The Digital Operational Resilience Act (DORA) enacted by the European Union will come into force on January 17, 2025, introducing new regulations for covered financial entities within the European Union. This act requires these entities to ensure their contracts with third-party Information and Communication Technology (ICT) service providers meet specific requirements to mitigate operational risks. Compliance with DORA involves more than internal ICT policy updates; it also necessitates a thorough review and possible modification of existing contracts.

This guide provides a roadmap for covered financial entities to navigate DORA’s mandatory contract provisions and offers a strategic approach to reviewing and updating agreements to ensure compliance by the deadline.

Understanding DORA’s Scope and Objectives

DORA applies to a wide range of financial entities, including banks, investment firms, fund managers, insurance companies, and other regulated entities in the EU. Its primary goal is to strengthen operational resilience by mandating comprehensive risk management across various ICT services, such as cloud computing, software-as-a-service (SaaS) platforms, digital data services, and IT infrastructure.

Key Contract Provisions Required by DORA

To comply with DORA, financial entities must ensure that all contracts with third-party ICT service providers, include the following provisions:

• Access and Audit Rights
• Performance Standards
• Service Locations
• Data Protection and Confidentiality
• Business Continuity Planning
• Termination Rights
• Cooperation with Authorities
• Incident Classification, Notification, and Reporting
• Compliance with Information Security Standards

For third-party ICT services deemed critical or important, additional requirements apply, such as more stringent subcontracting rules, enhanced reporting obligations, and detailed exit planning.

The Necessity of Reviewing and Updating Existing Agreements

With DORA setting new compliance standards, reviewing existing agreements with ICT third-party providers (TPPs) is crucial. Many contracts may not currently address the specific provisions required by DORA, especially those concerning risk management, business continuity, and the systemic impact of services. Failing to update these contracts can expose financial entities to non-compliance risks and operational vulnerabilities.

Effectively reviewing and updating these agreements requires a systematic approach. Given the complexity and volume of contracts, partnering with a third-party provider that offers a robust technology platform is vital. This approach allows for efficient comparison and alignment of contract terms with DORA requirements, helping firms meet compliance deadlines and avoid potential disruptions.

Why Partnering with a Third-Party Technology Provider is Key

To manage DORA compliance effectively, financial entities need more than legal guidance— they require a technology-driven solution that streamlines the review and update process. A third-party technology provider can offer features like:

• Contract Term Extraction: Automating the identification and extraction of key contract terms.
• Provision Comparison: Comparing current contract provisions against DORA’s mandatory requirements.
• Automated Alerts: Configure alerts for non-compliance risks and ensure contracts stay current with automatic reminders for deadlines, deliverables, and key obligations.

By leveraging these features, financial entities can more easily ensure that their contracts are aligned with regulatory obligations.

How Quadrangle and QDS Can Help

At Quadrangle, we combine regulatory and subject matter expertise with advanced technology to help financial entities navigate DORA compliance. Our platform provides a centralized repository for all vendor contracts, advanced document management tools, and automated alerts to keep you aligned with compliance deadlines. Additionally, our technology enables swift comparison of contract terms, ensuring adherence to DORA’s mandatory provisions.

Quadrangle’s comprehensive solution integrates legal expertise, optimizing your contracts for compliance and operational resilience. Whether renegotiating agreements or benchmarking current terms, our team provides tailored solutions that fit your needs.

By proactively addressing DORA’s requirements with our support, you will not only meet compliance standards but also strengthen your firm’s resilience against potential ICT disruptions.

Click the link below to learn more about how QDS and Quadrangle can assist with navigating DORA compliance.