- DORA: how the new european regulation works: its standards for improving operational resilience and cybersecurity
- Challenges and opportunities for LATAM: investment in technology and cybersecurity, regulatory compliance, and organizational cultural change.
The Digital Operational Resilience Act (DORA) of the European Union came into effect on January 17, 2023, and will be fully implemented by January 17, 2025.
This regulatory framework aims to strengthen cybersecurity and digital resilience within financial institutions. While it was designed for the European context, DORA has significant implications for Latin America (LATAM) due to the increasing globalization of the financial system and the adoption of international standards. This article explores the challenges and opportunities DORA presents for the region.
What is DORA? a framework for digital resilience
DORA establishes uniform requirements for financial entities to manage risks related to information and communication technologies (ICT). Its main objectives include:
- ICT Risk management: Implement robust practices to identify, mitigate, and manage risks.
- Incident reporting: Create a system for reporting significant ICT-related incidents.
- Resilience testing: Conduct periodic assessments to measure resilience against operational disruptions.
- Third-Party monitoring: Regulate and monitor third parties providing critical ICT services.
- Information sharing: Standardize data exchange on cyber threats.
DORA and LATAM: challenges for the region
The impact of DORA on LATAM presents several challenges for financial institutions in the region:
- Regulatory compliance: Adopting international standards such as DORA requires significant resources, especially for smaller entities.
- Cybersecurity enhancement: Growing digital threats demand investments in advanced technology and training.
- Third-Party monitoring: Managing risks associated with third-party service providers will be key, which could be complex in a diverse technological ecosystem.
- Cultural change: It is essential to raise organizational awareness about operational risks and foster a culture of prevention.
Opportunities for DORA in LATAM
Despite the challenges, DORA offers an opportunity to strengthen the financial sector in LATAM:
- Best practices: Adopting measures based on DORA could enhance consumer trust in financial institutions.
- Increased competitiveness: Aligning with international standards will prepare entities to participate in global markets.
- Regional cooperation: Collaborative initiatives could be promoted to share information on threats and solutions.
- Regulatory momentum: Local regulators could use DORA as a reference to modernize their own regulatory frameworks.
Regulatory and strategic implications
The implementation of DORA could inspire similar local regulations in LATAM, such as ICT incident reporting systems and resilience testing. This would not only align the region with global standards but also strengthen confidence in the financial system.
On the other hand, financial institutions will need to:
- Conduct a gap analysis to identify gaps in their processes.
- Document current procedures.
- Establish action plans to comply with DORA principles.
DORA marks a milestone in digital operational resilience. While its implementation in LATAM presents challenges, it also offers an opportunity to strengthen the regional financial sector. Institutions that proactively adopt this framework will be better prepared to face future challenges, improve their competitiveness, and contribute to a more secure and reliable financial system. Ultimately, DORA is not just a challenge but a pathway to digital transformation and the global integration of LATAM’s financial system.