Vendor vs supplier in DORA reporting

What's the difference between a vendor and a supplier under DORA?

DORA (Digital Operational Resilience Act) requires financial institutions to distinguish between vendors and suppliers for effective ICT risk management.

• Vendors: Provide complete, ready-to-use solutions (e.g., cloud services).
  • Focus: Service availability, security, and compliance.
  • Example: Microsoft offering cloud storage.
• Suppliers: Deliver components or materials that need integration (e.g., hardware parts).
  • Focus: Supply chain security and component quality.
  • Example: A manufacturer providing server components.

Quick Comparison

With DORA's compliance deadline in January 2025, financial institutions must maintain clear documentation, risk assessments, and contracts for both vendors and suppliers. Automated tools like DORApp can simplify reporting and ensure regulatory alignment.

Vendor and Supplier Definitions in DORA

What is a Vendor?

DORA defines a vendor as a third-party entity that provides fully developed products or services directly to financial institutions. These offerings are complete solutions designed to support operations without further integration.

Take, for instance, a cloud service provider offering data storage solutions to financial institutions. This provider qualifies as a vendor because they deliver a complete service, handle end-to-end management, ensure regulatory compliance, and maintain quality control.

Under DORA, vendors are expected to focus on delivering high-quality products and maintaining compliance with service delivery standards. Financial institutions are responsible for ensuring their vendors uphold strict security standards and guarantee uninterrupted service. Unlike suppliers, vendors provide finished solutions rather than components requiring assembly.

What is a Supplier?

In contrast, a supplier under DORA is an entity that provides components or materials that require further integration into a larger system. While suppliers are essential to the ICT supply chain, they do not directly deliver solutions to end-users.

DORA places a different regulatory emphasis on suppliers, focusing on areas like:

• Reliability in production
• Security within the supply chain
• Assurance of component quality
• Integration capabilities

This distinction underscores the unique roles and risks associated with vendors and suppliers, as outlined below.

Vendor vs Supplier Comparison

To manage these relationships, institutions must use contracts, conduct risk assessments, and ensure resilience measures are in place.

For critical ICT services, DORA also requires financial institutions to have documented exit strategies and mandates that both vendors and suppliers hold internationally recognized security certifications.

DORA Reporting Rules

Vendor Reporting Steps

To comply with DORA, it's crucial to maintain a centralized register for all vendor relationships. This should include contract terms, service level agreements, incident response plans, and data protection measures. Here's how to approach it:

• Initial Documentation: Record key details like contract terms, SLAs, emergency contacts, incident response protocols, and data protection policies.
• Ongoing Monitoring: Regularly review vendor performance, compare outcomes against agreements, assess security measures, and update risk profiles when disruptions occur.
• Incident Reporting: Vendors must promptly report major incidents, providing a timeline, impact summary, and the steps taken to mitigate the issue.

Supplier relationships also require specific documentation to address unique supply chain risks.

Supplier Reporting Steps

• Supply Chain Documentation: Capture details such as component specifications, quality assurance standards, supply chain security practices, and any subcontractor dependencies.
• Risk Assessment Reports: Conduct regular evaluations of supplier risks by reviewing factors like component quality, delivery reliability, and business continuity plans.

"Contracts with suppliers must include clauses that address compliance with DORA to ensure that the suppliers are contractually obligated to measure specific cybersecurity, digital resilience standards, and protocols"
– Gary Jones, Senior Programme Manager, KPMG UK

To simplify compliance, tools like DORApp, a cloud-based DORA compliance platform, can be highly effective. Its Enterprise plan includes features like XBRL report generation and automated LEI search, making it easier to manage vendor and supplier documentation efficiently.

Digital Operational Resilience Act (DORA) Compliance through Vendor and Contract Management

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Risk Assessment Methods

Under DORA, financial entities must evaluate risks associated with vendors and suppliers to ensure their operations remain resilient.

How to Assess Vendor Risk

Vendor risk assessment involves examining operational continuity, cybersecurity measures, and overall performance. This process looks at the critical services vendors provide, their cybersecurity defenses, incident response capabilities, and adherence to regulatory standards.

• Initial Risk Screening
  Start with due diligence by looking into:
  • Background checks and financial stability
  • Cybersecurity certifications and protocols
  • Incident response processes
  • History of regulatory compliance
• Critical Risk Factors
  Focus on key metrics to gauge vendor risk levels:

Supplier risk assessment follows a similar approach but emphasizes supply chain security, component quality, delivery reliability, and business continuity.

How to Assess Supplier Risk

Suppliers should be evaluated based on their ability to secure the supply chain, deliver high-quality components, maintain reliable delivery schedules, and ensure uninterrupted business operations.

Risk Assessment Software

Modern software tools simplify vendor and supplier risk assessments, offering features that streamline compliance monitoring and reporting.

DORApp Enterprise Solution
This tool provides:

• Automated XBRL report generation
• Intelligent data import/export options
• Automated LEI search functionality
• Detailed audit trail tracking

LogicManager includes customizable risk libraries tailored for vendor and supplier assessments. For ongoing monitoring, Vanta offers a dedicated DORA solution that aligns with regulatory standards and integrates with over 375 platforms.

"I'm still thrilled. We were looking for a simple solution for the DORA Register of Information reporting... With the SaaS solution, DORApp is exactly what it's meant to be for us - a reporting platform, not a maintenance platform."

When choosing risk assessment software, consider:

• Compatibility with existing systems
• Real-time monitoring capabilities
• Automated compliance workflows
• Customizable templates for risk evaluation
• Regular updates to meet regulatory changes

DORA Reporting Tips

Manual vs Software-Based Reporting

Financial organizations face a choice: stick with manual DORA reporting or switch to automated solutions. Manual methods, like using spreadsheets, often fall short due to the increasing complexity of regulations. Studies reveal that many firms still rely on manual processes, which frequently result in data quality issues and inconsistencies.

Manual reporting comes with several challenges:

• Time wasted on data collection instead of focusing on incident management
• Heavy reliance on relationship owners for gathering data
• Higher chances of human error
• Limited ability to maintain a centralized data repository

These challenges highlight why automated reporting tools are a smarter option.

Automated solutions bring clear benefits for DORA compliance:

With automation, organizations can overcome the pitfalls of manual methods while improving compliance workflows.

Software Tools for DORA Compliance

Modern DORA compliance platforms are designed to simplify vendor and supplier management. For example, 3rdRisk offers a pre-built DORA blueprint that can be implemented in just 10 days, specifically tailored for managing third-party risks.

When selecting compliance software, look for these key features:

• Automated Risk Assessments to efficiently evaluate vendors and suppliers
• Contract Management tools for digital tracking and updates of service agreements
• Incident Reporting systems that make documenting security incidents easier
• Continuous Monitoring for real-time insights into compliance and risk levels

The numbers speak for themselves:

• Financial organizations, on average, have 450,000 exposed sensitive files.
• 64% of financial firms allow over 1,000 critical files to be accessible to all employees.
• Cyberattacks and system errors impacted 61 million people in 2023, a 258% increase since 2018.

To stay compliant, financial entities must ensure their registers and contracts with ICT providers handling Critical or Important Functions (CIFs) are always up to date. This is key to maintaining comprehensive compliance coverage.

Summary

DORA reporting requires a clear distinction between vendors and suppliers.

To effectively address these distinctions, financial entities should take the following steps:

• Provider Classification: Clearly categorize providers. For example, companies like Microsoft and Salesforce fall under vendors, while component manufacturers are classified as suppliers.
• Documentation Management:

  "DORA compliance isn't going to be possible with a spreadsheet. You need digital vendor and contract management to enable this".

  Use digital tools to maintain accurate records of ICT contracts.
• Technology Integration: Leverage automation to improve efficiency. For instance, Box reduced processing cycles by 78%, and Uber increased on-time payments from 40% to 95% using automated systems.

Tools to Support DORA Compliance

Specialized platforms can simplify DORA compliance with key features:

• 3rdRisk: Delivers a 10-day implementation plan tailored to DORA requirements.
• ProcessUnity: Focuses on automating third-party risk management.
• DORApp: Provides automated XBRL report generation and LEI data enrichment for $200 per user per month.

Additionally, financial entities must maintain thorough records of ICT contracts, clearly distinguishing between critical and non-critical functions. Contracts should include all clauses required by DORA regulations.

These steps and tools are essential for crafting a solid DORA compliance strategy.

Related Blog Posts

• Top 5 ICT Third-Party Risk Management Best Practices
• DORA Compliance Checklist: 10 Key Requirements for 2025
• ESA's DORA reporting deadlines you should watch for in 2025
• Overview of DORA’s Draft Regulatory Technical Standards (RTS) and Implementing Technical Standards (ITS)