The DORA Regulation, in its endeavor to address the growing risk of third-party concentration in ICT, has drawn a fine line between the need to ensure financial stability and the need to foster innovation in the sector.
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DORA acknowledges the importance of contractual freedom and innovation but also emphasizes the necessity of thoroughly evaluating the risks associated with the concentration of ICT service providers. Financial entities must be capable of identifying and mitigating risks arising from outsourcing agreements, particularly when they involve providers located in third countries.
The flexible and gradual approach proposed by the Regulation, while avoiding the imposition of rigid limits that could hinder business activity, raises questions about its effectiveness in mitigating systemic risks.
The thorough evaluation of contractual agreements, including outsourcing contracts, is a fundamental step, but will it be sufficient to proactively identify and manage risks?
The role of the principal supervisor becomes crucial in this context. Their ability to understand the magnitude of interdependencies and to detect concentration risks in a timely manner will be decisive in preserving the stability of the financial system.
However, how can we ensure that this supervisor has the necessary resources and knowledge to fulfill this complex task?
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DORA: key contractual clauses for access, inspection and audit of ICT providers
Finally, the harmonization of contracts with third-party ICT service providers is a significant advancement, but to what extent will these agreements succeed in ensuring the digital resilience of financial entities? The increasing dependence on ICT in the financial sector demands constant vigilance and continuous adaptation of regulatory measures.
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DORA: Digital Resilience in the Financial Sector. Balancing Regulation and Flexibility
