The Digital Operational Resilience Act (DORA) represents a significant shift in how financial entities across the European Union must approach operational resilience. With the final deadline for compliance fast approaching in January 2025, the urgency for institutions to align their processes with the regulation is intensifying. DORA’s scope is broad, encompassing everything from ICT risk management and incident reporting to third-party risk management and digital operational resilience testing.
Third Party Risk Management (TPRM) is a critical pillar of DORA, focusing on the management of risks that arise from dependencies on external ICT service providers. Compliance with DORA's TPRM requirements presents several challenges for businesses:
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Compliance with DORA's TPRM requirements will require significant adjustments and resources from businesses. To effectively manage third-party risks, businesses should establish a comprehensive framework that addresses every stage of the vendor lifecycle. Conducting thorough due diligence and risk assessments on vendors is crucial, with a focus on their cybersecurity measures and operational resilience. Contracts should be robust, clearly defining terms related to data protection, audit rights, and incident response. Continuous monitoring of vendors, supported by advanced technology, is essential for maintaining real-time oversight. Additionally, developing and regularly testing incident response plans will help businesses manage potential disruptions. These practices collectively enhance risk management, resilience, and compliance.
For further information on how we can help your organisation navigate the complexities of Third Party Risk Management, please contact our team of experts.