Digital Operational Resilience Act (DORA)

In today’s financial landscape, institutions rely on digital platforms, cloud service, and third-party providers more than ever. However, this growing dependence also brings risks such as cyber threats, supply-chain related risks and vulnerabilities, and market destabilisation.

A single cyberattack or system failure can have a ripple effect across the financial ecosystem. Recognising these risks, the EU introduced the Digital Operational Resilience Act (DORA) as part of the Digital Finance Package (DFP) to strengthen cybersecurity and ensure financial institutions remain resilient against digital disruptions.

What is Digital Operational Resilience Act (DORA)?

The Digital Operational Resilience Act (DORA) is a transformative EU regulation (Regulation (EU) 2022/2554) designed to standardise cybersecurity, ICT risk management and operational resilience across the European financial sector.

Taking effect in January 2025, DORA applies to all financial institutions in the EU and their critical IT service providers. It sets clear and enforceable requirements to ensure entities can withstand, respond to, and recover from disruptions – thereby enhancing financial stability and consumer trust.

Why is DORA compliance important?

DORA is not only a prudent risk management move but a legal imperative. Non-compliance can result in significant penalties and remedial orders. Compliance with DORA ensures:

• Stronger ICT risk management: Sets a standardised frameworks for cybersecurity, incident reporting, third-party risk management and business continuity across EU.

• Financial & market stability: Reduces the risks of systemic IT failures and cyber shocks.
• Third-party resilience: Ensures critical ICT providers meet the same security standards.
• Consumer & investor confidence: Protects against service outages, data breaches, and financial disruption.

What are the key aspects of DORA?

DORA aims to ensure the stability and continuity of the European financial sector by introducing a harmonised and enforceable framework. It focuses on five core areas to enhance resilience:

• ICT risk management: Establishes robust frameworks, governance structures, and continuous monitoring to identify, assess and mitigate ICT-related risks effectively.
• Incident reporting: Mandates rapid detection, classification, and internal & external reporting of major ICT-related incidents within strict timeframes.
• Digital operational resilience testing: Requires regular testing to validate resilience of the ICT risk management framework, including penetration testing, stress testing, and threat-led penetration testing (TLPT).
• Third-party risk management: Introduces strict oversight of ICT service providers, ensuring financial institutions conduct thorough risk assessments and due diligence.
• Information sharing: Encourages collaboration between financial entities, regulators, and cybersecurity experts to enhance threat intelligence amongst the EU financial community.

How can businesses prepare for DORA?

With DORA compliance becoming mandatory in January 2025, financial institutions must act now to enhance digital resilience and regulatory alignment. A structured approach ensures compliance while strengthening cybersecurity, minimising risks, and ensuring business continuity.

Key steps to achieve DORA compliance:

• Assess digital resilience: Conduct a thorough assessment of the current cybersecurity state to evaluate ICT risk management, incident response, and third-party oversight against DORA’s requirements.
• Develop a compliance roadmap: Create a phased implementation plan with clear governance, security controls, and reporting mechanisms.
• Train & build awareness: Educate employees on cybersecurity risks & best practices, compliance responsibilities, and incident response protocols.
• Validate & continuously improve: Regular assessments, audits, and resilience testing ensure ongoing compliance and adaptation to emerging threats.