DORA
EU regulation for digital operational resilience in financial sector
J-SOX
Japanese regulation for internal controls over financial reporting
Quick Verdict
DORA mandates ICT resilience for EU financial entities against cyber threats, requiring testing and reporting. J-SOX enforces ICFR for Japanese listed firms via management assessments. Organizations adopt DORA for regulatory compliance, J-SOX for financial reporting reliability.
DORA
Regulation (EU) 2022/2554 Digital Operational Resilience Act
Key Features
- Mandates comprehensive ICT risk management frameworks overseen by management
- Requires 4-hour initial major incident reporting to authorities
- Imposes triennial threat-led penetration testing for critical entities
- Establishes oversight of critical third-party ICT providers
- Harmonizes resilience rules across 27 EU member states
J-SOX
Financial Instruments and Exchange Act (FIEA)
Key Features
- Management assessment of ICFR effectiveness
- External auditor attestation on management report
- Explicit IT response component in framework
- Risk-based scoping for listed companies
- COSO-aligned with asset preservation focus
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), formally Regulation (EU) 2022/2554, is an EU-wide regulatory framework enhancing digital operational resilience in the financial sector against ICT disruptions like cyberattacks and third-party failures. It applies to 20 financial entity types and critical ICT third-party providers (CTPPs), using a proactive, risk-based approach to shift from reactive measures to comprehensive resilience strategies.
Key Components
- Four core pillars: ICT risk management, incident reporting/response, resilience testing, and third-party oversight.
- Standardized requirements including 4/72-hour reporting timelines, annual basic tests, triennial threat-led penetration testing (TLPT).
- Built on proportionality principle, integrated with guidelines like EBA ICT rules.
- Compliance enforced via ESAs oversight, with penalties up to 2% global turnover.
Why Organizations Use It
Mandated for EU financial entities to meet legal requirements by January 2025, reducing systemic risks amid rising threats (74% ransomware hit rate). Enhances resilience, stakeholder trust, and competitiveness through harmonized practices and innovation in tools.
Implementation Overview
Involves gap analyses, framework establishment, testing programs, and vendor due diligence. Tailored by entity size/complexity; requires ongoing reviews and ESA reporting. Applies EU-wide to ~22,000 entities; no formal certification but strict audits and RTS compliance.
J-SOX Details
What It Is
J-SOX, or Japan's internal control regime under the Financial Instruments and Exchange Act (FIEA) promulgated in 2006 and effective April 2008, is a regulation mandating internal controls over financial reporting (ICFR) for listed companies and subsidiaries. Its primary purpose is ensuring reliable financial disclosures via risk-based management assessment and auditor review.
Key Components
- COSO five components plus Response to IT and asset preservation.
- Covers entity-level, process-level, and IT general controls (ITGCs).
- Built on BAC Implementation Guidance (2007); no fixed control count, emphasizes key controls.
- Management evaluation with external auditor attestation.
Why Organizations Use It
- Mandatory for ~3,800 listed firms to comply with FIEA, avoid FSA penalties.
- Enhances reporting reliability, investor trust, operational efficiency.
- Mitigates misstatement risks, reduces audit costs via automation.
- Builds governance maturity, supports market confidence.
Implementation Overview
- **Phased approachgovernance, scoping, design, testing, monitoring.
- Risk-based scoping of material processes/IT systems.
- Applies to listed companies in Japan, multinationals with subsidiaries.
- Annual management report audited by external firms.
Key Differences
| Aspect | DORA | J-SOX |
|---|---|---|
| Scope | ICT risk management, resilience testing, third-party oversight | Internal controls over financial reporting (ICFR) |
| Industry | EU financial sector (20 entity types) | Japanese listed companies and subsidiaries |
| Nature | Mandatory EU regulation with ESAs enforcement | Mandatory under FIEA, principles-based |
| Testing | Annual basic tests, triennial TLPT | Management assessment, auditor attestation |
| Penalties | Up to 2% global turnover fines | Fines, listing suspension, criminal liability |
Scope
Industry
Nature
Testing
Penalties
Frequently Asked Questions
Common questions about DORA and J-SOX
DORA FAQ
J-SOX FAQ
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