What is DORA Compliance? Key Requirements & Practical Steps

Financial sectors are targeted by cyberattacks 300 times more than any other sector—are you prepared? That's why the EU's Digital Operational Resilience Act (DORA) is here to shake things up. It's not just another rule book—it's your financial world's digital shield for tomorrow.

Picture it like building your body's immune system, but for your digital operations. You can't just set it and forget it! It's about bouncing back from cyber threats, system crashes, and operational hiccups. Since December 2022, financial firms have been preparing for DORA, with a deadline of January 2025 to get everything in order.

Here’s what’s changing: digital resilience isn’t just the IT department’s responsibility anymore. Executives and board members now carry the burden of making resilience a part of every decision they make for the company.

Let’s be honest—DORA isn’t some checklist to complete. It’s about proving reliability, making bold moves, and stepping up in a world where digital risks are always active. Digital resilience isn’t a choice—it’s what keeps you afloat.

Who Does DORA Compliance Apply To? (Hint: It’s Not Just Banks)

DORA spreads its influence surprisingly wide in the financial world. Many of my clients think these rules only apply to big banks at first. But the truth goes way beyond that.

Banks, insurers, and investment firms

DORA's core focus targets almost every financial entity operating in the EU. The rules apply to:

• Credit institutions (traditional banks)
• Payment service providers
• Electronic money institutions
• Investment firms and asset managers
• Insurance and reinsurance companies

A notable aspect of DORA is that it applies to organizations of all sizes. Small local banks must meet the same compliance standards as huge banking corporations.

Crypto platforms and crowdfunding services

The digital asset space falls under DORA's reach too. Crypto-asset service providers, trading platforms, and crowdfunding services must all comply. This shows how the EU wants digital finance to meet the same resilience standards as traditional banking.

Crypto platforms face an extra challenge as DORA adds new rules on top of existing MiCA regulations.

Critical third-party ICT providers

DORA's influence extends to technology providers that support financial firms. Cloud services, software providers, data analytics companies, and cybersecurity firms must meet specific requirements.

This oversight of third parties stands out as one of DORA's most innovative features. It shows how financial resilience depends on the whole ecosystem, not just individual institutions.

What makes a provider 'critical' under DORA?

Not every technology provider faces direct DORA supervision. The European Supervisory Authorities (ESAs) label providers as "critical" based on several key factors:

• How a service disruption would affect financial stability
• Financial entities' dependence on the service
• The ease of replacing the provider
• The provider's importance in the EU financial system

Providers tagged as critical face direct ESA supervision, whether they operate inside or outside the EU.

DORA Compliance Requirements (5 Pillars of DORA)

DORA's technical language boils down to a simple set of pillars that help strengthen financial resilience. The 5 pillars of DORA are:

1. ICT Risk Management Framework
2. Incident Reporting
3. Digital Resilience Testing
4. Third Party Risk Management
5. Business Continuity

1. ICT Risk Management Framework – map, assess, alleviate

DORA regulations start with a detailed ICT risk management framework. Financial entities must:

• Identify and document all ICT-supported business functions
• Map dependencies between systems and business operations
• Assess risks yearly (or after major changes)

This goes beyond paperwork. You need a clear picture of your assets to protect them properly.

2. Incident Reporting – 3 types of reports, strict timelines

DORA needs quick action with firm reporting deadlines:

• Initial report: Within 4 hours of classifying an incident as "major" and no later than 24 hours after you spot it
• Intermediate report: Within 72 hours of your original notification
• Final report: Within one month of the intermediate report

These deadlines apply on weekends too. Smaller entities can wait until noon the next business day.

3. Digital Resilience Testing – TLPTs, vulnerability scans, and more

Your digital defenses need regular testing under DORA:

• Vulnerability assessments and scans
• Source code reviews before deployment
• Penetration testing to find weaknesses

Larger institutions must run Threat-Led Penetration Tests (TLPTs) every three years. These advanced tests copy real-life attacks against live production systems that support critical functions.

4. Third-Party Risk Management – contracts, audits, and exit plans

Partners often create weak points, so DORA requires:

• Risk assessments before working with ICT providers
• Contractual safeguards for critical services
• Detailed exit strategies for each critical vendor relationship

You need detailed documentation showing how to switch from any third-party service without disrupting critical functions.

5. Business Continuity – be ready for anything

DORA makes business continuity planning mandatory. You must:

• Create and document detailed Business Impact Analyzes
• Test ICT business continuity plans yearly
• Keep records of activities during disruptions

You'll need backup processing sites that match your business needs. These sites should be in different locations and ready to keep critical operations running.

Your DORA Compliance Checklist for 2025

The January 2025 deadline for DORA compliance is coming up quickly. Financial entities should start preparing now with a clear plan. Financial experts say "a very complex and challenging task which requires a concerted effort" lies ahead. These are the DORA checklist elements:

1. Conduct a gap analysis
2. Build or update your ICT risk framework
3. Set up incident classification and reporting processes
4. Identify and assess all third-party dependencies
5. Plan your TLPT and testing schedule
6. Train your board and staff on DORA responsibilities

These are the checklist elements that form the foundation of DORA readiness. Now, let’s take a closer look at each of them to understand what they really mean and how to implement them effectively.

1. Conduct a gap analysis

You need to know where you stand right now. A gap analysis will show how your current practices match up with DORA's requirements. This full picture helps you:

• Focus on high-risk areas that can't wait
• Record your existing capabilities and processes
• Create a realistic implementation roadmap with deadlines

The biggest financial institutions face tough challenges across many compliance areas. A well-laid-out gap analysis lets you use your resources wisely and fix what matters most.

2. Build or update your ICT risk framework

DORA needs a complete ICT risk management framework with clear strategies, policies, and tools. Your framework should:

• Keep all information assets and ICT systems safe from unauthorized access and damage
• Have a digital operational resilience strategy that shows implementation methods
• Get reviewed yearly or after major incidents

On top of that, you should put someone in charge of ICT risk management who can work independently to avoid conflicts of interest.

3. Set up incident classification and reporting processes

You should create clear protocols to classify and report major incidents. This means setting up:

• Ways to identify and track issues
• Plans to communicate with teams and regulators
• Systems that meet DORA's tight reporting deadlines

4. Identify and assess all third-party dependencies

Look at all your third-party relationships, especially those handling critical functions. You should check providers carefully and make sure contracts cover ICT risk management. Yes, it is important – DORA requires you to keep a register of all contracts with third-party ICT service providers.

5. Plan your TLPT and testing schedule

Your company must do Threat-Led Penetration Testing (TLPT) at least every three years. Your testing must:

• Look at critical business functions
• Work with relevant third-party providers
• Use qualified external testers

6. Train your board and staff on DORA responsibilities

DORA requires board members to "actively keep up to date with sufficient knowledge and skills" through regular training. You should also develop "a strong sense of awareness about cyber risks" among all staff members to keep your operations resilient.

Cost of ignoring DORA compliance (Spoiler: It’s Expensive)

The cost of ignoring DORA compliance will shock you. Financial institutions can't work their way around these regulations. The penalties for non-compliance with DORA will hurt – that's exactly how they're designed.

Fines up to 1% of global daily turnover

DORA regulation violations come with massive financial penalties. Regulatory authorities can slam organisations with fines up to 1% of average global daily turnover. Large financial institutions could face penalties worth millions of euros—daily. These aren't one-time penalties but continuous financial punishment until the organisation achieves compliance.

Daily penalties for up to 6 months

The severity of DORA penalties extends beyond the shocking percentage. Supervisory authorities can enforce these daily penalties for six months straight. The financial burden adds up faster than you'd expect. This strategy makes it impossible for organisations to treat DORA compliance as optional—the numbers just don't add up.

Reputational damage and lost trust

The financial hit is just the beginning. DORA non-compliance can destroy an organisation's reputation. Here's what happens:

• Public penalty disclosure erodes customer trust
• Shareholders lose confidence and stock values drop
• Other regulatory bodies increase their scrutiny
• Compliant competitors gain an edge by promoting their reliability

Real-life example: What happened to firms that ignored GDPR?

Although DORA compliance is not the same as GDPR, the latter gives a clear idea of how EU regulators handle non-compliance. Following the implementation of GDPR, Google faced a hefty €50 million fine, while British Airways faced a €22 million penalty. Even a small company in Poland faced a €220,000 fine, regardless of its size.

Skipping DORA compliance might put you in a similar position. It’s not just about ticking another box; it is vital. The designers of this regulation have made it obvious that the cost of ignoring the rules will far outweigh the expense of following them. Putting off compliance now could lead to major penalties and long-term damage to your reputation, much like what happened with GDPR.

Looking Ahead: Why DORA Compliance Matters More Than You Think

DORA changes the way financial institutions manage digital resilience. It provides more than just basic rules and creates a solid framework to safeguard the EU’s financial system against advanced digital risks. With the deadline already upon us, financial institutions must act now. Setting up ICT risk management, incident reporting, and overseeing third-party systems takes effort, and delaying further will only make it more expensive.

Financial firms that treat DORA as more than just another rule see it as a chance to grow. Building a strong digital framework helps companies compete, gain customer confidence, and stay steady in tough times. Acting on DORA also helps businesses dodge fines that could go as high as 1% of daily global revenue. Since the financial sector faces cyberattacks 300 times more often than other industries, DORA Compliance isn’t just a checkbox—it’s a critical investment in the future of your business.