Navigating DORA Compliance Challenges

Introduction to DORA

In today’s digital age, financial institutions must verify their technology and data-handling processes adhere to strict regulatory standards. The Digital Operational Resilience Act (DORA) is a crucial EU regulation designed to enhance the digital resilience of financial entities and will require organizations to be proactive and not reactive when it comes to risk management. With the January 17, 2025, compliance deadline now passed, many organizations encounter challenges in aligning their operations with DORA’s requirements.

According to the Official Journal of the European Union, entities and/or organizations that fail to comply with DORA can face vigorous penalties reaching up to 2% of their total annual worldwide turnover or 1% of their average daily turnover worldwide. The specific amount depends on the severity of the DORA violation. That is why it is best to ensure your organization is meeting the requirements to maintain digital resilience and security. 

This article explores the different challenges faced and presents a variety of Myna recommendations on how to overcome each one.

Recommendations to Address DORA Compliance Challenges

DORA helps financial institutions withstand, respond to, and recover from digital disruptions and cyber threats. Key requirements include risk management, regular testing, incident reporting, and third-party risk management; however, achieving compliance presents several challenges:

Assurance & Reporting

Assurance Testing:

• Challenge: Inconsistent / infrequent testing performed.
• Recommendation(s): Establish a structured testing schedule to perform regular assurance evaluations of DORA controls. Utilize automated testing tools to help with continuous monitoring and compliance. Regularly review and update testing protocols to adapt to new regulatory requirements and organizational changes.

Third-Party Risk Management:

• Challenge: Assess the cybersecurity maturity of your critical third parties.
• Recommendation(s): Develop a comprehensive TPRM program that includes detailed assessments of third-party cybersecurity practices. Implement a risk-based approach to prioritize critical third parties and conduct periodic audits. Enhance collaboration with third parties to improve their cybersecurity posture and align with your organization’s standards.

Lack of Visibility:

• Challenge: Identifying gaps and inconsistencies.
• Recommendation(s): Implement comprehensive monitoring and reporting mechanisms to gain visibility into compliance activities. Use advanced analytics and dashboards to track compliance metrics and identify gaps in real-time. Conduct regular reviews and audits to ensure continuous improvement and address any inconsistencies promptly.

Cybersecurity Threats:

• Challenge: The increase in cyber threats and their growing sophistication.
• Recommendation(s): Adopt a multi-layered cybersecurity strategy that includes advanced threat detection and response capabilities. Invest in employee training and awareness programs to mitigate human error. Regularly update and patch systems to protect against known vulnerabilities. Collaborate with industry peers and participate in threat intelligence sharing to stay ahead of emerging threats.

Incomplete Metrics:

• Challenge: The increase in cyber threats and their growing sophistication.
• Recommendation(s): Adopt a multi-layered cybersecurity strategy that includes advanced threat detection and response capabilities. Invest in employee training and awareness programs to mitigate human error. Regularly update and patch systems to protect against known vulnerabilities. Collaborate with industry peers and participate in threat intelligence sharing to stay ahead of emerging threats.

Incomplete Metrics:

• Challenge: Difficulty in gathering and analyzing data for meaningful reports.
• Recommendation(s): Develop robust data analytics capabilities to gather, analyze, and report compliance metrics in real-time. Implement automated data collection and reporting tools to improve accuracy and consistency. Establish key performance indicators (KPIs) to measure compliance effectiveness and drive continuous improvement.

Governance, Risk, & Compliance (GRC)

Manual Processes:

• Challenge: Inefficiencies and errors from reliance on manual tools.
• Recommendation(s): Implement automation in compliance processes to reduce reliance on manual tools and minimize errors. Utilize workflow automation software to streamline tasks, maintain consistency, and improve accuracy. Regularly review and optimize automated processes to adapt to changing compliance requirements.

Siloed Functions:

• Challenge: Fragmented compliance efforts due to isolated processes.
• Recommendation(s): Break down silos by integrating compliance functions across departments. Implement a centralized GRC solution to coordinate and align all compliance activities. Foster cross-departmental collaboration and communication to achieve a unified approach to compliance.

Disconnected Systems:

• Challenge: Disjointed technology complicates compliance management.
• Recommendation(s): Implement unified platforms that connect disparate systems and centralize data management. Use integrated GRC tools to consolidate compliance data, streamline reporting, and enhance visibility. Facilitate seamless data flow between systems to improve efficiency and reduce the risk of errors.

Oversight

Evolving Regulations:

• Challenge: Frequent regulatory changes require quick adaptability.
• Recommendation(s): Assign those that are responsible and/or accountable for regulatory compliance to frequently monitor and identify any changes within the compliance landscape, as they occur. With continuous monitoring and updating, this will help to proactively adjust your compliance programs and adapt to regulatory changes.

Cultural and Ethical:

• Challenge: Making sure all employees understand and adhere to compliance requirements.
• Recommendation(s): Foster a strong compliance culture through regular training and awareness programs. Develop engaging and interactive training sessions to educate employees on compliance requirements and ethical standards. Promote a culture of accountability and encourage employees to report compliance concerns without fear of retaliation.

Conclusion  

Achieving DORA compliance is essential for financial institutions. By addressing these challenges, organizations can strengthen their digital resilience and meet regulatory adherence.

Myna offers comprehensive support and expertise across all aspects of DORA compliance, including designing integrated compliance frameworks, implementing technology solutions, developing data analytics capabilities, and providing ongoing regulatory updates as well as cybersecurity measures.

Is your organization ready for DORA? Partner with Myna to navigate these complexities and ensure your compliance efforts remain robust, effective, and in line with the latest regulatory requirements.

For more information, contact: Wills Catling, Director (william.catling@myna.com) or Corey Gant, Director (corey.gant@myna.com) today to learn more about our services and how we can support your organization!

References

Official Journal of the European Union: Regulation – 2022/2554 – EN – DORA – EUR-Lex