Digital Operational Resilience Act Articles (Proposal)

The Articles (Proposal) of the Digital Operational Resilience Act

Digital Operational Resilience Act (DORA), Article 26, Preliminary assessment of ICT concentration risk and further sub-outsourcing arrangements.

1. When performing the identification and assessment of ICT concentration risk referred to in point (c) of Article 25(5), financial entities shall take into account whether the conclusion of a contractual arrangement in relation to the ICT services would lead to any of the following:

(a) contracting with an ICT third-party service provider which is not easily substitutable; or

(b) having in place multiple contractual arrangements in relation to the provision of ICT services with the same ICT third-party service provider or with closely connected ICT third-party service providers.

Financial entities shall weigh the benefits and costs of alternative solutions, such as the use of different ICT third-party service providers, taking into account if and how envisaged solutions match the business needs and objectives set out in their digital resilience strategy.

2. Where the contractual arrangement on the use of ICT services includes the possibility that an ICT third-party service provider further sub-contracts a critical or important function to other ICT third-party service providers, financial entities shall weigh benefits and risks that may arise in connection with such possible sub-contracting, in particular in the case of an ICT sub-contractor established in a third-country.

Where contractual arrangements on the use of ICT services are concluded with an ICT third-party service provider established in a third-country, financial entities shall consider relevant, at least the following factors:

(a) the respect of data protection;

(b) the effective enforcement of the law;

(c) insolvency law provisions that would apply in the event of the ICT-third party service provider’s bankruptcy;

(d) any constraints that may arise in respect to the urgent recovery of the financial entity’s data.

Financial entities shall assess whether and how potentially long or complex chains of sub-contracting may impact their ability to fully monitor the contracted functions and the ability of the competent authority to effectively supervise the financial entity in that respect.