Key Points
- DORA Compliance Overview: The Digital Operational Resilience Act (DORA) is an EU regulation (effective 2023) that standardizes cybersecurity, ICT risk management, and digital resilience requirements for financial institutions.
- Who Must Comply: DORA applies to a wide range of EU financial entities—including banks, insurers, asset managers, payment institutions, trading venues, credit rating agencies, crowdfunding platforms, crypto-asset service providers, and ICT third-party service providers.
- Key DORA Requirements:
- ICT Risk Management: Identify, mitigate, and continuously monitor cyber threats with strong controls, encryption, and governance.
- Incident Reporting: Establish reporting protocols for timely communication with regulators, clients, and stakeholders.
- Resilience Testing: Annual vulnerability assessments, penetration testing (TLPT), and independent evaluations of digital defenses.
- Third-Party Risk Management: Continuous oversight of vendors, ICT providers, and outsourced services.
- Information Sharing: Cross-industry collaboration to share threat intelligence and improve defenses.
- Benefits of DORA Compliance: Enhances cybersecurity resilience, minimizes disruptions, improves transparency, builds trust with regulators, shareholders, and clients, and strengthens financial sector stability across the EU.
- Challenges for SMEs: Compliance can be resource-intensive; small and medium-sized firms often rely on managed service providers (MSPs) or all-in-one IT management platforms for cost-effective implementation.
- Steps to Achieve Compliance:
- Perform a compliance gap analysis to identify weaknesses.
- Build a structured ICT risk management framework with clear leadership roles.
- Develop a robust incident response and continuity plan.
- Audit and align third-party vendor contracts with DORA requirements.
- Conduct regular resilience testing and continuously monitor system performance.
- Global Impact: DORA complements existing regulations like GDPR and NIS2, setting a precedent for global digital operational resilience frameworks beyond the EU.
- Why It Matters: As cyberattacks become more sophisticated, DORA ensures that financial institutions are better prepared, more transparent, and more secure, reducing systemic risks and safeguarding customer trust.
As financial institutions rely more on technology, improving operational resilience and strengthening data protection becomes more pertinent. Such standards are set in place by regulations like the Digital Operational Resilience Act (DORA).
This article examines DORA regulation, its key requirements, and how to achieve financial sector compliance in the EU.
What is the Digital Operational Resilience Act (DORA)?
The Digital Operational Resilience Act is a comprehensive framework that enforces risk management methods to ensure the competence of EU financial institutions against cyberattacks.
Prior to its implementation, banks, insurance companies, and large investors implemented simple but lax protocols, like setting aside capital to pay for potential losses, to prepare for cyber incidents. Additionally, existing, pre-DORA regulations vary among EU member states, leading to inconsistencies.
With the European Union enforcing DORA in 2023, financial systems are now making a more unified and proactive effort to defend their digital infrastructure and assets from online threats.
Who does DORA apply to?
The Digital Operational Resilience Act applies to these EU institutions:
1. Payment & Account Services
- Account Information Service Providers (AISPs): Collect and manage payment account information.
- Payment Institutions: Provide payment services.
- Electronic Money Institutions (with exempt ones): Issue e-money and report on transparency.
2. Investment & Asset Management
- Investment Firms: Offer asset management and investment opportunities.
- Management Companies: Lead investment funds.
- Managers of Alternative Investment Funds (AIFMs): Manage hedge funds, private equity, and other alternatives.
3. Insurance & Retirement
- Insurance and Reinsurance Companies: Provide insurance and risk coverage.
- Insurance Intermediaries: Brokers/agents selling insurance products.
- Institutions for Occupational Retirement Provision (IORPs): Manage employee pensions.
- Retirement Savings Institutions: Offer retirement savings products.
4. Market Infrastructure & Trading
- Trading Venues: Platforms for buying/selling financial instruments (regulated markets, MTFs, OTFs).
- Central Counterparties (CCPs): Reduce counterparty risk in trades.
- Central Securities Depositories (CSDs): Hold and transfer securities.
5. Data, Transparency & Reporting
- Data Reporting Service Providers (DSRPs): Report financial data for transparency.
- Securitization Repositories: Maintain records of securitization transactions.
- Trade Repositories: Centralize and maintain trade records for regulatory oversight.
- Credit Rating Agencies: Assess and rate credit quality of issuers.
- Administrators of Critical Benchmarks: Set guiding principles (e.g., LIBOR, EURIBOR).
6. Alternative Finance & Innovation
- Crowdfunding Service Providers: Facilitate public fundraising.
- Crypto-Asset Service Providers & Issuers of Asset-Referenced Tokens: Provide crypto services and issue asset-linked tokens.
7. Technology & Outsourcing
- ICT Third-Party Service Providers: Provide IT services to financial institutions.
8. Lending
- Mortgage Lenders: Provide loans secured by real estate.
Even third-party software providers are subject to DORA’s guidelines. Because MSPs intertwine with financial institutions’ critical processes, any form of noncompliance will result in “effective, proportionate, and dissuasive” penalties and a negative impact on its reputation.
Total compliance minimizes workplace disruptions and enhances your organization’s cybersecurity standards, reinforcing the digital infrastructure of the EU’s overall financial state.
Key requirements of DORA compliance
ICT risk management
The Digital Operational Resilience Act involves identifying, mitigating, and continuously monitoring present and emerging threats. The first step is managing risk.
Control user privileges, keep data accurate and intact, and use government-grade encryption to keep everything safe. These measures (and the internal systems to safeguard information) should be maintained and optimized by professionals who can also be held accountable.
Incident reporting
Financial institutions must promptly develop their own protocol for incident assessment and reporting.
Create detailed incident records, adapt robust response protocols, evaluate outcomes, maintain proper channels with the authorities, and consistently report to customers and shareholders.
Testing and resilience strategies
DORA mandates financial institutions to test their digital defenses yearly in three ways: advanced vulnerability tests on information and communication technology (ICT) systems, independent evaluation of their infrastructure’s weak points, and threat-led penetration testing (TLPT) that simulates real-world attacks.
But it doesn’t stop there. Your organization must also create and maintain documentation about these trials, which should include methodologies and the extra steps taken to patch the holes in your digital ecosystem.
🛑 Proactively identify, evaluate, mitigate, and remediate vulnerabilities in your IT environment.
Read this guide on how to reduce vulnerabilities.
Third-party risk management
Third-party vendors must be consistently monitored and evaluated to ensure they follow DORA’s strict requirements.
Assess each third-party provider based on their technical capabilities, level of security, and disaster recovery plans. Additionally, third-party contracts should be airtight, and all DORA standards should be enforced.
Information sharing and cooperation
DORA encourages members of the financial sector to share knowledge on evolving cyber threats with one another. Networks that share incidents on new malware and the latest hacker methodologies are invaluable sources of information for IT teams and can help prevent PR nightmares down the line. Per 2025 cybersecurity statistics: Recent studies suggest that threat actors can reliably penetrate 93% of organizations’ networks.
What are the benefits of DORA compliance?
Technology is rapidly evolving, so DORA gives financial institutions another line of defense against emerging sophisticated threats. Complying safeguards businesses and paves the way for uninterrupted productivity, giving your business that constant edge to stay on top.
The new EU standards’ practices have also been shown to work for businesses, while building trust with regulators, shareholders, and prospective clients. A 2024 study by the Future Business Journal showed that cybersecurity transparency positively impacted bank performance and encouraged more banks to do the same. Simply put, DORA compliance gives clients more confidence in their money’s safety and security.
DORA compliance: The biggest challenges
While DORA compliance provides advantages to financial institutions, implementing such standards poses some challenges, especially for small- to medium-sized organizations. Adopting DORA-standard security measures is resource- and labor-intensive, which SMEs sometimes can’t shoulder alone due to size and budget constraints.
Hence, some turn to managed service providers (MSPs) for additional assistance, many of which can provide ICT support without breaking the bank. Others adopt cost-effective, all-in-one management tools to eliminate IT misery without breaking the bank.
Steps to achieve DORA compliance
1. Conduct a compliance gap analysis
First, perform a gap analysis that compares what you already have with what you want to achieve via DORA’s standards. Think of it as a Venn diagram to help you see what’s missing in your IT framework. To do this:
- Identify the gap between your structure and DORA’s needs.
- Rank them based on importance.
- Create time-sensitive action plans to address them competently.
2. Establish an ICT risk management framework
Next, create a management structure in your organization and assign clear roles. This DORA cybersecurity framework should be able to:
- Assign clear roles in the leadership structure.
- Assess risks impacting operations (e.g., ransomware, system failures, etc.).
- Create strategies to mitigate known risks (e.g., firewalls, least privilege access, encrypted drives).
- Closely coordinate with incident response and disaster recovery.
- Monitor and review past cases and current policies as new threats emerge.
3. Develop a robust incident response plan
Bad stuff happens, and you’ve got to be ready for it 24/7. Here’s what you need according to DORA:
- Define incidents based on severity and frequency.
- Outline clear steps for internal and external partners to approach, mitigate, and contain incidents.
- Delegate roles in preparing for future incidents.
- Develop business continuity measures to restore data and get systems online quickly.
- Perform tabletop exercises/simulations regularly to check for any necessary improvements. For a more in-depth discussion, see this guide, IT Security Checklist to Protect Your Business.
4. Collaborate with third-party providers to check for compliance
Do your due diligence on third-party vendors you employ to ensure total DORA compliance. Here’s how:
- Make sure your provider follows good security practices and data protection policies.
- Incorporate DORA compliance standards in your organization’s contracts. We recommend reading our guide on managed services agreements for MSPs for more information.
- Constantly monitor their performance through audits.
- Team up to help solve any gaps in your infrastructure.
- Maintain an open line of communication.
Read this guide → How to Choose a Reliable IT Service Provider
5. Regularly test and monitor for resilience
Test the resilience of your system’s security measures through extensive simulations:
- Conduct annual security tests.
- Assess your system vulnerabilities every 4 months.
- Use TLPT to simulate real-world attacks.
- Continuously track system performance, availability, and security during the tests.
- Analyze results to identify weak spots and ways to improve.
- Revise and intensify security protocols, recovery plans, and incident response.
How DORA impacts the future of financial sector compliance
DORA complements pre-existing standards and regulations in the EU, such as the General Data Protection Regulation (GDPR) and NIS2’s security directive, improving the overall digital well-being of its financial sector.
This major push for better operational resilience standards will likely inspire other countries outside the EU to adopt similar principles, such as GDPR, which sets a precedent for data regulation and operational safety worldwide.
By aligning on new and robust security frameworks like DORA, countries can foster a healthier world community that is better equipped to face today’s digital threats.
Your DORA compliance journey
The DORA enforces stronger risk management standards for banks and other financial firms in the European Union. DORA’s framework requires the formation of ICT risk management leadership, fast and reliable incident reporting, consistent testing, third-party provider evaluation, and information sharing.
Large financial institutions provide the lifeblood of the economy, and while incidents can happen, it’s your obligation to minimize the risk as much as possible. Following DORA grants your organization a stronger command system, world-class cybersecurity measures, and more, so start your compliance journey today.
