How to Leverage Digital Identity to Strengthen Operational Resilience Under DORA

The evolving digital threat landscape has heightened the need for robust operational resilience in financial services. As the EU’s Digital Operational Resilience Act (DORA) takes effect on January 17, 2025, financial service providers must align their ICT systems with its stringent standards. This regulation is not just about compliance; it’s about safeguarding trust and ensuring business continuity.

DORA: A Milestone in Financial Regulation

DORA addresses the critical need for operational stability in a digital-first financial world. It provides a harmonized framework for managing ICT risks across banks, insurers, investment firms, and their technology supply chains. Key requirements include:

• Identifying critical ICT systems and ensuring their resilience.
• Developing robust incident reporting arrangements.
• Creating and testing disaster recovery (DR) plans.
• Preparing for audits with detailed readiness protocols.

Identity and Access Management (IAM) has emerged as a critical asset for achieving DORA compliance, enabling secure access, real-time incident reporting, and improved operational efficiency.

The High Stakes of Operational Resilience

Financial service providers face immense pressure to avoid disruptions that could undermine customer trust and economic stability. Legacy IAM systems exacerbate risks by complicating ecosystem management, exposing vulnerabilities to sophisticated cyberattacks, and failing to meet rigorous regulatory standards. In addition, customers expect uninterrupted, secure financial services, making resilience a non-negotiable priority.

IAM: A Strategic Enabler of DORA Compliance

Modern IAM platforms provide capabilities that align directly with DORA’s mandates:

Incident Detection and Reporting

DORA emphasizes timely ICT incident reporting. Converged IAM solutions detect unusual activity, such as unauthorised access attempts, enabling:

• Early detection of security threats.
• Automated alerts for internal teams and regulators.
• Comprehensive audit trails for compliance.

Strengthening Disaster Recovery

Disaster recovery is a cornerstone of operational resilience. Converged IAM platforms with failover mechanisms ensure continuity during disruptions by:

• Automating failover testing.
• Rapidly recovering access systems.
• Securing access management during DR events.

Simplifying Audit Readiness

DORA introduces rigorous reporting requirements. Converged IAM solutions simplify compliance by:

• Centralizing access data.
• Automating compliance reporting.
• Providing detailed logs of access activities.

The Cost of Inaction

Legacy IAM systems pose significant risks:

• Operational Failures: Limited redundancy leads to outages during disruptions.
• Security Vulnerabilities: Older platforms are more susceptible to attacks.
• Non-Compliance: Inadequate capabilities hinder regulatory adherence.

Embracing Modern IAM for Resilience and Growth

Modern IAM platforms go beyond compliance by providing strategic advantages. Enhanced security features, such as passwordless authentication, adaptive multi-factor authentication (MFA), and dynamic authorisation protect customer trust through seamless and secure user experiences. Additionally, automation and tool consolidation reduce long-term operational costs, freeing resources for strategic initiatives.

These platforms also align with digital transformation efforts, supporting cloud adoption, secure integration of third-party services, and innovation in open banking and decentralized finance. By investing in modern and converged IAM systems, financial institutions can future-proof their operations while meeting regulatory expectations

Building a Future-Proof IAM Framework

The journey to DORA compliance is an opportunity to future-proof IAM systems, ensuring resilience, trust, and growth. Steps to take now include:

• Conduct a Readiness Assessment: Evaluate IAM infrastructure against DORA requirements.
• Invest in Modernization: Plan for IAM modernisation to meet current and future demands.
• Test Regularly: Simulate DR scenarios to ensure real-world readiness leveraging comprehensive IAM tooling.

By embracing IAM modernisation today, financial service providers can navigate the DORA landscape with confidence, safeguarding their operations and positioning themselves as leaders in regulatory compliance and operational excellence.