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The Digital Operational Resilience Act (DORA) is a regulatory initiative within the European Union that aims to enhance the operational resilience of the financial sector. Its main goal is to prevent and mitigate cyber threats and operational disruptions. The DORA Act outlines regulatory requirements for the security of network and information systems “whereby all firms need to make sure they can withstand, respond to and recover from all types of ICT-related disruptions and threats” (DORA Act website).

Who and What Are Covered Under the DORA Act?

The DORA Act is a regulation that covers all financial entities within the European Union (EU). It recognizes the critical role of information and communication technology (ICT) systems in financial services. DORA applies to financial services including payments, securities, credit rating, algorithmic trading, lending, insurance, and back-office operations. It establishes a framework for ICT risk management through technical standards, which are being released in two phases, the first of which was published on January 17, 2024. The DORA Act will go into effect in its entirety on January 17, 2025.

With cyberattacks constantly in the news cycle, it’s no surprise that governing bodies are putting forth standards for operational resilience. But without combing through this lengthy piece of legislation, what should IT teams start thinking about from a practical standpoint? Here are 5 takeaways on what the DORA Act means for the financial sector.

DORA Act: 5 Takeaways for the Financial Sector

1. Shore-up your cybersecurity measures

The DORA Act emphasizes strengthening cybersecurity measures within the financial sector. It requires financial institutions, such as banks, stock exchanges, and financial infrastructure providers, to implement robust cybersecurity controls and protocols. These include adopting advanced authentication mechanisms, encryption standards, and network segmentation to protect sensitive financial data and critical infrastructure from cyber threats. Part of this will also require organizations to apply system patches and updates in a timely manner, which means automated patching will become necessary to every organization’s security posture.

2. Implement resilience systems

Operational resilience is a key focus area of the DORA Act, aiming to ensure the continuity of essential financial services in the face of cyber threats, natural disasters, and other operational disruptions. Financial institutions are required to develop comprehensive business continuity plans, establish redundant systems and backup facilities, and conduct regular stress tests to assess their ability to withstand and recover from various scenarios. Implementing a resilience system helps with this, as it provides all the infrastructure, tools, and services necessary to continue operating during major incidents.

3. Conduct regular scans for vulnerabilities

The DORA Act mandates financial institutions to implement robust risk management practices to identify, assess, and mitigate cyber risks and operational vulnerabilities. This includes conducting regular assessments, vulnerability scans, and penetration tests, and developing incident response procedures to quickly address threats. This is all part of taking a proactive approach to identify and mitigate cyber incidents, and reduce the impact that adverse events have on financial stability and consumer confidence.

4. Collaborate and share information with industry peers

The DORA Act encourages financial institutions to share cybersecurity threat intelligence, incident data, and best practices with industry peers, regulators, and law enforcement agencies. The ability to monitor systems and collect data will be crucial to this approach, and will require systems that can rapidly (and securely) deploy apps/services during ongoing incidents. This will help financial institutions to better understand emerging threats, coordinate responses to cyber incidents, and strengthen collective defenses against threats and operational disruptions.

5. Segment physical and logical systems to pass regular audits

Through the DORA Act, regulators are empowered to conduct regular assessments, audits, and inspections of systems. This will ensure that financial institutions are implementing adequate controls and safeguards to protect against cyber threats and operational disruptions. A crucial part to this will involve physical and logical separation of systems, such as through Isolated Management Infrastructure, as well as implementing zero trust architecture across the organization. These will help bolster resilience by eliminating control dependencies between management and production networks, which will also help to streamline audits.

Get the blueprint to help you comply with the DORA Act

DORA’s requirements are meant to help IT teams better protect sensitive data and the integrity of financial systems as a whole. But without a proper network management infrastructure, their production networks are too sensitive to errors and vulnerable to attacks. ZPE has created the blueprint that covers these 5 crucial takeaways outlined in the DORA Act. The architecture outlined in this blueprint has been trusted by Big Tech for more than a decade, as it allows them to deploy modern cybersecurity measures, physically and logically separated systems, and rapid recovery processes. Download the blueprint now.