EU Digital Operational Resilience Act (DORA): Are You Ready?

The Digital Operational Resilience Act (DORA) is a disruptive policy that came into effect in January 2025 with the objective to boost the cyber resilience of financial institutions in the European Union. As digital transformation increases, it is crucial to ensure the availability, integrity, and confidentiality of critical IT systems to sustain financial market trustworthiness and stability. DORA creates a uniform framework for managing ICT (Information and Communication Technology) risks, making it a cornerstone of operational resilience throughout the EU.

The Digital Operational Resilience Act (DORA) is an EU regulatory mandate and should not be confused with the well-known DevOps Research and Assessment (DORA) metrics, which assess software delivery performance. The EU-mandated DORA focuses on regulatory compliance measures, including incident reporting, ICT risk management, and resilience testing, which extend far beyond the scope of DevOps metrics.

This article looks at DORA’s key requirements, their impact on businesses, and actionable steps to prepare for compliance. With the January 2025 deadline approaching, now is the time to learn how DORA can drive operational excellence and cyber resilience, not just as a regulatory requirement, but also as a strategic imperative.

Understanding the Digital Operational Resilience Act?

The Digital Operational Resilience Act (DORA) is a regulatory framework introduced by the European Union to ensure that financial institutions can withstand, respond to, and recover from operational disruptions, particularly those stemming from Information and Communication Technology (ICT) risks. Designed to enhance the resilience of the EU financial sector, DORA establishes a comprehensive set of rules to manage and mitigate risks associated with digital operations and third-party ICT service providers.

Objectives of DORA

1. Strengthening Operational Resilience: DORA aims to create a robust and uniform approach to ICT risk management across the EU financial sector. This ensures that institutions have the capabilities to minimize disruptions and maintain critical operations during adverse events.
2. Standardizing Incident Reporting: The act introduces a unified incident classification and reporting system for financial entities. This helps regulators and stakeholders understand the scope of incidents and develop strategies to mitigate future risks.
3. Reducing Third-Party Risks: With financial institutions increasingly relying on third-party ICT service providers such as cloud providers and SaaS vendors, DORA enforces strict oversight and monitoring of these dependencies to prevent vulnerabilities in the supply chain.

Scope of DORA

DORA applies to a wide range of financial entities, including:

• Banks and credit institutions.
• Investment firms.
• Payment institutions.
• Cryptocurrency service providers.
• Insurance companies.

Additionally, ICT third-party service providers such as cloud vendors and managed service providers (MSPs) fall within its scope when offering services to financial institutions.

Key Requirements of DORA

The Digital Operational Resilience Act (DORA) establishes a comprehensive framework for managing ICT risks, enhancing operational resilience, and ensuring regulatory compliance. Below are the key requirements that financial entities and their ICT service providers must meet to align with the regulation.

1. ICT Risk Management Framework

DORA mandates the implementation of a robust ICT risk management framework. This framework must encompass:

• Risk Identification and Assessment: Regularly identifying and evaluating potential ICT vulnerabilities and threats.
• Mitigation Strategies: Implementing controls to reduce identified risks, such as secure software development practices and robust access controls.
• Policy Development: Establishing clear policies for ICT risk management, including contingency planning and recovery protocols.

2. Governance and Oversight

Organizations must have a strong governance structure for ICT risk management, including:

• Assigning responsibilities to a board-level committee or equivalent for overseeing ICT risks.
• Regularly reviewing and updating ICT policies to align with emerging threats.
• Establishing a culture of accountability for operational resilience across all levels of the organization.

3. Operational Resilience Testing

Entities must conduct regular operational resilience tests to validate their ability to withstand and recover from disruptions. Key requirements include:

• Penetration Testing: Simulating cyberattacks to identify vulnerabilities in systems and processes.
• Disaster Recovery Testing: Ensuring continuity of critical operations through recovery exercises.
• Scenario-Based Testing: Evaluating responses to hypothetical incidents, such as ransomware attacks or cloud outages.

4. Incident Reporting

DORA requires organizations to adopt a standardized incident classification and reporting process:

• Incident Classification: Categorizing incidents based on severity and potential impact on operations and customers.
• Timely Reporting: Submitting incident reports to regulators within specified timeframes, enabling coordinated responses.
• Post-Incident Analysis: Conducting root cause analysis and documenting lessons learned to prevent recurrence.

5. Third-Party Risk Management

Given the reliance on external ICT providers, DORA imposes strict controls over third-party relationships:

• Due Diligence: Evaluating ICT service providers for their operational resilience and compliance capabilities.
• Contracts: Establishing contractual terms that require third-party compliance with DORA requirements.
• Ongoing Monitoring: Continuously monitoring the performance and resilience of third-party providers.
• Sub-outsourcing Controls: Ensuring that sub-outsourced services also meet DORA’s standards.

6. Information Sharing

To foster a coordinated approach to cyber resilience, DORA promotes secure information sharing:

• Entities are encouraged to share insights about cyber threats, vulnerabilities, and best practices.
• Collaborative efforts help the financial sector address systemic risks more effectively.

7. Record-keeping and Documentation

Organizations must maintain detailed records of their ICT risk management practices and operational resilience activities, including:

• Incident reports and post-incident analyses.
• Results of resilience tests and remediation efforts.
• Third-party assessments and monitoring records.
• These records must be made available to regulators upon request.

Comparison with Other Compliance Standards

Understanding how DORA compares to other well-known compliance standards helps organizations contextualize its requirements and identify gaps in their current compliance practices. Each framework emphasizes distinct aspects of security and operational resilience, tailored to its target audience or industry. Below, we outline the unique focus areas and key differences between DORA and other prominent standards.

Common Challenges in DORA Compliance

As organizations prepare for the Digital Operational Resilience Act (DORA), they will face several key challenges that could hinder compliance efforts. These challenges stem from both the complexity of DORA’s requirements and the need to align with existing regulations. Below are the most common challenges businesses may encounter:

1. Overlap with Existing Regulations

Many organizations are already complying with various regulations such as GDPR, ISO 27001, and NIS2, which focus on cybersecurity and operational resilience. DORA introduces its own set of requirements that overlap with these regulations, but with a stronger emphasis on financial entities and their ICT (Information and Communications Technology) service providers.

Businesses must carefully assess the interplay between these frameworks to avoid redundant efforts while ensuring full compliance with DORA’s specific provisions. This overlap can lead to confusion and may require dedicated resources to manage and interpret multiple compliance frameworks.

2. Complexity of Third-Party Oversight

DORA places a significant burden on businesses to manage third-party ICT service providers, especially given the importance of maintaining operational resilience in the event of disruptions. Under DORA, financial entities must ensure that their third-party providers meet rigorous standards for risk management and incident reporting.

This will require a robust process for vetting, monitoring, and ensuring compliance with the regulations for all third-party service contracts. For many organizations, this represents a major challenge in terms of maintaining visibility, ensuring proper security controls, and navigating potential disruptions from external partners.

3. Adapting Legacy Systems for Resilience Testing

Another hurdle for DORA compliance is adapting legacy IT systems for the required operational resilience testing. DORA mandates that financial institutions perform regular resilience testing to evaluate the ability of their ICT systems to withstand and recover from adverse scenarios.

However, many financial institutions rely on legacy systems that were not designed with resilience testing in mind. Updating or replacing these systems can be resource-intensive and time-consuming, especially in organizations that have complex IT infrastructure built over decades. Businesses will need to dedicate time and expertise to modernize their systems and incorporate resilience testing into their operational workflows.

The Bottom Line

The Digital Operational Resilience Act (DORA) requires EU organizations in finance, insurance, and technology to strengthen operational resilience. Its focus on ICT risk management, incident reporting, and third-party oversight will help financial institutions better withstand and recover from disruptions.

January 2025 was the deadline for organizations to enhance risk management, incident response, system testing, and third-party monitoring to meet DORA’s requirements. Now, compliant organizations need to make sure they don’t drift out of compliance.

DORA’s impact extends beyond compliance, fostering more secure and resilient digital infrastructure. Early preparation will position businesses to meet the deadline and improve their ability to manage operational risks.

The time to act is now—assess systems, strengthen resilience frameworks, and ensure DORA compliance to secure your business’s future.