Ensuring DORA compliance: an in-depth guide
Expected to take effect in early 2025, DORA, or the Digital Operational Resilience Act, is a new framework targeting the EU financial industry. Designed to enhance the resilience of financial institutions against cyber threats and operational disruptions, DORA introduces several comprehensive guidelines that aim to manage and mitigate critical ICT risks.
Below, we set out to explore the key principles of DORA, its implications for financial organisations, the actionable strategies you need to achieve compliance, and much more.
What is DORA?
DORA was established to reduce the risks of unauthorised data, breaches, and a lack of control over sensitive financial data. While previous EU regulations varied between different EU member states, DORA’s unified framework will streamline compliance efforts and enhance the resilience of the collective EU financial system.
Now, standardised practices ensure that financial institutions and their third-party service providers across the EU adhere by the same framework for optimised cyber security.
Although officially sanctioned by the European Parliament and the Council of the European Union in November 2022, DORA is still being refined to include more detailed standards, with an expected go-live date of early 2025.
Who needs to achieve DORA compliance?
DORA applies to every financial entity within the EU, spanning conventional players like banks and investment firms, as well as unconventional ones such as crypto-asset service providers and crowdfunding platforms.
However, it’s not just the financial entities themselves that are being held accountable.
The regulation also applies to the third-party services that provide ICT solutions to these enterprises, meaning that entities like cloud service providers and data centres must also demonstrate compliance for safety across the entire supply chain.
Find out how to achieve DORA compliance with Kiteworks.
Why do you need to be DORA compliant?
If your enterprise falls under the criteria above, then achieving compliance is crucial for several reasons. The three most vital are:
- You will be legally required to do so — DORA is a binding regulation set forth by the European Union, meaning that compliance with DORA is mandatory for all financial institutions and their critical third-party technology service providers operating within the EU.
Fail to comply, and you can expect to be met with legal liabilities, reputational damage, and fines. More significant than GDPR by design, these penalties will be imposed by your region’s designated competent authorities. Depending on the severity of the violation, these penalties could be as high as 2% of your annual turnover. - It will mitigate ICT-related risks — DORA aims to enhance the operational resilience of the financial sector by comprehensively addressing risks like breaches, unwanted access, and lack of data control.
Compliance with DORA standards can help you identify, assess, and mitigate ICT-related risks, reducing the likelihood and impact of disruptions to your operations and services. - It can help strengthen your reputation — Compliance with regulations like DORA can help your enterprise maintain a positive reputation within the financial industry. It signals to clients, partners, and regulators alike that you prioritise security, therefore strengthening trust and credibility.
How do I achieve DORA compliance?
DORA is broken down into five compliance pillars. Each one of these requires specific attention and strategic solutions to ensure that compliance is met.
Pillar 1: Risk management and governance
To comply with this pillar, organisations need to assess their ICT-related risks and implement relevant cybersecurity measures. These measures could involve transitioning from legacy systems to centralised platforms and controls, which would enhance visibility and reduce risk by eliminating potential vulnerabilities.
Pillar 2: Incident management and reporting
This pillar stresses the importance of responding to, and reporting on, any incidents that occur. Compliance with this pillar will require organisations to deploy systems that enable automated monitoring and quick incident management.
Pillar 3: Digital operational resilience testing
This involves the regular testing of ICT systems to evaluate their strength and identify any vulnerabilities. Testing processes can be resource-intensive, but introducing automation or templated workflows can streamline these activities.
Pillar 4: Managing third-party risks
This pillar requires organisations to establish specific contractual agreements, map dependencies, and safeguard critical functions to ensure compliance from both parties.
Pillar 5: Information-sharing arrangements
This pillar includes setting up frameworks for exchanging cyber threat information and intelligence between entities. Establishing internal protocols for evaluating cyber threat intelligence and assigning dedicated roles are vital here. What’s more, organisations looking to become compliant must once again assess their third-party communication methods to ensure that they can securely share their findings.
Don’t fall behind your competitors, discover the latest financial services data communication trends and much more in our full report on DORA regulation.
Managing third-party risk: the essentials
Managing third-party risk is an important pillar of DORA UK regulations, aiming to protect data against cyber threats and reduce vulnerabilities introduced by external ICT providers.
Here are six solutions that can help:
- Secure third-party file sharing: ensuring the confidentiality of shared data is crucial. Using secure file sharing tools enables automatic policy enforcement during transfers, safeguarding any sensitive information in the process.
- Digital Rights Management (DRM): to comply with DORA, enterprises will need to maintain complete (and granular) access control. This can often be challenging when multiple organisations are editing the same document. DRM solutions ensure that anyone collaborating on a single file can do so without you having to give up source control.
- End-to-end email encryption: traditional email security may fall short when it comes to sharing sensitive data, with a lack of access controls allowing users to share emails at their leisure. Employ end-to-end email encryption tools, like our own DORA-compliant solution, to safeguard confidential information and prevent unauthorised access or forwarding.
- Third-party compatibility: ensure seamless access to encrypted emails without compromising security. Our email encryption solutions employ compatible gateways, allowing recipients to access emails within secure environments without compromising encryption protocols.
- Comprehensive audit logs: monitoring and tracking activity across your third-party communication is an essential part of achieving DORA compliance. Solutions that offer auditing, logging, and reporting capabilities will ensure that you can evidence compliance against DORA UK regulatory standards, while boosting the transparency of any file sharing operations.
- Access control mechanisms: role-based policies to regulate file access can help manage the risks associated with third-party interactions, implementing robust access controls that reduce the likelihood of breaches.
Learn more about controlling third-party risk in our latest blog.
Our top tips for achieving compliance
With so many pillars to adhere to, navigating DORA can be challenging. But, with severe consequences facing those that fail to comply, it’s important that you feel as confident as possible in demonstrating compliance.
We’ve distilled five essential tips that can help you fortify your organisation’s digital resilience:
- Enhance third-party risk management early. Addressing these risks early on can fortify your overall resilience and align with DORA standards.
- Secure early stakeholder support. Rallying support from decision-makers and relevant departments can ensure a unified commitment across all levels.
- Continually assess incident reporting and management. Incident management lies at the core of DORA compliance. Regularly evaluate your reporting processes’ efficacy in capturing relevant information that will help you strengthen your resilience.
- Consider automation. Deploying automation tools can standardise processes and bolster risk mitigation efforts for seamless compliance efforts.
- Document any actions taken. Thorough documentation and detailed records of any steps involved in your compliance journey can showcase compliance and foster a culture of transparency.
Discover more tips and advice about how to ensure DORA compliance in our blog.
Kiteworks: trusted by global leaders to ensure DORA compliance
The Kiteworks platform provides secure file and email data communications, designed to facilitate compliance with standards like DORA.
The Kiteworks Private Content Network empowers financial organisations to securely share sensitive content with third parties via various channels, ensuring the highest levels of security, governance, and compliance.
Built on the NIST CSF framework, Kiteworks incorporates robust security measures such as hardened virtual appliances, end-to-end encryption, and access controls to safeguard data and adhere to ICT compliance standards, enabling EU organisations to be fully compliant with DORA regulations.
Our Private Content Network is compatible with existing systems, offering complete control over shared data even when collaborating with EU third parties. In addition, our advanced audit and reporting features allow you to seamlessly monitor and evidence third-party risk.
By proactively adopting DORA’s recommended best practices for data and file sharing, organisations can reduce their reliance on partners and integrate compliant digital communication processes into their operations with confidence.
Find out more about the Kiteworks Private Content Network today.
Begin your journey to assured DORA compliance today
“Kiteworks completely ‘ringfences’ the company data.” – Financial Planning and Analysis Manager, Consumer Goods Company
Don’t let compliance concerns hold you back. Schedule your free demo and find out firsthand how our platform can revolutionise your data sharing practices, provide uncompromising security, and make DORA compliance effortless.
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