The Digital Operational Resilience Act (DORA) is a EU regulation whose goal is to ensure that financial institutions are resilient from digital disruption. DORA takes into consideration the reliance on digital operations for financial institutions. It is also a response to the recent increase of ICT-related incidents.
The European Union introduced this regulation in 2023. It went into effect in 2025. There are three entities that oversee and enforce DORA compliance. They are the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA), and the European Securities and Markets Authority (ESMA). These three entities are referred to as the European Supervisory Authorities.
Who Needs to Comply with DORA?
All financial institutions, such as banks, insurance companies, and payment providers that have operations in Europe must comply with this regulation. The European Banking Authority (EBA), which is one of the three European Supervisory Authorities (ESA), states that DORA also extends to any third-party entity, such as cloud and IT service providers, that delivers services to financial institutions. These entities are critical third-party providers (CTPPs), and their inclusion in DORA is one of the key pillars for this regulation.
Key Objectives of the Digital Operational Resilience Act
The Digital Operational Resilience Act defines a robust framework that ensures that financial institutions can sustain severe digital interruptions. This system is based on five key objectives:
ICT risk management
Organizations must identify, assess, and mitigate risks to their information systems while establishing governance policies and assigning clear responsibilities for ICT security. Continuous monitoring of IT infrastructure is also mandated to detect vulnerabilities before they can be exploited.
ICT incident reporting
Organizations are required to establish mechanisms for detecting, responding to, and reporting ICT-related incidents. DORA mandates that significant incidents be reported to regulatory authorities within strict deadlines. Also that organizations maintain detailed records for forensic analysis.
Digital operational resilience testing
Financial entities will need to conduct regular security testing, such as penetration testing, to assess their ability to withstand cyber threats. The testing results must be then analyzed so that organizations can implement remediation plans to address any identified weaknesses.
ICT third-party risk management
Organizations must conduct thorough risk assessments before engaging with third-party vendors. They ensure that contractual agreements include provisions for security, incident reporting, and compliance audits. Continuous monitoring of vendor performance is essential, and financial institutions are expected to take corrective action if security risks arise.
Information sharing
The DORA framework encourages organizations to share threat intelligence and cybersecurity insights to improve their collective defenses. Participation in EU-wide cybersecurity initiatives and information-sharing networks helps institutions stay ahead of emerging cyber risks.
Impact on Businesses and Financial Institutions
By implementing these five key pillars, financial institutions and their ICT providers can strengthen their operational resilience, safeguard customer data, and contribute to a more secure and reliable financial sector. Given its broad scope, DORA’s influence is likely to extend beyond European borders. It applies not only to EU-based organizations but also to any entity that operates within or provides services to the European market. This extraterritorial reach means that global financial firms and technology providers must align with DORA’s standards if they wish to maintain access to EU markets.
However, compliance with DORA comes with challenges. Particularly, in the form of increased investments in cybersecurity, threat detection, and infrastructure monitoring. Financial institutions will need to allocate greater resources to enhance their security frameworks, deploy advanced monitoring solutions, and implement continuous testing protocols. These investments will also drive demand for a more skilled workforce, as organizations seek professionals with expertise in cybersecurity, risk management, and regulatory compliance. While these requirements may create initial financial and operational hurdles, they ultimately position businesses for long-term resilience in an increasingly digital and threat-prone financial landscape
Conclusion: The Future of the Digital Operational Resilience Act
The Digital Operational Resilience Act (DORA) sets strict rules to boost cybersecurity in EU financial institutions. It enforces stronger ICT risk management, incident reporting, resilience testing, and third-party risk oversight. DORA also promotes information sharing to help institutions tackle cyber threats. Its scope includes critical third-party providers (CTPPs), like cloud and IT service firms, ensuring a secure digital ecosystem. Compliance may demand high investments in cybersecurity, monitoring, and skilled staff. However, it strengthens business continuity, protects customer data, and secures the financial sector. DORA’s broad reach may also shape global cybersecurity standards, urging firms worldwide to align with its principles.
