortify the digital defences of financial organisations. These pillars go beyond mere compliance; they empower businesses to cultivate a long-term culture of resilience against today’s ever-evolving cyber threats. 

DORA Pillar 1: Risk Management (ICT) 

This pillar forms the foundation of DORA’s mandate. Financial organisations must possess robust frameworks to meticulously identify, assess, and mitigate ICT-related risks. This translates to continuous monitoring of key digital systems, data, and connections. 

DORA emphasises a proactive approach. Vulnerabilities shouldn’t be unearthed – they should be anticipated and addressed before they escalate into major incidents. Regular risk assessments, constantly evolving incident response plans, and vigilant monitoring of the ICT environment are crucial steps. 

Beyond immediate security benefits, effective ICT Risk Management fosters a culture of risk awareness within an organisation. This heightened awareness translates to a more resilient posture against cyber and digital threats. 

DORA Pillar 2: Incident Management 

The second pillar of DORA focuses on building a robust incident management strategy. This means having clear procedures for swiftly identifying, classifying, and reporting ICT-related incidents. But it goes beyond just reacting to issues. 

DORA mandates reporting details like user impact, data loss, and geographical locations. This knowledge-building exercise helps identify trends, understand the evolving threat landscape, and implement preventative measures to minimise future occurrences. 

The emphasis is on a well-organised approach. Financial organisations need to: 

• Review and update incident reporting standards to ensure alignment with DORA requirements 

• Develop robust incident management processes that encompass clear steps for investigation, containment, eradication, and recovery 

• Establish clear communication strategies to keep internal and external stakeholders informed throughout the incident lifecycle 

Transparency is another key aspect of DORA’s incident management pillar. Financial organisations are required to notify relevant stakeholders, including regulatory authorities, about significant incidents. This open communication fosters trust and allows for a collective effort towards strengthening digital operational resilience across the financial sector. 

DORA Pillar 3: Digital Operations Resilience Testing 

DORA recognises the importance of regularly testing your digital defences to identify and address vulnerabilities before they can be exploited by attackers. This pillar focuses on threat-led penetration testing conducted by qualified third-party vendors. The frequency of testing should be tailored to the risk profile of your assets – higher risk assets will require more frequent testing. 

Here’s what effective testing under DORA entails: 

• Creating a Threat-Led Penetration Testing Strategy: Develop a comprehensive plan that outlines the scope and frequency of testing, considering the specific threats your organisation faces. 

• Drafting Clear Engagement Plans with Vendors: Ensure effective collaboration with your chosen penetration testing vendors by outlining clear communication protocols and expectations. 

DORA goes beyond simply conducting tests. It requires financial organisations to address the vulnerabilities identified. This means: 

• Closing the Gaps: Implement the recommendations and remediation steps identified during testing 

• Validating Effectiveness: Demonstrate the effectiveness of the implemented solutions to ensure a stronger overall security posture 

DORA Pillar 4: Third Party Risk Management 

DORA recognises that financial organisations rely heavily on third-party vendors. However, these external relationships can introduce vulnerabilities into your digital ecosystem. This pillar focuses on actively managing third-party risk to ensure your entire supply chain contributes to a robust overall security posture. 

Here’s what effective third-party risk management under DORA entails: 

• Defining Partner Strategies and Policies: Develop clear guidelines for selecting, onboarding, and managing third-party vendors. These policies should establish expectations for cyber security practices and incident response protocols. 

• Creating a Third-Party Register: Maintain a comprehensive inventory of all third-party vendors, including details about their services and associated risks. This allows you to prioritise due diligence efforts and track ongoing compliance. 

• Conducting Due Diligence and Assessments: Before onboarding a third-party vendor, conduct thorough due diligence to assess their cyber security posture and adherence to relevant regulations. Regularly perform audits and information security assessments to maintain a clear picture of your third-party risk landscape. 

• Including Security Clauses in Contracts: Ensure your contracts with third-party vendors clearly outline their responsibilities for data protection, incident reporting, and resilience testing. This contractual clarity fosters a shared commitment to digital security within your supply chain. 

Dora Pillar 5: Information Sharing and Reporting 

The final pillar of DORA champions collaboration in the fight against cyber threats. By breaking down information silos and fostering a culture of shared intelligence, financial organisations can collectively strengthen their digital defences. 

By actively participating in information sharing, organisations can benefit from a broader understanding of the cyber threat landscape and develop more effective defensive strategies. This collaborative approach fosters a united front against cybercrime, enhancing the digital operational resilience of the entire financial sector. 

Five Actions Financial Businesses can Take to Comply with DORA 

The five pillars of DORA, as outlined previously, establish a comprehensive framework for financial organisations to fortify their digital defences against ever-evolving cyber threats. Now, let’s translate these pillars into action. Here are five key steps you can take to implement DORA’s requirements and build long-term resilience within your organisation: 

Refine Your Risk Management Framework 

The foundation of a secure digital environment lies in a robust risk management framework. Begin by identifying and classifying all potential ICT risks within your organisation, understanding your risk tolerance and potential exposure to cyber threats. Gain a clear view of your critical functions and their dependencies on technology. 

Next, consider adopting established ICT governance and control frameworks, such as the NIST Cyber Security Framework. These frameworks provide best practices for managing ICT risks, reducing the likelihood of cyberattacks, and improving incident recovery capabilities. By adopting a structured approach to risk management, you lay the groundwork for building long-term cyber resilience within your organisation. 

Build Robust Incident Management Processes 

Efficient incident management is crucial for minimising damage and preventing future occurrences. Review and update your incident reporting standards to align with DORA requirements. Establish robust incident management processes that define clear steps for identification, classification, investigation, containment, eradication, and recovery. 

Develop clear communication strategies to keep both internal and external stakeholders informed throughout the incident lifecycle. This ensures timely and coordinated responses that minimise disruption and reputational damage. 

Create a Threat-Led Penetration Testing Strategy 

Regular penetration testing is essential for proactively identifying vulnerabilities in your digital defences. Develop a comprehensive strategy for conducting threat-led penetration testing by qualified third-party vendors. Tailor, the frequency of testing to your risk profile – higher-risk assets require more frequent testing. 

Manage Third-Party Risk Proactively 

Financial organisations increasingly rely on third-party vendors. However, these external relationships can introduce vulnerabilities into your digital ecosystem. To mitigate these risks, define clear partner strategies and policies for selecting, onboarding, and managing third-party vendors. These policies should establish expectations for cyber security practices and incident response protocols. 

Create a comprehensive third-party register that details all vendors, their services, and associated risks. This allows for prioritised due diligence and ongoing compliance tracking. Conduct thorough due diligence on potential third-party vendors, assessing their cyber security posture and adherence to relevant regulations. Regularly perform audits and information security assessments to maintain a clear picture of your third-party risk landscape. 

Finally, include robust security clauses in your contracts with third-party vendors. These clauses should clearly outline their responsibilities for data protection, incident reporting, and resilience testing. By holding your vendors accountable for cyber security, you strengthen your overall digital defences. 

Embrace Information Sharing and Reporting 

Collaboration is key in the fight against cybercrime. Actively participate in relevant industry forums focused on cyber threat intelligence sharing. Develop secure channels for sharing cyber security information with other financial institutions and regulatory authorities. 

Establish a process for analysing and leveraging the intelligence gained from information sharing initiatives. This could involve threat modelling exercises or updating your incident response plans based on shared knowledge. Finally, fulfil your reporting obligations to the authorities, demonstrating your adherence to DORA regulations. 

Conclusion 

The escalating cyber threat landscape necessitates robust action. DORA’s arrival provides a vital framework for financial organisations to strengthen their digital defences across the EU. 

Compliance requires proactive steps: refining risk management, building incident response processes, conducting regular testing, managing third-party risk, and fostering information sharing. While investments in governance and addressing vulnerabilities are needed, the benefits are clear: enhanced operational resilience and a competitive edge in a security-conscious market. 

Explore our resources for further guidance: 

• Series 1: Let’s Chat About DORA – Understanding the Key Requirements  

• Series 2: Building Long-Term Resilience: A Guide for Financial Services Beyond DORA Compliance