DORA Regulation Explained: What You Need to Know

Photo of a digital globe and text displaying DORA (Digital Operational Resilience Act)

Written by: Meghan Maneval

Reviewed by: Jonathan Muir
Updated: January 13, 2025

Table of contents

In today's digital world, financial institutions are under constant threat from cyberattacks, system failures, and other operational disruptions. With the increasing reliance on digital infrastructure, regulatory bodies are stepping up to ensure these institutions are not only secure but also resilient in the face of such challenges. 

What is DORA?

The Digital Operational Resilience Act (DORA) is a groundbreaking regulation aimed at ensuring that financial institutions across the European Union (EU) can withstand, respond to, and recover from all types of digital disruptions and operational risks. Whether it's a cyber-attack, system failure, or third-party service outage, DORA sets the standards to build a robust defense against operational breakdowns.

Key Components of DORA

DORA is designed to safeguard digital operations in the financial sector and brings several critical elements to the forefront.

  1. Robust Risk Management Framework: Institutions must adopt a comprehensive operational resilience framework that identifies and mitigates vulnerabilities in their digital operations.
  2. Incident Reporting: Significant incidents must be promptly reported to regulators, classified by severity, and follow specific timelines for resolution.
  3. Third-Party Risk Management: DORA mandates strong oversight of third-party service providers, ensuring that financial institutions regularly assess and continuously monitor these relationships.
  4. Digital Operational Testing: Regular stress testing and participation in EU-led coordinated testing exercises are essential to assess and improve resilience.

Why DORA Matters

DORA’s importance cannot be overstated. Compliance with this regulation offers multiple benefits to financial institutions, including:

✔ Preventing Disruptions: By focusing on digital resilience, DORA ensures that institutions can maintain operational continuity during cyber-attacks, outages, or other digital disruptions.
✔ Reducing Financial Penalties: Non-compliance with DORA can result in significant fines and reputational damage. Proactively adhering to these regulations minimizes such risks.
✔ Gaining a Competitive Edge: Institutions that adopt DORA’s best practices early will be viewed as secure and resilient, gaining trust from both regulators and customers.

Preparing for DORA Compliance

If you’re ready to get started, here are some actionable steps:

  1. Conduct Regular Risk Assessments: Evaluate your institution’s digital resilience across all operations. Identify any critical gaps or weaknesses that require attention.
  2. Establish Strong Cybersecurity Protocols: Make sure your IT systems are secure and that your incident response plan is up-to-date and thoroughly tested.
  3. Strengthen Vendor Management: Perform due diligence on third-party providers and ensure that they meet DORA’s risk management and resilience requirements.
  4. Prepare for Digital Stress Tests: Regular stress tests and simulations will ensure your systems are prepared to handle potential disruptions.

Get the Full Picture: Download Our DORA Infographic!

Understanding DORA and how to implement it in your organization can feel overwhelming. Download the DORA Infographic to get a clear, visual guide to everything you need to know about the Digital Operational Resilience Act.

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