Why the Need for Application Security Intensifies as EU Tightens Cybersecurity Requirements

As EU tightens cybersecurity requirements, AppSec importance grows

Two new sets of regulations introduced by the European Union (EU) indicate that the public sector is taking increased interest in improving cybersecurity and resilience.

The EU is introducing the Digital Operational Resilience Act (DORA) for financial institutions and the Cyber Resilience Act (CRA) for software and hardware providers, both designed to enforce software security and secure delivery of services. These legislative acts follow the recent announcement by the White House of the introduction of a new U.S. national cybersecurity strategy designed to defend critical infrastructure, thwart threat actors, increase investment, and build stronger international partnerships to improve cybersecurity worldwide.

The new moves by the EU could have a big potential impact on European organizations and other international organizations operating in Europe. In line with the U.S. legislation, they pivot towards formal regulation because individual organizations’ cybersecurity efforts and voluntary measures by various industries and sectors have proved insufficient for remediating software vulnerabilities and defending against cyberattacks.

Let’s take a brief look at both.  

The Digital Operational Resilience Act (DORA) 

DORA Is focused entirely on implementing effective and comprehensive management of digital risks in financial markets and harmonizing security and resilience best practices within the financial sector throughout the EU.

DORA came into force on 16th January 2023. It applies to more than 22,000 financial entities and ICT service providers in the EU. It includes specific requirements for banks, investment firms, insurance undertakings and intermediaries, crypto asset providers, data reporting providers, and cloud service providers. Areas it covers include risk management, IT and cybersecurity operational capabilities, and third-party management. Any relevant organizations will be expected to comply with the regulations by 17th January 2025.

There are five key pillars to the regulations:  

Risk management. Organizations must establish a comprehensive IT risk management framework, including: 

• Resilient IT systems and tools that minimize the impact of risk
• Identify, classify, and document critical functions and assets
• Continuously monitor all sources of risk and set up protection and prevention measures
• Establish prompt detection of anomalous activities
• Implement business continuity policies and disaster and recovery plans, including yearly testing

Incident management. Organizations must:

• Log all issues and determine major incidents according to the criteria specified by the ESAs — European Supervisory Authorities (EBA, EIOPA, and ESMA)
• Submit an initial, intermediate, and final report on these incidents
• Harmonize reporting of these incidents through the standard templates of the ESAs

Digital operational resilience testing. Organizations must:

• Annually perform basic testing of IT tools and systems
• Identify, mitigate, and promptly eliminate any weaknesses, or deficiencies, with counteractive measures
• Periodically perform advanced threat-led penetration testing (TLPT) for IT services that impact critical functions. IT third-party service providers are required to participate

Third-party risk management. Organizations must:

• Monitor risks arising from IT third-party providers
• Report all outsourced activities and services to third-party IT service providers
• Account for risks arising from sub-outsourcing activities
• Harmonize the relationship with IT third-party providers to enable ‘complete’ monitoring
• Ensure that contracts with these third-party providers contain all the necessary monitoring and accessibility details
• Critical third-party service providers will be subject to a Union Oversight Framework, which can issue recommendations on the mitigation of identified IT risks

Information sharing arrangements.

• Organizations should set up arrangements to exchange cyber threat intelligence
• The supervisory authority will provide relevant anonymous intelligence on threats for organizational review and action

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