Be DORA Ready: DORA Compliance Checklist

Be DORA Ready: DORA Compliance Checklist

The enforcement date for the Digital Operational Resilience Act (DORA) regulation is fast approaching – January 17, 2025. 

Financial institutions across the European Union must be prepared for the upcoming changes, using tools like a DORA compliance checklist, as the act seeks to improve the digital resilience of financial entities against cyber threats. 

Does the industry need this? Absolutely. According to the IBM Cost of a Data Breach Report 2023, financial institutions rank second in the global cyber attack damage statistics, with losses amounting to approximately $5.9 million per cyber attack in 2023. The average across all industries is $4.45 million. The report also shows that there were twice as many cyber attacks on financial institutions in 2023 compared to 2022.

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Introduction to DORA

DORA is a regulatory framework established by the European Union (EU) to strengthen digital resilience in financial institutions. It aims at making these entities able to withstand, respond to, and recover from various IT-related disruptions and risks. It forms part of wider efforts to enhance cyber security, including security testing and sound operation within Europe’s finance sectors.

DORA should also deal with the increasing complexity and interdependence of digital systems underpinning financial services. It helps ensure uniform standards among member states, guaranteeing high levels of protection and continuity of operations. 

The requirements are stringent. Financial institutions must re-engineer their internal processes and systems, creating a more resilient and secure environment. Overall objectives include establishing a solid framework that reduces risk and enhances trust and stability within an evolving digital threat landscape.

DORA applies to most financial institutions, including banks and credit unions, insurance providers, investment firms, fintech companies, etc. If it’s a financial institution, chances are high that DORA applies to it. Third-party IT providers supporting these companies must also follow DORA compliance regulations. It’s the entire financial ecosystem.

DORA complements existing EU cybersecurity regulations, such as the GDPR and NIS2 Directive – both the GDPR and NIS2 Directive are legal measures that boost cybersecurity in the EU.

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Consequences of Non-Compliance

Breaking DORA rules can result in huge fines, revoked permission to operate, and public reprimands that institutions can avoid with the DORA checklist. Financial penalties could be a serious deal, with potential fines amounting to as much as 1% of the average daily worldwide turnover of the previous year, which was $3,117 billion in April 2023. And – non-compliance leads to reputational damage, loss of customer trust, and increased exposure to cyber risks.

The consequences of failing to meet DORA compliance requirements go beyond immediate financial losses. Regulatory authorities may continuously examine these institutions, diverting their attention and resources from core business operations. The result? Legal challenges and the possibility of civil litigation only add to the costs and complexities associated with non-compliance. 

Ignoring DORA also strains partners’ relationships, including stakeholders, who depend on robust cybersecurity practices in a financially interconnected ecosystem.

Complying with DORA is paramount for EU-based financial entities. It protects against regulatory penalties and enhances its overall security posture. Financial institutions can finally be resilient to emerging IT threats in the finance sector. Do you feel DORA ready with our DORA complaint checklist?