DORA compliance

DORA compliance and the role of AI

With the Digital Operational Resilience Act (DORA) compliance deadline behind us, financial institutions now face the ongoing task of maintaining compliance and adapting to regulatory shifts. The focus has shifted from meeting the initial deadline to managing contracts and vendor relationships in a way that ensures sustained adherence to DORA’s evolving requirements. Ongoing management and review of vendor contracts have become essential to ensure continuous compliance.

The complexities of DORA compliance

The European Union introduced DORA in 2022 to protect customers by establishing uniform cybersecurity standards for the financial sector. By January 17, 2025, approximately 22,000 financial entities must comply with these regulations. However, a significant challenge is that DORA’s scope extends beyond internal systems. Financial institutions must ensure their IT vendors comply with DORA’s regulations. It means they are accountable for their vendor’s security practices and must carefully manage every contract. Thus, contractual agreements become a critical focus for compliance efforts.

The pivotal role of contracts

Under DORA, contracts with IT vendors must include specific terms related to security and compliance. Article 30 of the Act outlines these requirements, emphasizing the need for explicit contractual provisions to ensure alignment with regulatory standards. However, ensuring compliance is challenging because contracts are often scattered across different departments and stored in formats that make bulk reviews difficult. Additionally, they are not integrated with governance, risk, and compliance (GRC) systems. Historically, achieving compliance required large teams to manually find, review, and amend contracts, which is laborious, expensive, and error-prone. However, the advancements in AI have revolutionized this process, enabling organizations to automate contract reviews, identify non-compliant clauses, and streamline updates to meet DORA’s requirements efficiently.

How smartContract CLM’s contract analyzer transforms compliance and risk assessment

smartContract CLM is at the forefront of this transformation. It offers an advanced AI tool designed specifically for DORA compliance. The tool uses Microsoft Azure’s secure OpenAI large language models (LLMs) to analyze numerous ICT vendor contracts in one go, helping assess the risks in your entire contract portfolio. It systematically reviews contracts, highlighting compliant clauses and flagging non-compliant ones. For instance, in a portfolio of hundreds of existing contracts, if certain agreements lack the required clauses about data location or incident response procedures under DORA, the tool can quickly flag those specific contracts, ensuring compliance issues are identified and addressed efficiently across the entire portfolio.

Streamline DORA compliance in new contracts

With every new contract, smartContract CLM’s contract analyzer ensures that no new risks emerge by automatically assessing contracts for DORA compliance during the drafting and review process. Post-signature, vendor obligations are seamlessly tracked through automated alerts, workflows, and reports, ensuring ongoing compliance throughout the contract lifecycle. As regulations evolve or new requirements are introduced, the contract analyzer proactively recommends necessary updates, keeping contracts aligned with the latest standards and safeguarding businesses from future risks. This continuous, real-time monitoring guarantees that institutions are always prepared, with every contract fully compliant and risk-free.

Conclusion

Achieving DORA compliance is undoubtedly a significant challenge for financial institutions, yet it also presents a valuable opportunity to enhance operational resilience and streamline risk management processes. By integrating smartContract CLM’s contract analyzer into their compliance strategies, financial institutions can not only navigate the complexities of DORA more efficiently but also automate and optimize various aspects of contract management. It reduces the burden on human resources, minimizes the risk of error, and accelerates the compliance process.

Beyond DORA, the contract analyzer’s benefits extend to multiple areas, such as GDPR compliance, vendor risk management, and business continuity planning. The ability to manage contracts proactively and with greater precision ensures that institutions stay ahead of regulatory changes and are better prepared for future challenges. As the regulatory landscape evolves, smartContract CLM’s contract analyzer will remain a key enabler of long-term compliance and operational excellence in the financial services, providing a strategic advantage for forward-thinking institutions.

New: Legal and procurement partnership: Strategies for success Read Now →

X