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New EU Law Expands Digital Resilience to Third-Party Dependencies: What is the Impact on Businesses
- The EU’s Digital Operational Resilience Act (DORA) sets new standards for financial services, emphasizing digital resilience and oversight of third-party ICT dependencies.
- DORA mandates robust incident management, risk assessments, and compliance measures to ensure reliable, secure services across interconnected digital ecosystems.
- In the financial services sector, many customers now primarily interface with banks, insurance firms, and trading platforms digitally.
- With credibility at stake, it is essential that financial institutions maintain trust, visibility, and remain compliant.
- The European Union’s Digital Operational Resilience Act ('DORA') is set to take effect in January 2025.
- DORA will act as both a catalyst and a model for FS institutions and their service providers to rethink resilience in relation to system architectures and contractual arrangements.
- Banks and other FS institutions have had to rely on third-party payment applications, cloud platforms, and connectivity to execute effectively for some time now.
- DORA does introduce new and enhanced requirements that represent a step-change in accountability and requires financial institutions to become even more proactive.
- FS institutions need ways to quickly pinpoint where an issue is impacting the execution of a transaction and identify the root cause, both to pursue remediation and to meet enhanced disclosure and reporting requirements.
- In such a distributed environment, where modern applications rely on networks and services outside of FS companies’ domain of control, visibility is key.
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