NIS 2 Directive: Relation to DORA Regulation

EU banks navigate complex compliance with NIS2, CER, & DORA. The Swedish Banking Assoc. seeks a harmonised approach to streamline processes, ensure cybersecurity, and bolster operational resilience within the financial sector.

NIS 2 Directive: Relation to DORA Regulation
EU Cybersecurity in the Financial Sector

NIS2 and CER Directives in Relation to the DORA Regulation

Svenska Bankföreningen Keywords DORA NIS2

The Association of Swedish Banks is actively engaged in a dialogue to demystify the interplay between the NIS 2 Directive, the Critical Entities Resilience (CER) Directive, and the Digital Operational Resilience Act (DORA) regulation within the financial sector. This initiative is part of a broader, strategic response to the European Union's legislative efforts aimed at elevating cybersecurity standards and reinforcing the operational resilience of vital financial services.


The NIS 2 Directive, an evolution of its predecessor, is designed to provide a high common level of cybersecurity across member states, focusing on enhancing the security of network and information systems. The Critical Entities Resilience (CER) Directive, on the other hand, is aimed at establishing a framework to ensure European critical entities are robust enough to withstand and counteract disruptions. Both directives are pivotal in the EU's cybersecurity strategy.


However, the introduction of the DORA regulation, which took effect on January 16, 2023, has brought a new dimension to the regulatory landscape. DORA is specifically tailored to the financial sector, mandating a comprehensive set of standards for ICT risk management, incident handling protocols, detailed incident reporting mechanisms, regular security testing, and stringent management of ICT third-party risk.


Given the specificity and breadth of the DORA regulation, the Association of Swedish Banks is advocating for a streamlined regulatory approach. The concern is that the NIS 2 and CER directives, while crucial, may overlap with DORA's mandates, leading to regulatory redundancy for banks. The association posits that DORA's exhaustive guidelines already encompass the cybersecurity and resilience objectives of the NIS 2 and CER directives, thus should be considered the primary regulatory framework for financial institutions.


The call for clarity is not just a matter of compliance efficiency; it is also about ensuring that banks can allocate resources effectively without being burdened by potentially duplicative regulatory demands. The Association of Swedish Banks emphasiSes the need for a regulatory environment where the DORA regulation serves as the cornerstone for digital operational resilience in the banking sector, with the NIS 2 and CER directives complementing it without creating unnecessary overlap.


In the context of this regulatory discussion, the Association of Swedish Banks is also highlighting the importance of a harmonized European regulatory framework. It ensures that banks can operate on a level playing field, fostering a secure and resilient digital infrastructure across the entire European financial market.


The ongoing investigation into the implementation of EU directives is a testament to the commitment of the EU and its member states to safeguard the financial sector from cyber threats and operational disruptions. The Association of Swedish Banks is poised to play a critical role in shaping the outcome of this investigation, ensuring that the regulations like NIS 2, CER, and DORA are applied in a manner that promotes cybersecurity, operational resilience, and the smooth functioning of the financial market.


As the dialogue progresses, the financial sector keenly anticipates further guidance from regulatory bodies. The outcome of this clarification will undoubtedly have a significant impact on how banks across Sweden and the broader EU navigate the complex web of cybersecurity and operational resilience regulations.




EU Financial Regulatory Framework: NIS2, CER, and DORA


The NIS 2 Directive is the European Union's clarion call for heightened cybersecurity across all its critical sectors, including the banking industry. The directive's expansive reach requires banks to fortify their digital fortresses, ensuring they can withstand the growing onslaught of cyber threats that recognize no borders.


  • Scope and Significance of NIS2:

The directive goes beyond its predecessor to encompass a wider array of sectors, pushing for a unified cybersecurity strategy. Banks, in particular, are mandated to elevate their cyber defense mechanisms to align with this ambitious continental blueprint. They face the intricate task of weaving the NIS2 requirements into the fabric of their existing systems, a process that demands both strategic foresight and meticulous execution.


  • Operational Impacts on Banks:

As banks interpret the broad language of NIS 2, they must tailor these guidelines to their operations, which can vary significantly from one institution to another. The directive’s sweeping nature means that financial institutions must embark on a comprehensive review of their cybersecurity policies, identify gaps, and implement measures that satisfy the EU's stringent standards.




The DORA Regulation: ICT Risk for Financial Institutions


With the precision of a tailor crafting a bespoke suit, the DORA regulation has been designed to fit the contours of the financial sector's ICT risk landscape. It is a regulatory ensemble created for the express purpose of safeguarding the financial sector's digital operations.


  • DORA's Directives for Banks:

DORA delineates clear expectations for financial entities, such as the need for a resilient infrastructure capable of withstanding ICT-related disruptions. It lays out a blueprint for incident response strategies, ensuring that banks have both the foresight to prevent ICT risks and the agility to respond effectively when risks materialise.


  • DORA’s Detailed Requirements:

The regulation compels banks to implement regular security testing and to maintain rigorous oversight of third-party service providers. This is a critical component, as the modern bank's operations are increasingly intertwined with a web of external ICT services, from cloud storage solutions to fintech partnerships.





The interplay between the DORA regulation and the NIS 2 Directive is akin to a dance between partners, requiring rhythm and coordination to prevent a misstep that could lead to regulatory non-compliance.


  • Potential Overlaps and Gaps:

Banks must remain alert to the nuances of both sets of regulations. They must ensure that their compliance with DORA's specific requirements also aligns with the overarching cybersecurity objectives set out by NIS2. It is a balancing act that requires a deep understanding of the regulatory landscape and the ability to implement processes that are efficient and effective.




The Implications of Regulatory Redundancy on Resource Efficiency


The Swedish Banking Association's concerns about redundancy between the NIS 2 Directive and the DORA regulation spotlight the potential for an inefficient use of resources, which could be better deployed in strengthening cyber defenses or enhancing customer service.


  • Strategies to Eliminate Redundant Efforts:

Banks are encouraged to take a strategic approach that integrates the objectives of NIS2 and DORA, using each directive's strengths to build a comprehensive cybersecurity and operational resilience framework. This approach not only ensures compliance but also optimizes the bank's investment in cybersecurity, ensuring that every euro spent contributes to the institution's resilience.




Regulatory Directives: The Future of EU Banking Compliance


The push for a harmonised approach to the NIS 2 Directive and the DORA regulation by the Swedish Banking Association is indicative of a broader desire for clarity and cohesion within the EU regulatory environment.


  • Creating a Level Playing Field:

Harmonization would ensure that all EU banks adhere to the same high standards, fostering not only a secure banking environment but also a competitive market that is fair and secure. It would enable banks to plan and implement compliance measures with the confidence that they are meeting EU-wide expectations and contributing to the resilience of the EU's financial infrastructure.




NIS 2 & DORA regulation: Shaping the Regulatory Landscape for EU Banks


As the Swedish Banking Association continues to engage with regulatory bodies, the outcomes of these discussions will shape the future of compliance and cybersecurity for banks across the EU.


  • Setting Industry Precedents:

The way the EU resolves the complexities of the interplay between the NIS2 Directive and the DORA regulation will have implications that reach beyond the financial sector, potentially setting a benchmark for other industries facing similar regulatory challenges. The banking sector's experiences and the solutions it implements can offer valuable insights into achieving a balance between sector-specific and broad regulatory requirements.


The ongoing dialogue is not merely a procedural discussion; it is a strategic endeavor to foster a secure, resilient, and competitive financial market across the European Union. As the financial industry continues to evolve, the regulations that govern it must be agile, clear, and conducive to the ultimate goal of a robust financial ecosystem.




Read More

The State of Security in the European Union: NIS2, CER and DORA - RHEA Group
Discover how the European Union NIS2 and CER Directives and DORA Regulation will affect the cybersecurity of critical infrastructures of EU Member States.




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