Preparing for DORA: Insights from the Dutch Financial Watchdog on Testing Digital Operational Resilience

The Dutch Authority for the Financial Markets (AFM) has released its fifth update on the Digital Operational Resilience Act (DORA), providing critical guidance on the testing of digital operational resilience for financial firms. Since its implementation in January 2023, DORA aims to fortify financial organizations against IT risks, ensuring they are better equipped to withstand cyber threats and maintain operational continuity.

As organizations navigate the requirements set forth by DORA, the AFM emphasizes the importance of establishing robust testing frameworks. These frameworks are designed to regularly assess and enhance the security and resilience of information technology systems. By routinely testing their ICT tools and systems, firms can identify vulnerabilities and address deficiencies proactively, safeguarding critical functions in the event of disruptions.

The testing methodologies outlined in Article 25 of the Regulation should be selected based on a proportionality principle, taking into account the size and risk profile of the firm. Various tests can be incorporated into the program:

1. Vulnerability Scans: Automated assessments that identify security weaknesses within ICT systems.
2. Gap Analyses: Evaluations comparing current system performance against expected outcomes to identify compliance issues.
3. Physical Security Assessments: Tests ensuring unauthorized access to sensitive locations is prevented.
4. Source Code Reviews: Independent evaluations of code prior to deployment to identify potential flaws.
5. Compatibility Testing: Assessments of software functionality across various environments, including different hardware and network configurations.
6. End-to-End Testing: Comprehensive checks on applications to ensure all components function correctly under real-world conditions.
7. Penetration Testing: Simulated attacks conducted by external testers to uncover vulnerabilities.

This program encompasses a variety of tests, methodologies, and tools aimed at evaluating the effectiveness of ICT systems and processes. Notably, the update highlights the introduction of threat-led penetration testing (TLPT), which certain designated firms will be required to undertake every three years. This advanced testing approach simulates cyber threats, providing a comprehensive evaluation of a firm's defenses against real-world attacks.

Compliance Timeline and Supervision

Firms are expected to comply with DORA regulations by January 2025. Following this deadline, both the AFM and De Nederlandsche Bank (DNB) will be responsible for supervising adherence to the regulation. Some firms may already be subject to DORA-related requirements due to existing laws, positioning them advantageously as they prepare for full compliance.

The AFM's insights into the testing of digital operational resilience under DORA are crucial for financial firms aiming to enhance their cybersecurity posture. By understanding and implementing these testing protocols, organizations can significantly bolster their defenses against an increasingly complex threat landscape.

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