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Understanding DORA: What It Is and Why It Matters for Financial Entities
- The Digital Operational Resilience Act (DORA) is a regulation for the financial sector designed to enhance and unify cyber resilience across Europe. DORA mandates that financial institutions and ICT service providers adopt stringent cybersecurity measures starting in January 2023.
- DORA aims to mitigate the risks posed by the growing complexities of cyber threats and to safeguard the sector against potential fallout.
- DORA introduces key requirements that financial entities must comply with, including implementing an ICT risk management framework, incident reporting, digital operational resilience testing, third-party risk management, and sharing information with entities within the financial ecosystem.
- To comply with DORA, organizations should follow these five essential steps: conducting a comprehensive gap analysis, developing or enhancing an ICT risk management framework, implementing a robust incident reporting procedure, enhancing third-party risk management, and planning and executing regular digital resilience testing.
- DORA may require only incremental changes for large financial institutions with mature cybersecurity measures in place. However, for smaller entities or those with less developed security postures, DORA represents a significant regulatory burden.
- DORA's requirements extend beyond traditional financial institutions to include critical ICT service providers as well.
- DORA's introduction is indicative of the increased importance that regulators place on cybersecurity within the financial sector and seeks to ensure that financial entities are not only aware of, but actively managing cyber risk.
- As we approach the deadline for full compliance in 2025, now is a crucial time for financial institutions to assess their current cybersecurity measures and implement necessary changes to meet DORA's requirements.
- Understanding and implementing DORA is crucial for financial services entities to ensure the digital resilience of their organization, safeguard against potential cyber incidents, and continue to serve customers with confidence.
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