Digital Operational Reliability Act (DORA)

Basics and objectives

The Digital Operational Resilience Act (DORA) came into force on January 17, 2023 as a fundamental part of the European Union’s digital finance package. The regulation aims to strengthen the digital operational resilience of the entire European financial sector through uniform regulations. Financial companies must implement comprehensive measures to secure their IT systems by January 17, 2025. The regulation creates a harmonized legal framework for IT security in the financial sector at EU level for the first time. DORA expands existing national regulations such as MaRisk and BAIT into a comprehensive European standard. The regulation applies to a wide range of financial institutions, from banks to crypto service providers. The requirements also affect critical IT service providers and cloud providers as important infrastructure partners. The regulations are intended to strengthen trust in digital financial services. Resilience to cyber attacks and IT disruptions will be systematically increased. Financial stability is to be secured through robust digital infrastructures. The regulation creates legal certainty for innovative digital business models.

ICT risk management and security requirements

DORA obliges financial institutions to implement comprehensive ICT risk management in accordance with uniform standards. The overall responsibility for digital risk management lies explicitly with the management of the institutions. Companies must continuously monitor their IT systems and keep them up to date with updates. The regulation stipulates detailed requirements for IT security architecture and access controls. Strategies for data backup and recovery procedures must be implemented and tested. The documentation of all risk management processes must be complete and comprehensible. Regular employee training on IT security topics is mandatory. The integration of IT security into the corporate strategy is mandatory. The technical security measures must correspond to the current state of the art. The effectiveness of the measures must be reviewed regularly. The requirements apply in proportion to the size and complexity of the institutions.

Incident management and reporting obligations

The regulation establishes a standardized system for handling and reporting IT incidents in the financial sector. Serious IT disruptions and cyber incidents must be reported immediately to the responsible supervisory authorities. Incidents are classified according to standardized European criteria. Companies must implement processes for the rapid detection and assessment of IT incidents. All incidents must be documented completely and comprehensibly. Escalation paths and responsibilities must be clearly defined. Communication with authorities and affected parties is standardized. Regular testing of incident response processes is mandatory. The analysis of incidents must be used for continuous improvement. The reporting obligations also apply to incidents at critical IT service providers. Cooperation between companies and authorities will be intensified. Transparency regarding IT risks in the financial sector will be increased.

Test requirements and checks

DORA prescribes comprehensive test procedures for checking digital operational stability. The tests must be carried out regularly and according to a risk-based approach. Penetration tests and vulnerability analyses are mandatory for certain institutions. The review of physical IT security is included in the test scenarios. The tests must be carried out by qualified internal or external auditors. The test results must be documented and used for improvement. Critical systems are subject to particularly strict test requirements. The test scenarios must depict realistic threat situations. The effectiveness of emergency plans must be tested in practice. The tests must also include the interfaces to external service providers. The supervisory authorities may specify additional test requirements. The test results must be presented to the management.

Supervision and control

The national financial supervisory authorities monitor compliance with the DORA requirements as part of ongoing supervision. The European supervisory authorities EBA, ESMA and EIOPA coordinate supervision at EU level. Technical standards and guidelines are developed by the European authorities. The supervisory authority can impose sanctions in the event of breaches of DORA requirements. Regular IT security audits will become part of supervisory practice. Cooperation between national supervisory authorities will be intensified. A European monitoring system for critical IT service providers will be established. The supervisory authority can define additional requirements for particularly critical institutions. Audit procedures will be carried out in a risk-oriented manner. Supervision takes into account the proportionality of the requirements. The effectiveness of supervision is regularly evaluated. International cooperation is strengthened.

Practical implementation and challenges

The implementation of the DORA requirements poses considerable operational challenges for financial companies. The technical and organizational measures must be fully implemented by January 2025. Integration into existing IT security concepts requires careful planning. The costs of implementation can be considerable, especially for smaller institutions. The availability of qualified IT security experts poses a challenge. Coordination with external IT service providers must be reorganized. The documentation requirements require additional resources. Staff training must be systematic. The technical systems need to be adapted and expanded. Incident detection processes need to be optimized. Cooperation between specialist departments must be strengthened. The management must actively manage the implementation.

Future prospects and developments

DORA will have a lasting impact on the digital transformation of the European financial sector. The harmonization of IT security standards creates a level playing field. Resilience to cyber threats will be systematically strengthened. Innovative digital business models will be given a clear regulatory framework. The international competitiveness of the EU financial market will be improved. Cooperation between financial institutions will be intensified. Technological innovation will be promoted through uniform standards. The digitalization of the financial sector will be accelerated. Confidence in digital financial services will be strengthened. Cybersecurity becomes a strategic success factor. Regulatory requirements will be continuously developed. Global harmonization will be driven forward.