Synthetic Monitoring: A strategic approach to DORA compliance in financial institutions

The European Digital Operational Resilience Act (DORA) represents a critical regulatory framework challenging financial institutions to transform their digital risk management approach. Synthetic monitoring emerges as a powerful strategic tool for institutions seeking to not just comply with, but excel in digital operational resilience. 

Understanding DORA’s regulatory landscape 

DORA mandates comprehensive digital risk management, focusing on: 

• Robust ICT (Information and Communication Technology) risk governance 
• Information system security 
• Operational resilience testing 
• Critical third-party risk management 
• Rapid incident reporting 

Synthetic Monitoring: A proactive compliance solution 

Synthetic monitoring goes beyond traditional monitoring by simulating user interactions and system behaviors, providing financial institutions with a sophisticated mechanism to: 

1. Proactive Digital Service Surveillance

By generating simulated transactions across digital platforms, synthetic monitoring enables: 

• Real-time detection of potential system failures 
• Identification of performance bottlenecks before they impact customer experience 
• Continuous assessment of digital service reliability 

2. ContinuousResilience Testing 

DORA requires regular operational resilience assessments. Synthetic monitoring facilitates this by: 

• Simulating complex crisis scenarios (network failures, cyber attacks) 
• Evaluating system recovery capabilities 
• Documenting performance metrics for regulatory demonstration 

3. ComprehensiveRisk Management 

The approach allows institutions to: 

• Map technological risks in real-time 
• Prioritize critical uncertainty scenarios 
• Provide centralized visibility into potential threats 
• Automate incident mitigation responses 

4. Third-Party Risk Monitoring

Synthetic monitoring enables sophisticated third-party risk management by: 

• Integrating external provider performance data 
• Assessing risks associated with critical service providers 
• Configuring alerts for potential service level agreement (SLA) breaches 

5. AutomatedIncident Reporting 

The technology supports DORA’s stringent reporting requirements through: 

• Automatic generation of incident reports 
• Compliance with regulatory notification formats 
• Rapid communication of critical system events 

Key Capabilities of an Effective Synthetic Monitoring Solution 

Financial institutions should seek solutions offering: 

• Seamless integration with existing IT infrastructure 
• Predictive risk analysis capabilities 
• Customizable dashboards 
• Automated incident response mechanisms 
• Built-in regulatory compliance modules 

Practical Implementation Example 

Consider a scenario where a bank uses synthetic monitoring to: 

1. Detect a targeted attack on a cloud service provider 
2. Automatically activate service continuity protocols 
3. Generate immediate regulatory incident reports 
4. Implement corrective measures with minimal service disruption 

Conclusion 

Synthetic monitoring transcends mere regulatory compliance, representing a strategic approach to digital resilience. By providing continuous, proactive insights into technological risks, financial institutions can: 

• Anticipate potential digital threats 
• Strengthen operational robustness 
• Demonstrate advanced risk management capabilities 

The future of financial digital resilience lies not in reactive measures, but in intelligent, predictive monitoring strategies that align with regulatory expectations and technological innovations.