ISO 27001 and DORA Compliance: Navigating the EU’s Cybersecurity Directive

What is DORA, and Who Must Comply?

The Digital Operational Resilience Act (DORA) is the EU’s latest cybersecurity directive, impacting 21 types of financial entities. These include traditional financial institutions, FinTech companies, insurance intermediaries, and crucially, ICT providers that serve affected organizations. You can find a comprehensive list of these organizations here.

DORA places significant emphasis on third-party providers. By addressing gaps in ICT services and enhancing third-party risk management, DORA aims to prevent data breaches that have plagued the financial sector in recent years.

Exemptions and Timelines

DORA does offer exemptions. “Very small enterprises,” defined as financial entities with fewer than 10 employees and an annual turnover or balance sheet under €2 million, are exempt. Additionally, intermediaries—companies with fewer than 250 employees and a turnover under €50 million or a balance sheet under €43 million—also enjoy a larger exemption.

As for compliance timelines, DORA was originally proposed in 2020. The European Union formally adopted it in November 2022. Financial entities and their third-party IT providers have until January 17, 2025, to align with DORA requirements before enforcement begins. Regulators in each EU member state, known as “competent authorities,” will oversee enforcement. They can request specific security measures, address vulnerabilities, and impose administrative and criminal penalties on non-compliant entities. Each member state will determine its own penalties

The details

1. Understanding DORA Pillars

DORA is structured around five critical pillars:

  1. ICT Risk Management: Financial institutions must identify, assess, and mitigate ICT-related risks to bolster operational resilience.
  2. Incident Response and Reporting: Prompt and accurate incident reporting mechanisms are essential to maintain system integrity.
  3. Operational Resilience Testing: Regular resilience testing helps identify vulnerabilities and implement necessary improvements.
  4. Managing ICT Third-Party Risks: Effective monitoring and management of third-party risks are crucial.
  5. Harmonisation Across EU: DORA aims to harmonise operational resilience requirements across EU member states.

2. ISO 27001’s Role

ISO 27001, the international standard for information security management, provides a framework for organisations to enhance operational resilience and comply with regulatory requirements. It emphasizes risk management and the establishment of an Information Security Management System (ISMS).

3. Integration with DORA Components

By integrating ISO 27001’s information security measures with DORA’s critical components, businesses can achieve compliance effectively:

  • Risk Management: ISO 27001’s risk-based approach aligns with DORA’s ICT risk management pillar.
  • Incident Reporting: ISO 27001 ensures timely incident detection and reporting.
  • Resilience Testing: ISO 27001 supports regular testing to assess system effectiveness.
  • Third-Party Risk Management: ISO 27001’s due diligence practices align with managing ICT third-party risks.

4. Benefits of ISO 27001

Leveraging ISO 27001 not only secures sensitive information but also builds a robust foundation for operational resilience. It prepares organisations to meet DORA’s objectives and compliance requisites effectively.

In summary, ISO 27001 provides the structure and culture necessary for DORA compliance, emphasising risk management and resilience.