Cyber Risks and Financial Operational Resilience: A Synthesis of Key Themes

This document synthesizes key insights regarding the integration of cyber risk management within the broader framework of financial operational resilience. The central thesis is that cyber risks are now primarily addressed as a critical component of Information and Communications Technology (ICT) risk, which is foundational to achieving digital operational resilience. Cyber‑attacks are explicitly recognized as significant, man‑made disruptive events that financial services firms must strategically prepare for to ensure the continuity of critical services.

The regulatory landscape is undergoing a significant transformation, driven by the European Union's Digital Operational Resilience Act (DORA). DORA establishes harmonized, cross‑sector requirements for ICT risk management, incident reporting, third‑party risk management, and resilience testing. Its principles are now considered the benchmark for good practice by regulators like the Central Bank, which encourages all financial entities‑even those not directly subject to the act‑to adopt equivalent measures. This shift is further evidenced by the withdrawal of previous standalone cybersecurity guidance in favor of a more holistic, DORA‑aligned approach. Ultimately, the focus is on embedding robust cybersecurity and ICT risk management practices directly into a firm's overarching Operational Resilience Framework to withstand and recover from cyber‑related disruptions.

The Role of Cyber Risk in Operational Resilience

The provided context establishes a clear and direct link between cyber risk and the imperative for operational resilience in the financial services sector. Rather than being treated as a separate discipline, cybersecurity is positioned as an integral component of a firm's ability to withstand operational disruptions.

Cyber Incidents as Significant Disruptive Events

• Financial services firms face persistent challenges from cyber incidents and cyber‑attacks, which are identified as significant disruptive events that can compromise operational continuity [1, 2].
• These threats are categorized as man‑made causes of operational disruptions, placing them alongside other risks such as technology failures and insider threats [2].
• Consequently, firms are expected to prioritize operational resilience strategies that explicitly account for and ensure continuity amid future crises, including cyber threats [3].

Integration into Holistic Frameworks

• Effective operational resilience demands a holistic approach that coordinates various management disciplines, with ICT risk management being a cornerstone of this integration [5, 10].
• The resilience of a firm's technology infrastructure and the comprehensive protection of its ICT assets‑core tenets of cybersecurity‑are considered integral to any successful Operational Resilience Framework [6, 7].

Defining and Managing ICT Risk

The concept of ICT risk serves as the primary umbrella under which cyber risks are managed within the operational resilience context. This framework provides a structured approach to identifying and mitigating threats to digital systems and services.

Official Definition of ICT Risk

ICT risk is formally defined as "any identifiable circumstance related to network and information systems that, if materialized, could compromise the security of these systems, technology‑dependent tools or processes, operations, or service provision, leading to adverse effects in digital or physical environments" [4, 9]. This definition explicitly encompasses the full spectrum of cyber risks.

ICT Resilience Strategies

• Firms are mandated to develop dedicated ICT Resilience strategies that are directly aligned with the operational resilience requirements of their critical or important business services [6].
• The primary objective is to manage ICT systems and their dependencies in a manner that ensures a high level of digital operational resilience [7].

The Regulatory Landscape and the Digital Operational Resilience Act (DORA)

Regulatory evolution, spearheaded by the Digital Operational Resilience Act (DORA), is the principal driver compelling financial firms to formally integrate cyber and ICT risk into their resilience frameworks. DORA creates a new, harmonized standard for the entire European financial sector.

DORA's Central Role

• DORA is a landmark piece of legislation that establishes uniform requirements for digital operational resilience across various financial sectors in Europe [7, 8, 11‑14].
• The act introduces specific and binding requirements for key areas including:
  • ICT risk management frameworks
  • ICT‑related incident management and reporting
  • Digital operational resilience testing
  • Management of ICT third‑party risk [8, 14]

DORA as a Benchmark for Good Practice

• The Central Bank officially recognizes DORA's requirements as representing good practices for ICT risk management, incident management, testing, and third‑party arrangements for all financial entities under its purview [8].
• Firms that are not directly subject to DORA are strongly encouraged to consider implementing equivalent measures within their own operational resilience and ICT risk management frameworks [15‑17].
• Specifically, DORA's Simplified Risk Management Framework is highlighted as a model of good practice for these firms [15‑17].

Regulatory Evolution and Alignment

• The strategic importance of DORA is underscored by the Central Bank's decision to withdraw its "Cross Industry Guidance in respect of Information Technology and Cybersecurity Risk Management" (issued in September 2016) in December 2020 [11].
• This action was taken explicitly to align with DORA and to enhance regulatory simplification and clarity, signaling a definitive shift from siloed cybersecurity guidance to a more integrated, resilience‑focused regulatory approach [11].

Practical Applications and Complementary Directives

The principles of integrated cyber resilience extend into specific operational functions and are designed to be compatible with other relevant regulations, creating a cohesive regulatory environment.

Incident Management and Reporting

• Incident management strategies must be fully integrated into the broader Operational Resilience Framework and must cover the full lifecycle of an event, from detection to resolution and post‑mortem analysis [18].
• For firms directly subject to DORA, this includes mandatory compliance with the act's detailed provisions on ICT‑related incident management, classification, and reporting for all major ICT‑related incidents [19].

Compatibility with the NIS2 Directive

• The guidance on operational resilience is explicitly presented as being compatible with and complementary to the ‘Directive on Security of Network and Information Systems' (NIS2) [20].
• This alignment further reinforces the overarching regulatory focus on comprehensively managing network and information security risks, including the full range of cyber threats [20].