Published on: September 28, 2025 at 12:22 AM

What Is the Digital Operational Resilience Act (DORA)?

The Digital Operational Resilience Act (DORA) is a landmark regulation by the European Union that aims to strengthen the digital resilience of the financial sector. In an era where digital infrastructure is as critical as financial capital, DORA addresses the growing threats posed by cyberattacks, IT failures, and third-party risks. It ensures that all participants in the EU financial system can maintain resilient operations during severe digital disruptions.

DORA was officially adopted in December 2022 and will apply from January 17, 2025. Unlike other regulations that focus solely on data protection (like GDPR), DORA emphasizes operational continuity and system resilience. It mandates unified rules for cybersecurity, risk management, incident reporting, resilience testing, and oversight of third-party ICT providers. Whether you're a traditional bank, a fintech startup, or a cloud services vendor supporting financial firms, DORA impacts you. It is not just a compliance checklist — it's a strategic framework to help organizations survive and thrive in an increasingly hostile digital environment.

Step 1: Identify If Your Organization Is Affected

Understanding whether DORA applies to your business is the first critical step. The regulation covers a wide range of entities within the financial ecosystem, as well as their digital service providers. DORA creates obligations for nearly all financial sector participants operating within the EU, regardless of size.

• Banks and credit institutions
• Insurance and reinsurance undertakings
• Investment firms and asset management companies
• Payment institutions and e-money institutions
• Crypto asset service providers (under MiCA)
• Central securities depositories and trading venues
• Financial market infrastructures (FMIs)
• Third-party ICT service providers — cloud vendors, software suppliers, cybersecurity firms, etc.

If you are a service provider to any of these institutions — especially if your services are considered “critical” — DORA may apply to you either directly or indirectly. Even small organizations that support larger regulated entities will need to demonstrate compliance to maintain contracts and partnerships.

Step 2: Establish ICT Risk Management Framework

DORA requires organizations to create and maintain a comprehensive ICT risk management framework. This is the foundation for all other compliance activities and must be integrated into the overall governance of the company. Boards and executive leadership are expected to take direct responsibility for digital risk, not just delegate it to IT departments.

• Define ICT risk ownership at all levels of the organization
• Create policies and procedures for identifying, evaluating, and mitigating ICT risks
• Document and classify all systems, assets, processes, and data flows
• Regularly assess the impact of new technologies, vendors, and infrastructure
• Implement security controls such as endpoint protection, firewall rules, patch management, etc.
• Ensure continuous monitoring of key systems and assets
• Establish internal reporting channels for vulnerabilities and near-miss events

This framework must be reviewed and updated annually or after any major change in the ICT landscape. Internal audit teams should conduct independent evaluations to ensure its effectiveness.

Step 3: Build an Incident Reporting Process

Fast and accurate reporting of ICT-related incidents is one of DORA’s most critical obligations. The goal is to ensure regulators and other financial institutions are aware of systemic risks as early as possible, allowing for coordinated response and mitigation.

• Develop an incident classification system based on severity and impact
• Create response teams with clear roles and escalation paths
• Set up secure reporting channels that meet regulatory standards
• Log all events and timeline of responses for post-incident analysis
• Train staff on how to recognize and escalate incidents quickly

Under DORA, serious incidents must be reported to the relevant national competent authority (NCA) in a structured timeline: an initial notification within hours, followed by detailed intermediate and final reports. Firms must also track and analyze trends in incident data to enhance future preparedness.

Step 4: Perform Digital Resilience Testing

To ensure that financial firms can operate through disruption, DORA mandates regular resilience testing of systems, processes, and personnel. This includes a range of testing activities — from basic vulnerability assessments to advanced simulations of real-world attacks.

• Run periodic internal vulnerability scans and fix identified issues
• Conduct red team exercises and penetration testing on production-like environments
• Test backup systems, data recovery procedures, and business continuity processes
• Evaluate user response during phishing or social engineering simulations
• Verify failover capability and capacity during infrastructure stress testing

Firms designated as “significant” (e.g., systemically important institutions) must conduct Threat-Led Penetration Testing (TLPT) — where ethical hackers simulate advanced cyberattacks under the observation of regulators. The results of all testing activities must feed back into risk assessments and be used to improve systems, documentation, and training.

Step 5: Monitor Third-Party ICT Risks

Modern financial institutions are deeply dependent on third-party vendors for cloud infrastructure, software platforms, and cybersecurity services. DORA recognizes this and places strict obligations on how firms select, monitor, and manage third-party ICT providers.

• Conduct pre-contract due diligence to assess provider security posture
• Include DORA-compliant provisions in all contracts — including SLAs, incident response, audit rights, and termination clauses
• Map data and service dependencies across providers and sub-contractors
• Develop a risk-based vendor classification model
• Monitor performance, compliance, and availability of critical vendors on an ongoing basis
• Maintain a detailed and regularly updated register of all ICT providers

For “critical ICT providers,” such as hyperscale cloud vendors, the EU will establish a central oversight framework. These providers may be audited or supervised directly by designated EU authorities, and firms using them must cooperate fully in such processes.

Step 6: Prepare for Oversight and Enforcement

Compliance with DORA is not a one-time task — it’s an ongoing obligation. National and EU-level regulators will have broad powers to assess, investigate, and enforce DORA requirements. This includes conducting audits, issuing fines, and imposing corrective actions.

• Ensure all policies and frameworks are properly documented and reviewed regularly
• Maintain records of risk assessments, test results, and incident logs for a minimum of 5 years
• Provide evidence of board-level involvement in ICT governance
• Train all employees and contractors on their specific roles in digital resilience
• Participate in supervisory reviews, onsite inspections, or information requests

Penalties for non-compliance can include financial sanctions, legal restrictions, reputational damage, or even revocation of operational licenses in severe cases. A proactive, well-documented approach to compliance is the best defense.

Step 7: Embrace Information Sharing and Sector Collaboration

While not mandatory, DORA encourages financial firms to participate in voluntary cyber threat information-sharing initiatives. This helps build a more resilient financial sector through collective intelligence.

• Join industry-wide threat intelligence platforms and ISACs (Information Sharing and Analysis Centers)
• Collaborate on best practices, attack indicators, and early-warning systems
• Coordinate incident response during sector-wide cyber crises
• Contribute anonymized insights to help others detect threats earlier

Participation in such initiatives demonstrates good faith to regulators and strengthens collective defense across the financial system.

Conclusion

The Digital Operational Resilience Act is a major milestone in financial regulation. It shifts the focus from reaction to preparation, from siloed systems to integrated digital governance. DORA will not only protect individual institutions but also improve the stability of the entire EU financial market.

Meeting DORA’s requirements is a strategic advantage. It helps build trust with customers, partners, and regulators — while also improving cyber defense, reducing operational costs, and minimizing downtime. As 2025 approaches, firms that take action now will be in a strong position to meet compliance deadlines and thrive in a digitally driven financial ecosystem.

DORA is not just another regulatory obligation — it’s a blueprint for operational excellence in the digital age. Start building resilience today to secure your future tomorrow.