Once upon a time in Belgium, a fast-growing ICT company, TechSecure Solutions, landed a major contract with EuroBanker *, a large financial institution subject to the new Digital Operational Resilience Act (DORA). The contract was a big win, and the team was excited—but with tight deadlines, TechSecure4U rushed to assemble a network of subcontractors without ensuring they met DORA’s rigorous security and resilience requirements.
One of the subcontractors, DataWaver, specialized in data storage. While DataWave had solid technology, they hadn’t invested much in security testing, incident response plans, or business continuity measures. Another subcontractor, CloudGuard Services 4U, handled network security but was lax about monitoring and incident reporting, often relying on outdated systems. Despite the warning signs, TechSecure assured EuroBank that the subcontractors were reliable.
Months later, a data breach hit DataWave, exposing sensitive client information that was stored without sufficient encryption. Worse, because CloudGuard wasn’t continuously monitoring, it took days for the breach to be detected, and EuroBank’s data was already compromised by the time the alarm was raised. EuroBank’s operations suffered, and the breach made headlines, leading to significant financial and reputational damage.
Under DORA, both TechSecure4U and EuroBanker faced scrutiny and potential fines. EuroBanker terminated the contract, citing non-compliance. Meanwhile, TechSecure4U scrambled to improve its compliance and resilience standards, but the damage was done. TechSecure4U’s reputation took a serious hit, and future contracts became harder to secure. This crisis became a costly lesson on the importance of ensuring compliance, not only within their company but also throughout their entire network of subcontractors. (Names are fictive and not related to existing companies!)
Lessons learned ?
Achieving compliance with DORA’s baseline requirements is essential even if you’re a subcontractor working for an ICT company that delivers services to a DORA-regulated entity. This baseline is critical because it ensures consistent resilience, security, and compliance across the entire supply chain, ultimately protecting the DORA entity from operational risks that could stem from any part of its extended service network. Here’s why this is important:
Supply Chain Risk Management
Risk Reduction Across Tiers: In a supply chain, every subcontractor’s security and resilience directly affect the overall risk posture of the end-client (the DORA-regulated entity). Achieving DORA compliance as a subcontractor helps reduce the risk of vulnerabilities that could propagate from the lower tiers of the supply chain to the DORA entity.
Cascading Impact Prevention: If a subcontractor suffers a disruption, the ripple effects can lead to service failures that impact higher-tier service providers and, ultimately, the DORA-regulated financial institution. Meeting DORA standards helps to prevent these cascading impacts, ensuring operational continuity at every level.
Trust and Competitive Advantage
Enhanced Trustworthiness: Demonstrating adherence to DORA’s baseline requirements builds trust with both your immediate ICT client and the DORA-regulated end-client. Compliance shows you are a reliable partner committed to regulatory standards, which can strengthen your business relationships.
Competitive Positioning: DORA compliance increasingly serves as a competitive advantage, as DORA entities and their direct ICT providers seek resilient subcontractors. By achieving this baseline, you position your company favorably for future opportunities, especially as compliance scrutiny intensifies.
Regulatory Alignment and Preparedness
Alignment with Regulatory Standards: Subcontractors may also be scrutinized by regulatory bodies to ensure that they are not the “weak link” in the supply chain. Achieving DORA’s baseline ensures that your company aligns with industry standards, preventing potential compliance issues or liabilities.
Easier Adaptation to Future Regulations: DORA sets a regulatory precedent in the financial sector that may expand to other sectors or jurisdictions. Meeting DORA requirements now positions your company to easily adapt to similar or more stringent regulations in the future, creating operational efficiencies and preparing you for evolving regulatory landscapes.
Incident Prevention and Resilience
Enhanced Cybersecurity and Incident Response: Achieving the DORA baseline includes implementing security, incident response, and continuity frameworks that mitigate the risk of disruptions. As a subcontractor, this means your systems are less likely to become points of compromise in the event of a cyberattack, and your resilience contributes to the stability of the broader service ecosystem.
Reduced Downtime and Recovery Times: DORA compliance requires continuity and recovery planning that allows you to respond quickly to incidents. This reduces downtime and ensures minimal disruption to services, benefiting both your direct ICT client and the DORA entity.
Stronger Contracts and Client Retention
Meeting Contractual Obligations: Many contracts with DORA entities and ICT providers will include clauses requiring subcontractors to comply with DORA. Achieving the baseline helps you fulfill these obligations, reducing the risk of contract termination or penalties.
Retention of Business Relationships: For ICT companies serving DORA entities, choosing compliant subcontractors is crucial for maintaining their client relationships. By achieving the DORA baseline, you become a valuable and compliant partner, contributing to long-term retention of these business relationships.
Data Protection and Confidentiality
Ensuring Data Integrity: DORA mandates strong data protection and confidentiality measures, which help you protect sensitive financial data handled on behalf of your ICT client or the DORA entity. Compliance demonstrates a commitment to safeguarding data, reducing the likelihood of data breaches that could damage your reputation and relationships.
Avoiding Legal Liabilities: A data breach or failure in resilience due to non-compliance could result in legal liabilities. Meeting DORA’s baseline requirements helps you avoid such liabilities by showing that you adhere to industry-recognized data protection standards.
In summary, achieving the DORA baseline as a subcontractor not only strengthens your business operations but also helps protect the entire service chain supporting DORA-regulated entities. Compliance fosters trust, reduces operational risk, and positions your organization for growth and resilience in an increasingly regulated environment.
When pursuing ISO 27001 compliance as most important baseline to show DORA readiness, teaming up with Qfirst and KIWA VINCOTTE ensures a guided and verified path to success, avoiding the pitfalls of navigating standards blindly. Qfirst, as the expert implementer, provides tailored guidance, policies, and security frameworks specific to your business needs, setting a solid foundation for certification. Then, KIWA VINCOTTE, as an independent and accredited Certification Body (CAB), steps in to rigorously audit and verify compliance, giving your certification credibility and assurance. This dynamic partnership offers clarity, precision, and reliability, helping you achieve robust information security with full confidence in your compliance journey.
The Digital Operational Resilience Act (DORA) imposes strict requirements on ICT (Information and Communication Technology) service providers to ensure the operational resilience of financial entities within the EU. If a company delivers ICT services to a DORA-regulated entity, it must comply with specific obligations under DORA. Here’s what they need to focus on:
Risk Management with RISK3D
Implement Resilience Frameworks: The company must establish risk management frameworks that align with DORA requirements, including identifying, managing, and mitigating ICT-related risks.
Adopt Adequate Security Controls: DORA requires ICT service providers to have robust cybersecurity measures, including incident detection, prevention, and response mechanisms.
Continuous Monitoring and Testing: Regularly monitor and test ICT systems to ensure resilience and minimize operational disruptions. This includes vulnerability assessments, penetration testing, and threat intelligence sharing where applicable.
ICT Third-Party Risk Management
Define and Document Dependencies: Document dependencies and third-party relationships, assessing the risk these pose to the DORA entity.
Subcontracting Requirements: Notify the DORA entity of any subcontracting arrangements, ensuring they adhere to DORA’s principles. This also means that any subcontractors used by the ICT provider must also comply with DORA’s requirements.
Operational Contract Requirements: Ensure contracts with DORA entities include mandatory clauses around security, data protection, business continuity, and incident handling, as required by DORA.
Business Continuity and Disaster Recovery
Develop Recovery Plans: Ensure comprehensive business continuity and disaster recovery (BCDR) plans are in place and aligned with the DORA entity’s requirements. BCDR plans must address scenarios of ICT disruption and outline steps for service restoration.
Regular Testing of BCDR Plans: Regularly test these recovery plans to confirm they are effective and update them periodically based on test outcomes or emerging risks.
Align RPOs and RTOs with DORA Requirements: Define Recovery Time Objectives (RTOs) and Recovery Point Objectives (RPOs) that meet DORA entities’ criticality thresholds.
Incident Reporting and Handling
Incident Response Framework: Implement an incident response framework that includes identification, containment, eradication, recovery, and post-incident review procedures.
Timely Incident Reporting: Report incidents that impact DORA entities according to the timelines specified in DORA. Providers should ensure a clear communication protocol with DORA entities to meet these reporting obligations.
Root Cause Analysis and Continuous Improvement: Conduct post-incident analyses to identify the root causes of disruptions and implement corrective actions to prevent recurrence.
Governance and Compliance
Establish Governance Framework: Develop a governance framework for overseeing and managing ICT risks that impact DORA entities.
Appoint Dedicated Roles: Appoint dedicated roles or teams responsible for compliance with DORA requirements, including roles for operational resilience, compliance, and risk management.
Regular Audits and Reporting: Engage in regular audits and assessments to demonstrate compliance with DORA. This includes preparing reports or documentation for DORA entities on demand to confirm resilience and security measures.
Data Protection and Confidentiality
Protect Data Integrity and Confidentiality: Ensure all data, especially sensitive financial data managed on behalf of DORA entities, is protected from unauthorized access or breaches.
Adhere to Data Minimization and Retention Policies: Align with data minimization principles and retain data only as required, ensuring compliance with applicable data protection laws like GDPR.
Continuous Monitoring and Cybersecurity Controls
Enhanced Monitoring: Adopt tools and processes for continuous monitoring of systems that impact DORA entities, with real-time alerting and reporting capabilities.
Implement Advanced Security Measures: DORA requires high standards for cybersecurity, so use measures like multi-factor authentication, encryption, endpoint protection, and zero-trust architectures.
Supply Chain Security: Regularly assess the security of third-party providers and technology partners within the supply chain to ensure end-to-end security resilience.
Collaboration and Information Sharing
Threat Intelligence Sharing: Engage in information-sharing networks and threat intelligence sharing to stay ahead of potential ICT threats that could impact DORA entities.
Coordinate with Supervisory Authorities: Be prepared to engage with DORA regulatory bodies and share necessary information related to operational resilience if requested.
Summary Checklist:
- Implement Risk Management and Security Controls
- Manage Third-Party Risks
- Develop Business Continuity and Disaster Recovery Plans
- Establish Incident Reporting Procedures
- Ensure Strong Governance and Compliance
- Protect Data and Maintain Confidentiality
- Conduct Continuous Monitoring and Cybersecurity Controls
- Engage in Information Sharing
Compliance with DORA helps ICT service providers not only meet regulatory obligations but also reinforce their resilience and trustworthiness in the financial sector.
START TODAY
