Understanding DORA Regulation (Digital Operational Resilience Act)

What is DORA Regulation?

The Digital Operational Resilience Act (DORA) is an EU regulation designed to help financial institutions handle IT-related disruptions like cyber attacks and system failures. With digital threats becoming more advanced, DORA sets clear standards for managing risks, reporting incidents, testing resilience, and overseeing third-party IT providers.

If you’re operating in the EU financial sector, complying with DORA isn’t optional—it’s a legal must. But beyond just meeting regulations, following DORA helps protect financial services across Europe from cyber risks and unexpected IT breakdowns.

Who Does DORA Apply To?

DORA covers a wide range of financial organisations, including:

• Banks and investment firms
• Crypto-asset service providers
• Insurance and reinsurance companies
• IT service providers working with these financial entities

Now, let’s break down the key areas of DORA and what businesses need to focus on:

DORA Requirements

DORA is built on 5 core pillars that guide financial institutions in achieving operational resilience:

1. ICT Risk Management

Financial institutions must put strong risk management strategies in place to protect against cyber threats and system failures. This includes:

• Developing secure networks and encrypted databases.
• Performing regular risk assessments to identify weaknesses.
• Implementing controls to mitigate risks and enhance security.
• Establishing protocols for detecting, protecting, and recovering from IT incidents.
• Creating robust backup policies and recovery procedures.
• Ensuring clear communication at all levels.

In short, your IT risk management strategy should cover everything—from identifying threats to recovering and learning from incidents. If you’re unsure where to start, our IT strategy toolkit could help with this.

2. ICT Incident Management

When IT issues happen, financial institutions must respond quickly and efficiently. DORA requires businesses to:

• Detect, report, and investigate IT-related incidents
• Set up a solid incident management process with clear reporting channels
• Notify the relevant authorities promptly when incidents occur

Having a structured plan in place ensures quick resolution and minimal disruption. Need a starting point? Our Incident Response Plan Template could help guide you.

3. Testing Digital Operational Resilience

Regular testing is key to making sure IT systems can handle cyber threats. Some of the required tests include:

• Vulnerability assessments and scans
• Open source analyses
• Network security assessments
• Gap analyses
• Physical security reviews
• Questionnaires and scanning software solutions
• Source code reviews
• Scenario-based tests
• Compatibility testing
• Performance testing
• End-to-end testing
• Penetration testing

These tests help you assess the effectiveness of your ICT risk management strategies and identify areas for improvement. Depending on the size and nature of your organisation, DORA’s testing requirements may vary in strictness.

If you handle testing internally, DORA requires you to bring in an external provider at least once every three years.

4. Managing Risks from ICT Third-Party Providers

DORA introduces strict rules for how financial institutions must manage their third-party IT providers to reduce cyber security risks, including:

• Develop a clear strategy for using third-party ICT services.
• Regularly review and assess third-party risks.
• Perform thorough checks on suppliers before signing contracts.
• Have an exit strategy in place to reduce reliance on any single provider.

These steps ensure financial institutions stay in control of their IT security, even when outsourcing services.

5. Cyber Threat Information Sharing

DORA encourages financial organisations to share cyber security insights with industry peers to strengthen collective defence. This includes:

• Indicators of compromise (IoCs) to detect potential attacks
• Cyber security alerts and updates from industry forums
• Threat mitigation strategies to proactively defend against cyber risks

By sharing information, financial entities can stay ahead of emerging threats and improve overall security across the sector.

Consequences of Non-Compliance with DORA

Not following DORA can lead to serious consequences, such as:

• Being forced to stop certain activities
• Facing fines and penalties
• Public notices may be issued, disclosing the names of non-compliant entities and the individuals responsible.

Where to Start with DORA Compliance?

The first step is to conduct a Gap Analysis to identify areas in your business that need improvement with regards to DORA compliance. It’s important to get the leadership team onboard and start creating a DORA compliance roadmap which aligns with the 5 pillars, including roles, tasks, deadlines, checklists and future planning.

Where to Get Help

Achieving DORA compliance can be complex, but financial institutions don’t have to navigate it alone. Organisations can seek support from:

• Regulatory Bodies – Consult the European Insurance and Occupational Pensions Authority (EIOPA) and other EU financial authorities for guidance.
• Industry White Papers & Documentation – Detailed technical guides can help clarify requirements.
• Your IT Provider – Work with your IT provider to ensure alignment with DORA requirements.

Many firms struggle with the budget, time, and expertise required for DORA compliance. Implementing all requirements at once can be overwhelming, which is why leveraging external support is often beneficial. As a trusted IT provider, we offer the tools and expertise to help financial institutions navigate DORA compliance efficiently. Whether it’s IT management, risk mitigation, or system testing, we can support you in achieving compliance with confidence.

If you need assistance, our team is ready to help.