Get Ready for DORA: Your 7-step guide to Cloud Compliance

by Cloud Transformation in Banking

Cloud computing has transformed the world digitally, which includes the financial sector. According to recent reports, nearly 98% of financial services companies are currently using some form of cloud computing, with a significant portion (59%) storing or processing regulated banking information within cloud services; indicating a high level of cloud adoption within the industry. This widespread adoption presents incredible opportunities for innovation and efficiency, but it also introduces new challenges, particularly in the realm of regulatory compliance. Which includes DORA. 

The Digital Operational Resilience Act a.k.a DORA, a landmark EU regulation (Regulation (EU) 2022/2554) designed to strengthen ICT risk management and enhance digital operational resilience within the financial services industry. DORA standardizes how financial entities report cybersecurity incidents, test their digital operational resilience, and manage ICT third-party risk across the financial services sector and EU states. 

The inevitable intersection of DORA and cloud computing is paramount, since cloud adoption presents both immense potential and significant hurdles for achieving compliance. In this blog, we will discuss strategies crucial for financial organizations to achieve DORA compliance with cloud computing. With DORA taking effect on January 17, 2025, getting ready is absolutely a top priority right now. 

An overview on DORA 

DORA sets forth a comprehensive framework for managing ICT risks, ensuring business continuity, and minimizing disruptions to financial services. Key requirements relevant to cloud computing include:

  • ICT Risk Management Framework: Establishing a robust framework for identifying, assessing, and mitigating ICT risks, including those associated with cloud environments. 
  • ICT Incident Management, Classification, and Reporting: Implementing standardized procedures for reporting significant ICT-related incidents, including cyberattacks and cloud service outages. 
  • Digital Operational Resilience Testing: Conducting regular testing to ensure the resilience of ICT systems and applications, including cloud-based infrastructure. 
  • Managing of ICT Third-Party Risk: Managing the risks associated with third-party ICT providers, especially cloud service providers, through due diligence, contractual obligations, and ongoing monitoring. 
  • Information Sharing Arrangements: Facilitating the sharing of information about cyber threats and vulnerabilities within the financial sector. 

The increasing frequency and cost of cyberattacks on financial institutions underscores the urgency of DORA compliance. Statistics reveal a disturbing trend: In 2023, data breaches came with a hefty average price tag of $4.45 million—a jump of 15% in just three years. As a prime target, the financial sector felt the brunt, with costs surging to an alarming USD 5.97 million per breach. 

Opportunities and Challenges for DORA Compliance 

Cloud computing offers numerous advantages for financial institutions, including scalability, cost-efficiency, and access to cutting-edge technologies. However, this widespread adoption also introduces specific challenges for DORA compliance: 

  • Data Security and Privacy: Ensuring data security and privacy in shared cloud environments requires meticulous planning and implementation of robust security controls. 
  • Third-Party Risk Management: Managing the risks associated with cloud providers requires a comprehensive third-party risk management program. 
  • Data Residency and Sovereignty: Meeting data residency and sovereignty requirements can be complex in cloud environments, especially for cross-border operations. 
  • Resilience and Availability: Ensuring the resilience and availability of cloud services is crucial for maintaining business continuity. 
  • Lack of Direct Control: Financial institutions often have less direct control over the underlying infrastructure in cloud environments. 

A 7 Step Data-Driven Approach to DORA Compliance in the Cloud 

A structured, data-driven approach is essential for achieving DORA compliance in cloud environments: 

Step 1: 

Data Inventory and Classification 

Establish a comprehensive data inventory, classifying data based on sensitivity and regulatory requirements like GDPR. 

Step 2: 

Risk Assessment 

Conduct thorough risk assessments of cloud environments, focusing on data security, third-party dependencies, and operational resilience.  

Step 3: 

Security Controls 

Implement robust security controls in the cloud, including access management, encryption, data loss prevention, and intrusion detection, following industry best practices like the NIST Cybersecurity Framework. 

Step 4: 

Third-Party Management 

Develop a strong third-party risk management program for cloud providers, including due diligence, contract negotiation, and ongoing monitoring. 

Step 5: 

Resilience Testing 

Implement regular resilience testing of cloud-based systems and applications, including disaster recovery and business continuity testing. This includes penetration testing, load testing, and other relevant methods. 

Step 6: 

Incident Response 

Establish a clear incident response plan for cloud-related incidents, including communication protocols and escalation procedures. 

Step 7: 

Monitoring and Reporting 

Implement continuous monitoring of cloud environments and generate regular reports on DORA compliance status. 

P.S. Data analytics can play a crucial role in improving DORA compliance by detecting anomalies, predicting risks, and automating reporting. 

Conclusion 

DORA compliance in the cloud is not just a regulatory obligation; it’s an opportunity to strengthen operational resilience, enhance data security, and build customer trust. Given the high level of cloud adoption in the financial services sector, as demonstrated by the fact that nearly all companies utilize some form of cloud computing, and the increasing reliance on cloud for sensitive data, a robust cloud strategy is paramount. 

By adopting a data-driven approach and leveraging available resources like Aspire systems, financial Organizations can effectively navigate the complexities of cloud computing and ensure compliance with DORA. 

Start your DORA compliance journey today! 

Harshavardini Murali
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