The clock is ticking for financial entities across the European Union. The Digital Operational Resilience Act (DORA) is set to be fully enacted by January 2025, which will bring sweeping changes to how IT operational risk is managed. But the regulation doesn’t just tweak the rules — it overhauls them.  

This reality demands a proactive approach to operational resilience. The urgency to comply is about avoiding fines and safeguarding your organization’s reputation and operational integrity.   

Now is the time to understand DORA’s requirements, assess your vulnerabilities, and implement robust strategies to ensure compliance and reliance. This comprehensive guide will arm you with the knowledge you need to navigate this regulatory shift. Fortify your organization against future disruptions.  

1. What Is IT Operational Resilience? Definition & Its Impact 

2. Operational Resilience: Regulations Around the World 

3. Decoding What the EU’s DORA Regulation Means By “Operational Resilience” 

4. What the DORA Regulation Means For Your Organization 

5. What's Different with the DORA Regulation? 

6. Insights into ESAs Report on the Landscape of ICT Third-Party Providers 

7. Key DORA Act Insights: What You Missed in Our New Whitepaper 

8. Case Study: BugZero: Protecting Financial Services Firms against $15M outages 

Operational resilience is essential for modern IT operations. It involves an organization's ability to maintain consistent delivery of products or services despite disruptions. This concept encompasses risk tolerance and preparedness for unforeseen situations. When executed correctly, it ensures that operations continue smoothly even during outages.  

The core principles of operational resilience include understanding risk appetite, determining tolerance for disruption, and focusing on business continuity. These elements help organizations manage risk more effectively. That leads to greater efficiency, increased profitability, better customer retention, and higher employee productivity.  

Operational resilience is becoming increasingly important due to the complexity of software and evolving compliance requirements. Regulations like the EU's DORA mandate organizations to enhance their operational resilience. To stay compliant, businesses must identify operational gaps, appoint responsible parties, and create a comprehensive resilience framework. Embracing operational resilience not only meets regulatory demands but also drives overall business success. 

Operational resilience is a global priority for regulators and leaders. But keeping track of every new regulation is challenging, as it’s being handled a bit differently in different areas of the world. Here are the global approaches to operational resilience.  

• Global: The Basel Committee on Banking Supervision issued Principles for Operational Resilience and updated Principles on Outsourcing in 2021. 

• United States: The SEC Division of Examinations consolidated Operational Resilience efforts into "Sound Practices to Strengthen Operational Resilience."  

• Canada: The Office of the Superintendent of Financial Institutions revised guidance for operational risk management and third-party risk management. 

• EU: Many European countries support DORA and have published local legislation aligning with DORA requirements. 

• Australia: The Australian Securities and Investments Commission issued market integrity rules to promote operational resilience in securities and futures markets. 

• Hong Kong: The Hong Kong Monetary Authority issued a Supervisory Policy Manual on operational resilience and business continuity planning. 

• Singapore: The Monetary Authority issued guidelines on operational risk management and encourages non-bank financial institutions to adopt best practices. 

In terms of the future of global operational resilience regulations, compliance is time-consuming, as seen with the recent UK regulations. On March 31, 2022, UK firms had to pinpoint essential business services, establish impact thresholds, and launch a scenario testing program. Despite meeting these requirements, many firms with EU operations still face challenges to achieve full resilience by DORA's 2025 deadline. Improving operational risk management workflows is crucial for all organizations, regardless of location.  

BugZero offers an automated platform for operational defect risk management, integrating with ITSM tools to improve operational resilience. 

Did you know the annual cost of vendor operational defects to an average enterprise company is at least $6.5 million?  

The EU’s DORA aims to address these costly operational defects by safeguarding financial institutions from internal and third-party IT risks. Unlike traditional regulations focusing solely on cybersecurity, DORA mandates comprehensive operational resilience, requiring financial entities to ensure the integrity and reliability of their IT systems and third-party services.  

DORA applies to a wide range of financial institutions, including banks, investment firms, and crypto asset providers. It emphasizes managing ICT risk, which includes any factor that might compromise the stability or security of IT systems. Organizations must meet high standards for data availability, authenticity, integrity, and confidentiality. 

BugZero helps firms meet DORA’s requirements by aggregating operational defect data, streamlining incident reporting, and enhancing third-party risk management. As financial institutions prepare for DORA’s January 2025 compliance deadline, BugZero offers a solution to ensure resilience and protect against costly operational defects. 

DORA is a pioneering regulation in the EU, published in 2023 to regulate financial services and insurance firms, including many US firms operating in the EU. DORA mandates financial entities to build, assure, and review operational integrity and reliability. Compliance is very important as the January 2025 deadline approaches.  

DORA, part of the Digital Finance Package, replaces previous EU cyber regulations with a comprehensive framework focusing on digital resilience. Unlike the NIS Directive, which focuses solely on network security, DORA is capabilities-led, requiring a digital resilience strategy and continuous monitoring, including oversight of Critical Third-Party Providers (CTPP). 

By January 2025, financial organizations must be fully compliant with DORA. Take these three steps to accelerate your compliance process.   

1. Identify Operational Gaps 

2. Appoint Responsible Parties 

3. Create an Operational Resilience Framework 

DORA is set to revolutionize IT risk management and align it with global standards for digital operational resilience. Financial entities must prepare now to ensure compliance and address a broader spectrum of IT risks, including operational defects and third-party risks. 

DORA marks a significant shift in the landscape of IT operational risk. DORA focuses on IT operational resilience and includes Critical Third-Party Providers, requiring public reporting of all incidents along with fines. This EU legislation mandates high standards of availability, authenticity, integrity, and confidentiality. Unlike past cybersecurity regulations, DORA emphasizes operational resilience, introducing a comprehensive and proactive approach to managing IT risks, including those posed by third-party vendors.  

This regulation targets operational defects – errors or flaws in software causing unexpected results or system downtimes. Such defects can result in significant financial losses, customer trust issues, and operational disruptions. Firms are now required to implement strategies to identify and mitigate these risks, involving rigorous testing, continuous change management, and automated software solutions. DORA’s emphasis on preventing, adapting, responding to, and learning from operational disruptions represents a paradigm shift in IT risk management. 

Critical Third-Party Providers are now in scope under DORA, which includes vendors such as cloud services, software, data analytics, and data centers. DORA expands IT risk regulations to include operational defects introduced by third-party vendors, which can cause significant IT disruptions. Unlike previous regulations that were more reactive, DORA is proactive and capabilities-led, encouraging firms to develop digital resilience strategies and continuously monitor third-party risks. This broader focus on IT risk management necessitates a new approach for financial entities, highlighting the importance of managing not just security vulnerabilities but also operational defects and third-party risks. 

Industry leaders must prepare for a significant shift, as DORA's comprehensive approach recognizes the pivotal role of digital services in the financial sector. DORA introduces a broad definition of ICT services, capturing a range of digital and data services essential to modern financial operations. Key points include:  

• Scope: Includes software, data processing, hardware, cloud services, and technical support (excludes traditional telephone services). 

• Impact: Affects major technology service providers, consultancy firms, SaaS providers, and smaller operators.  

• Reach: Approximately 15,000 ICT TPPs directly serve financial sector entities across the EU, rising to 20,000 when subcontractors are included. 

The landscape of ICT TPPs is layered, with services categorized based on their criticality to financial institutions:  

• Non-Critical TPPs: Offer supplementary technologies, not directly regulated under DORA but require contractual protections.  

• TPPs supporting critical functions: Provide services that support core functions within financial entities, subject to extensive customer requirements. 

• Critical TPPs: Essential to the financial sector's operational framework, subject to direct and stringent regulatory oversight. 

This layered approach highlights the varying degrees of reliance on TPPs and underscores the complexity of managing digital operations within the financial sector.  

DORA, set to be fully enacted by January 2025, will represent a paradigm shift in operational resilience for all EU financial service companies and their third-party providers. For those who may have missed it, our whitepaper "Preparing for DORA: Building Operational Resilience into Your Continuous Compliance Framework" offers a deep dive into these upcoming changes.  

The content details the timeline of DORA and its broad implications, offers strategies to mitigate the risk of costly outages, and provides suggestions to improve internal workflows. It also explains one of the most overshadowed IT risk factors that DORA addresses. This resource serves as a guide to not only meet, but exceed, the requirements of this pivotal regulation.   

Notably, the whitepaper highlights DORA's insistence on shifting from traditional static compliance models to a dynamic approach that demands ongoing, continuous compliance. This necessitates firms to rethink their IT risk management strategies, moving to a more resilience-focused approach. By understanding the requirements in advance and incorporating them into an integrated compliance framework, financial entities and other companies can enhance their operational resilience and be prepared for this significant change. 

Operational disruptions can be disastrous – both in terms of cost and reputation. In early 2022, a financial services firm with over $200B in assets faced $15 million in losses from IT outages caused by software bugs. Seeking a solution, they turned to BugZero for its operational defect risk management platform. BugZero helped the firm reassess IT risks beyond Common Vulnerabilities and Exposures (CVEs), preventing future outages and enhancing operational resilience. 

BugZero streamlined the vendor due diligence process with SOC 2 compliance and seamless integration via the ServiceNow app store. This allowed the firm to incorporate BugZero into their IT operations quickly. BugZero's automation and AI capabilities filtered thousands of vendor-published bugs, identifying only the most severe and catastrophic ones. The platform's proprietary algorithm provided immediate risk assessment, while its automation handled repetitive tasks, correlated data, and compiled reports. 

Since implementing BugZero, the financial services firm has seen significant improvements. BugZero's defect risk management has prevented any further bug-related outages and enhanced the firm's IT operations. The firm now benefits from better reporting capabilities, reduced manual effort, and continuous IT operations improvement. BugZero’s integration and automated defect management have matured the firm’s IT operations while reducing IT risk, demonstrating a significant return on investment. 

Think about DORA as more than a regulatory requirement; it’s an opportunity to revolutionize your operational resilience. Prepare for the future. Embrace this opportunity to protect your organization against disruptions and enhance your IT framework.  

Ready to ensure compliance and strengthen your resilience? Learn how BugZero can help you today!