DORA
EU regulation for digital operational resilience in financial sector
Basel III
Global framework for bank capital, leverage, and liquidity standards.
Quick Verdict
DORA mandates ICT resilience for EU financial firms via risk frameworks and testing, while Basel III enforces global bank capital, leverage, and liquidity standards. EU entities adopt DORA for compliance; banks use Basel III for prudential resilience and market confidence.
DORA
Regulation (EU) 2022/2554 Digital Operational Resilience Act
Key Features
- Harmonizes EU-wide ICT resilience rules for finance
- Mandates direct oversight of critical ICT third-parties
- Requires triennial threat-led penetration testing for criticals
- Enforces 4-hour major incident reporting timelines
- Applies proportionality based on entity size and risk
Basel III
Basel III: Finalising post-crisis reforms
Key Features
- Strengthened CET1 capital minimum of 4.5% RWA
- Non-risk-based leverage ratio at 3%
- Liquidity Coverage Ratio for 30-day stress survival
- Net Stable Funding Ratio for one-year resilience
- Capital buffers with automatic distribution constraints
Detailed Analysis
A comprehensive look at the specific requirements, scope, and impact of each standard.
DORA Details
What It Is
Digital Operational Resilience Act (DORA), Regulation (EU) 2022/2554, is an EU-wide regulation strengthening ICT resilience for financial entities against disruptions like cyberattacks. Applicable to 20 entity types (~22,000 organizations) and critical third-party providers (CTPPs), it employs a risk-based, proportional approach, harmonizing national rules entering full force January 17, 2025.
Key Components
- **ICT Risk ManagementComprehensive frameworks with vulnerability scans, continuity plans, annual reviews.
- **Incident Reporting4-hour initial alerts, 72-hour updates, monthly root-causes for major events.
- **Resilience TestingAnnual basic tests, triennial threat-led penetration testing (TLPT).
- **Third-Party OversightDue diligence, monitoring, ESAs supervision of CTPPs. No certification; compliance via RTS/ITS standards.
Why Organizations Use It
Mandated to avoid 2% turnover fines; counters cyber threats (74% ransomware hit); boosts resilience post-CrowdStrike; enhances trust, competitiveness in digital finance.
Implementation Overview
Gap analyses, framework builds, testing programs, vendor strategies; for EU financials; proportional by size; authority oversight, no external cert but reporting/remediation required. (178 words)
Basel III Details
What It Is
Basel III is the global regulatory framework by the Basel Committee on Banking Supervision (BCBS), introduced post-2008 crisis. It enhances bank resilience through higher-quality capital, leverage constraints, and liquidity standards. Its multi-metric, risk-based approach integrates RWA-based ratios with non-risk metrics for comprehensive prudential oversight.
Key Components
- **Three PillarsPillar 1 (capital ratios: CET1 4.5%, Tier 1 6%, Total 8%; leverage 3%; LCR/NSFR 100%), Pillar 2 (supervisory review/ICAAP), Pillar 3 (disclosures).
- Capital buffers: conservation (2.5%), countercyclical, G-SIB/D-SIB.
- Revised RWA methods, output floor (72.5%), standardized approaches.
- National implementation without centralized certification.
Why Organizations Use It
Banks implement for mandatory compliance, crisis resilience, systemic risk reduction, and comparability. Benefits include usable buffers, better funding costs, strategic asset allocation, and enhanced market trust via transparent disclosures.
Implementation Overview
Phased enterprise transformation: gap analysis, data/IT upgrades, model governance, training. Targets internationally active banks globally; involves ongoing reporting, stress testing, and supervisory engagement. (178 words)
Key Differences
| Aspect | DORA | Basel III |
|---|---|---|
| Scope | ICT risk mgmt, incidents, testing, third-party oversight | Capital, leverage, liquidity ratios, disclosures |
| Industry | EU financial entities + CTPPs | Internationally active banks globally |
| Nature | Mandatory EU regulation | Global prudential standards |
| Testing | Annual basic + triennial TLPT | Stress testing, ICAAP reviews |
| Penalties | Up to 2% global turnover | Supervisory add-ons, restrictions |
Scope
Industry
Nature
Testing
Penalties
Frequently Asked Questions
Common questions about DORA and Basel III
DORA FAQ
Basel III FAQ
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