Article 1 Digital Operational Resilience Act (DORA), Subject Matter

Article 1 of the Digital Operational Resilience Act (DORA) outlines the essential requirements and frameworks designed to strengthen the digital operational resilience of financial entities across the European Union. The regulation sets forth uniform standards aimed at safeguarding the network and information systems that support financial institutions, ensuring they can withstand and recover from ICT-related disruptions. Here's a detailed breakdown of the key provisions:

Uniform Requirements For Digital Operational Resilience

This Regulation establishes standardized requirements to secure the network and information systems integral to the business operations of financial entities, with the goal of achieving a high level of digital operational resilience across the sector. These requirements include:

ICT Risk Management For Financial Entities

• Comprehensive ICT Risk Management Framework: Financial entities are required to implement a robust ICT risk management framework. This framework should include strategies, policies, and procedures designed to identify, assess, and mitigate ICT risks. It must address both internal and external vulnerabilities, protect information assets, and ensure continuous operational resilience.

• Reporting of Major ICT-Related Incidents: Financial entities must promptly report major ICT-related incidents to competent authorities. These reports should contain detailed information on the nature, impact, and response to the incident, enabling regulators to effectively assess and manage systemic risks.

• Digital Operational Resilience Testing: Financial entities are mandated to regularly test their digital operational resilience. This includes simulating various ICT disruptions and evaluating the effectiveness of their response mechanisms. Regular testing helps identify potential weaknesses and ensures that entities are prepared for ICT incidents.

• Information and Intelligence Sharing: Financial entities must actively participate in information sharing regarding cyber threats and vulnerabilities. This involves collaborating with other financial entities and relevant bodies to exchange information on emerging threats and best practices for mitigating them.

• Managing ICT Third-Party Risks: Financial entities are required to implement measures to manage risks associated with ICT third-party service providers. This includes assessing the security and resilience of third-party services, establishing clear contractual obligations, and continuously monitoring the performance of these third parties.

Contractual Arrangements With ICT Third-Party Service Providers

Financial entities must establish strong contractual arrangements with ICT third-party service providers. These contracts should clearly define the responsibilities, performance expectations, and security requirements of the service providers. The agreements must ensure that third parties adhere to the entity's digital operational resilience standards and allow for effective oversight.

Oversight Framework For Critical ICT Third-Party Providers

DORA mandates the establishment of an oversight framework for critical ICT third-party service providers. This framework ensures that these providers comply with rigorous operational and security standards when delivering services to financial entities. The oversight process includes regular assessments, audits, and monitoring to ensure that critical providers maintain high levels of resilience and compliance.

Cooperation and Supervision by Competent Authorities

The regulation emphasizes the need for cooperation among competent authorities to ensure effective supervision and enforcement of DORA. Authorities are required to collaborate in sharing information, coordinating responses, and ensuring compliance throughout the financial sector. This cooperation is crucial for addressing systemic risks and maintaining overall financial stability.

Sector-Specific Union Legal Act

For financial entities identified as operators of essential services under national rules transposing Article 5 of Directive (EU) 2016/1148, this Regulation serves as a sector-specific Union legal act, in line with Article 1(7) of that Directive.

Article 1 of DORA sets the foundation for enhancing digital operational resilience across the EU financial sector. By establishing comprehensive ICT risk management practices, ensuring prompt incident reporting, mandating resilience testing, promoting information sharing, and overseeing ICT third-party risks, DORA aims to create a secure and resilient financial environment that can withstand and recover from digital threats and disruptions.