Supervisors Outline DORA Oversight Playbook

Key Takeaways

• Oversight Guide Released: The ESAs published a detailed guide on how Joint Examination Teams will oversee critical ICT third-party providers under DORA.
• Designation and Monitoring: Providers designated as critical face annual risk assessments, inspections, information requests, and follow-up obligations.
• Coordinated Supervision: A layered governance structure ensures harmonization, including the Joint Oversight Network and the Oversight Forum.
• Transparency and Accountability: Providers must engage actively with overseers. Non-compliance can lead to public disclosures and regulatory action.
• Systemic Risk in Focus: The framework aims to reduce ICT concentration risk and strengthen digital resilience across the EU financial sector.

Deep Dive

With the Digital Operational Resilience Act (DORA) shifting from concept to implementation, Europe’s financial watchdogs have laid out how they plan to keep a close eye on the tech providers underpinning the financial system. The European Supervisory Authorities recently published a guide on how they will oversee critical ICT third-party service providers (CTPPs) under DORA. While the guide doesn’t carry legal force, it offers much-needed clarity for financial entities, regulators, and ICT providers bracing for a new era of operational scrutiny.

The document outlines how regulators will conduct oversight through Joint Examination Teams (JETs), composed of ESA staff and experts from national competent authorities and cybersecurity bodies. These teams will be responsible for designating, assessing, monitoring, and inspecting ICT providers that play an essential role in supporting financial institutions across the EU.

A Structured Approach to Managing Systemic Tech Risk

DORA’s oversight framework was designed with a clear objective: to address the systemic and concentration risks posed by a small number of dominant ICT providers. The ESAs, acting as Lead Overseers (LOs), are tasked with identifying those providers whose services are critical to the financial sector and subjecting them to direct EU-level oversight.

The guide explains that once a provider is designated as critical, it becomes subject to a multi-step supervision process that includes:

• Annual Risk Assessments and Oversight Planning: Each year, the ESAs evaluate the risk profile of designated CTPPs to determine the scope and intensity of planned oversight.
• Ongoing Monitoring and Examinations: From document reviews and data requests to general investigations and intrusive inspections, regulators will evaluate whether providers have sound risk controls in place.
• Recommendations and Follow-Up: Overseers can issue non-binding recommendations that providers are expected to address, and refusal to cooperate could lead to public disclosure or further regulatory pressure.

Crucially, the framework does not displace the responsibility of financial institutions to manage their third-party risks, but it does introduce a second line of defense focused on the providers themselves. The oversight structure isn’t just built on teams, it’s built on coordination. Governance is shared across a layered network that includes the Joint Oversight Network (JON), the Oversight Forum (OF), and the Joint Committee of the ESAs.

These bodies steer decisions around provider designation, ensure harmonized supervision across jurisdictions, and help manage emerging risks. The ESAs have also established a Joint Oversight Venture (JOV) to pool staff and resources, ensuring consistency in how examinations are planned and carried out.

From an operational standpoint, English is the default working language across the system. And while the framework is proportionate, adjusting oversight intensity to the risk posed by each provider, it is also designed to be proactive, forward-looking, and responsive to incidents or sector-wide vulnerabilities.

Expectations Are Rising

With the publication of this guide, engagement and transparency are no longer optional. Designated providers are expected to maintain structured liaison channels with overseers, respond to requests in a timely and complete manner, and provide remediation plans when recommendations are issued.

If a provider declines to follow a recommendation, it must submit a formal explanation. Regulators may choose to publicly disclose instances of non-compliance, introducing reputational risk into an already heightened regulatory environment. Competent authorities, meanwhile, may even direct financial institutions to limit or terminate relationships with non-cooperative providers.

The guide also sets out expectations for non-EU providers serving EU markets, including requirements for cooperation, transparency, and, where necessary, coordination with third-country regulators.

At a time when operational resilience is increasingly synonymous with financial stability, the ESAs’ new guide signals that oversight won’t just be reactive, it will be continuous and integrated. The goal is to ensure that the ICT backbone of Europe’s financial system is robust, secure, and accountable.

While the guide is intended to clarify rather than codify, it underscores a broader truth that resilience isn’t just about weathering the next outage, it’s about knowing where the risks lie before the storm hits.

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