7. Third Party (Security) Risk Management (TP(S)RM)

7. Third Party (Security) Risk Management (TP(S)RM)
The Digital Operational Resilience Act (DORA) mandates financial entities to establish robust frameworks for Third-Party Risk Management (TPRM) to ensure operational resilience and ICT security when relying on third-party service providers. With increasing reliance on external providers for ICT services, DORA sets clear requirements for identifying, assessing, managing, and mitigating risks posed by third-party dependencies.
This guide provides a detailed roadmap for achieving DORA compliance in Third Party Security Risk Management (TP(S)RM), highlighting best practices, regulatory requirements, and integration with other DORA compliance themes.
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by Sylvan Ravinet
 
The StratOps way to accelerate DORA
This guide on Third Party (Security) Risk Management (TP(S)RM) can help you achieve DORA compliance. Faster. Part of my 12-capabilities cyber framework.
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1. Regulatory Foundation
1.1 Core Requirements
DORA Regulation (EU 2022/2554)
Articles 28-39 specifically address:
Third-party risk management framework (aligned with Risk Framework Guide)
Critical ICT third-party service provider oversight
Concentration risk monitoring
Contractual arrangements
RTS 2024/1773
Detailed requirements for ICT service contractual arrangements
RTS 2024/1774
Requirements for ICT risk management tools and third-party integration
1.2 Key Obligations
Financial entities must:
1
Identify critical third-party providers
Identify critical third-party providers that deliver essential ICT services (aligned with Critical Functions Guide)
2
Assess and mitigate risks
Assess and mitigate risks posed by third-party dependencies to ensure operational resilience (aligned with Risk Framework Guide)
3
Implement contractual agreements
Implement contractual agreements, monitoring, and oversight of third-party providers
4
Prepare for disruptions
Prepare for disruptions by integrating third-party risks into broader business continuity and incident management frameworks (see Business Continuity Guide and Incident Management Guide)
2. Third-Party Provider Management Framework
2.1 Provider Identification and Classification
2.2 Risk Assessment and Due Diligence
3. Contractual Requirements
3.1 Mandatory Elements (per RTS 2024/1773)
Contracts must explicitly define:
3.2 Service Level Agreements (SLAs)
Define specific metrics for:
Service availability and performance
Response times for incidents and requests
Recovery time objectives (RTO) (aligned with Business Continuity Guide)
Recovery point objectives (RPO)
Quality and compliance standards
3.3 Security Requirements
Establish comprehensive security controls:
Data protection measures (aligned with Data Security Guide)
Access control frameworks and authentication
Encryption standards and key management
Security testing and validation procedures
Incident response and notification protocols
4. Critical Service Provider Management
4.1 Enhanced Oversight Requirements
Implement stricter controls for critical providers:
Annual risk assessments and security reviews
Regular audit and compliance reporting
Detailed risk mitigation planning
Concentration risk monitoring and mitigation
Enhanced performance monitoring
4.2 Operational Resilience Measures
Ensure robust continuity planning:
Business continuity integration (see Business Continuity Guide)
Disaster recovery testing and validation
Regular joint incident response exercises
Exit strategy maintenance and testing
Crisis management procedures (see Crisis Management Guide)
5. Implementation Framework
5.1 Governance Structure
Establish clear oversight mechanisms:
Board and senior management involvement (aligned with Governance Guide)
Defined roles and responsibilities
Regular reporting and escalation procedures
Documentation and review processes
Change management controls
5.2 Risk Management Tools
Deploy appropriate tools and templates:
Provider assessment frameworks
Risk scoring methodologies
Monitoring dashboards and alerts
Incident tracking systems
Compliance verification checklists
5.3 Operational Processes
Implement structured procedures for:
Provider onboarding and offboarding
Regular assessment schedules
Continuous monitoring protocols
Incident response workflows
Exit planning and testing
6. Integration with Other DORA Domains
6.1 ICT Risk Management
Ensure seamless integration with:
Overall risk framework (see Risk Framework Guide)
Control assessments and testing
Risk reporting and metrics
Threat intelligence sharing (see Threat Detection Guide)
Unified risk register maintenance
6.2 Incident Management
Coordinate response procedures:
Clear notification channels and timelines
Joint investigation protocols
Recovery coordination procedures
Lessons learned integration
Communication protocols (see Incident Management Guide)
6.3 Business Continuity
Align recovery planning:
Integrated continuity strategies
Coordinated testing and exercises
Shared recovery objectives
Resource allocation plans
Crisis communication procedures (see Crisis Management Guide)
7. Common Challenges and Solutions
7.1 Provider Assessment
Challenge: Comprehensive evaluation
Solutions:
Standardized assessment framework
Clear evaluation criteria
Regular reassessment process
Automated assessment tools
Third-party audit integration
7.2 Contract Management
Challenge: Ensuring compliance
Solutions:
Standard contract templates
Regular review cycles
Compliance checklists
Legal expertise involvement
Change management procedures
7.3 Monitoring Effectiveness
Challenge: Maintaining oversight
Solutions:
Automated monitoring tools
Regular service reviews
Clear metrics and KPIs
Escalation procedures
Performance dashboards
8. Success Factors and Best Practices
8.1 Critical Success Factors
Executive commitment and support
Clear governance structure
Comprehensive documentation
Regular assessments and reviews
Strong contract management
Effective monitoring systems
Integrated incident response
8.2 Implementation Best Practices
Start with critical providers
Use phased implementation approach
Leverage automation where possible
Maintain detailed documentation
Ensure stakeholder communication
Practice continuous improvement
Regular testing and validation
Links to Related DORA Compliance Themes
For a comprehensive understanding of DORA compliance, this guide aligns with the following related topics:
ICT Governance
ICT Risk Management Framework
Incident Response
Critical and Important Business Functions
Business Continuity
Resilience Testing and TLPT
Third-Party Risk Management
ICT asset Management
Crisis Communication
Threat management
Data security
Security Operations
For detailed implementation guidance, refer to DORA's RTS and ITS documentation and related guides within this compliance series.
The StratOps way to accelerate DORA
Sylvan Ravinet
CISO & Advisor | My StratOps newsletter helps cybersecurity experts achieve more, faster.

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