The management of ICT third-party risks is a central component of the Digital Operational Resilience Act (DORA). Financial companies and their ICT service providers must ensure that their third-party providers also meet the requirements for digital resilience and security. In this blog post, we take a detailed look at contract review and due diligence and show how artificial intelligence (AI) can make these processes considerably easier and automate them as far as possible.
Table of contents
Why is the management of ICT third-party risks important?
Third-party providers play a decisive role in the value chain of financial companies. They offer specialized services and technologies that are essential for operations. However, they also entail additional risks that need to be managed. An outage or security breach at a third-party provider can have a significant impact on the entire company.
Goal of the contract review:
- Ensure that all contracts with third-party providers contain clear provisions on ICT security and resilience.
- Avoidance of risks due to unclear or inadequate contractual provisions.
Important contractual clauses:
- Security requirements: Clear specifications of the security measures that the third-party provider must comply with.
- Reporting of incidents: Obligation of the third-party provider to report ICT-related incidents immediately.
- Review capabilities: The financial institution should have the ability to occasionally review the security practices of the third-party provider.
- Continuity planning: arrangements to ensure business continuity in the event of ICT disruptions or failures.
Automated contract review with artificial intelligence (AI):
AI-powered contract review solutions can help you ensure that your contracts comply with DORA requirements. With Tucan.ai you can, for example:
- Check contracts quickly and efficiently for security-relevant clauses.
- Create detailed and automatic contract comparisons and subsumptions.
- Save time and resources by reducing manual inspection processes.
2. Due Diligence
Objective of the due diligence
- Thorough review of the third party provider’s ICT security practices and capabilities.
- Ensure that the third-party provider is able to fulfill the contractually agreed security requirements.
Important steps in due diligence:
- Security assessments: Conducting security assessments and audits at the third-party provider.
- Risk assessment: Identification and assessment of potential risks that could arise from working with the third-party provider.
- Continuous monitoring: Establish a system for continuous monitoring of the third-party provider’s security practices.
Automated due diligence with artificial intelligence (AI):
With AI solutions such as Tucan.ai, you can significantly simplify and automate the due diligence process. You can, for example:
- Perform automated identification and analysis of critical contract terms.
- Reduce time and costs by minimizing manual checks in the due diligence process.
- Quickly identify potential legal and financial risks in contractual documents.
The ICT third-party risk management factor
Managing ICT third party risks is critical to complying with DORA requirements and ensuring your organization’s digital resilience. Through thorough contract review and due diligence, you can ensure that your third-party providers meet high security standards.
Artificial intelligence can be used to make these processes efficient and effective. Use AI-powered solutions like Tucan.ai to optimize your contracts and due diligence practices and ensure your company is well prepared to meet the challenges of digital resilience.
About Tucan.ai
Tucan.ai is a leading provider in the field of legal tech and offers innovative solutions for contract analysis and review.. With Tucan.ai’s AI-powered technology, you can save time and resources and ensure that your contracts comply with the latest legal requirements.
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