Navigating Operational Resilience: A Comparative Look at DORA, TLPT, and Beyond

This is the first installment in my series of blogs exploring the dynamic world of operational resilience regulatory frameworks, with a special focus on DORA (Digital Operational Resilience Act) and TLPT (Threat Led Penetration Testing).

In this blog, I have shared my observations while examining how regulatory changes in the UK, EU, and US are shaping the landscape for financial institutions. So grab your favorite beverage and settle into your comfy chair for this read.

Operational resilience has emerged as a critical area of focus within the financial services sector in recent years. While reforms following the 2008 financial crisis bolstered financial resilience, they left operational resilience relatively unaddressed. Fast forward to 2022, and we find ourselves in a world where cyber threats, pandemics, and other disruptions loom large, underscoring the need for robust operational resilience frameworks.

Enter DORA, the EU's proposed Digital Operational Resilience Act, aimed at fortifying the resilience of financial institutions in the digital age. With a focus on ICT (Information and Communication Technologies) risk, DORA seeks to address the ongoing challenges posed by digital disruptions. Meanwhile, the UK has rolled out its own operational resilience regime, requiring firms to identify critical services, set impact tolerances, and ensure continuity in the face of disruptions.

Across the pond, US federal banking regulators are also taking steps to enhance operational resilience, recognizing the myriad challenges posed by technology failures, cyber incidents, and more. While the US approach may differ in specifics, the overarching goal remains the same: safeguarding the stability of the financial system in the face of adversity.

So, how do these regulatory frameworks stack up against each other? Well, let's take a closer look.

Scope-wise, DORA focuses on digital operational resilience, while the UK regime takes a broader approach, encompassing all aspects of operational resilience. However, both aim to ensure the continuity of critical services and mitigate the impact of disruptions.

Methodologically, both the UK and EU frameworks emphasize the identification of critical functions and services, as well as the establishment of impact tolerances. While the UK regime provides detailed guidance on setting impact tolerances for each service, DORA offers a more general framework, leaving room for interpretation.

The US regulators are consolidating existing guidance and issuing new rules to address evolving cybersecurity risks. While their approach may differ in specifics, the overarching goal remains consistent: protecting the integrity of the financial system and minimizing disruptions.

Looking ahead, firms navigating these regulatory landscapes will need to invest in mapping, testing, and other measures to ensure operational resilience. With regulators ramping up scrutiny and expectations, proactive compliance will be key to staying ahead of the curve.

In conclusion, operational resilience is no longer just a buzzword—it's a critical imperative for financial institutions worldwide. By embracing regulatory changes and investing in robust resilience frameworks, firms can weather the storms of uncertainty and emerge stronger than ever before.

Stay tuned for more insights on Operational Resilience in my upcoming blogs.