Strengthening Digital Resilience: The impact of Internal Audit in DORA

DORA is a cornerstone regulation designed to enhance operational resilience, ensuring financial organisations can withstand, respond to, and recover from ICT-related disruptions. Internal audit plays an important role in helping organisations meet DORA’s stringent requirements by offering assurance that governance, controls, and risk management frameworks are robust and effective.

 

DORA at a Glance

DORA establishes a unified regulatory framework for digital operational resilience across the EU’s financial sector. Financial institutions—including banks, insurance companies, investment firms, and payment institutions—must adhere to its core mandates:

1. Strengthen ICT risk management frameworks by implementing robust governance structures and operational risk controls.
2. Ensure resilience through ICT incident reporting that follows specific regulatory requirements.
3. Conduct comprehensive digital operational resilience testing (DORT) to identify vulnerabilities and measure the effectiveness of existing controls.
4. Manage third-party risks, particularly ICT service providers, by establishing rigorous oversight mechanisms.
5. Enhance cybersecurity and recovery plans to minimise service disruptions and safeguard sensitive information.

 

Internal audit is instrumental in aligning with DORA objectives and providing independent assurance on compliance and good practice 

 

Internal Audit’s Contribution to DORA Compliance

As financial entities strive to meet stringent DORA’s requirements, internal audit functions act as a strategic partner, evaluating, reporting, and refining DORA-related processes, such as:

1. Evaluating ICT Risk Management Frameworks

Internal audit ensures that the organisation’s ICT risk management framework aligns with DORA’s requirements by:

• Reviewing policies and procedures governing ICT risk;
• Evaluating the organisation’s approach to identifying, assessing, and mitigating ICT risks; and,
• Ensuring the board and senior management are actively engaged in ICT risk governance.

2. Reviewing Incident Management Processes

Internal auditors examine how financial entities report and manage ICT-related incidents. They assess:

• Whether incidents are reported to relevant authorities within DORA’s prescribed timelines;
• The effectiveness of root cause analyses and corrective action plans; and,
• Compliance with DORA’s requirements for documenting and learning from incidents.

 

3. Assessing Digital Operational Resilience Testing

A critical DORA requirement is the regular testing of ICT systems’ resilience. Internal audit:

• Reviews the scope, frequency, and outcomes of testing processes;
• Confirms that testing identifies vulnerabilities and that management implements remediation plans; and,
• Assesses the adequacy of testing methodologies and third-party penetration testing results.

4. Auditing Third-Party Risk Management

With DORA placing a significant focus on ICT third-party risk, internal audit:

• Evaluates the organisation’s vendor selection, contracting, and monitoring processes;
• Ensures compliance with contractual obligations and risk mitigation strategies for ICT providers; and,
• Verifies that the organisation maintains an accurate and updated inventory of ICT third-party relationships.

 

5. Reviewing Cybersecurity and Recovery Planning

Internal audit provides assurance on the robustness of cybersecurity frameworks and disaster recovery plans by:

• Assessing the adequacy of security controls to prevent cyberattacks;
• Reviewing business continuity plans and their alignment with DORA’s expectations; and,
• Ensuring timely updates and regular testing of recovery processes.

 

Challenges in DORA Compliance

While internal audit plays a significant role in DORA compliance, challenges include:

• Increased regulatory burden requiring enhanced governance and controls;
• Keeping pace with technological advancements and evolving cyber threats; and,
• Ensuring adequate resources and expertise within internal audit teams to meet ICT risk and resilience demands.

Turning Challenges into Opportunities

By integrating DORA compliance into the internal audit plan, financial entities can:

• Build trust with regulators, clients, and stakeholders;
• Improve overall digital resilience and operational efficiency; and,
• Identify potential gaps and opportunities for improvement before regulatory scrutiny.

What’s next

Looking ahead, internal audit will continue to play a critical role in ensuring ongoing DORA compliance. As financial institutions navigate the evolving digital landscape, internal audit will not only provide independent oversight but also drive continuous improvements in governance and risk management. By staying ahead of emerging challenges, internal audit will help organisations safeguard their operational integrity, ensuring they remain resilient and secure in the face of future regulatory demands and technological advancements.



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