DORA (Digital Operational Resilience Act)
The Digital Operational Resilience Act (DORA) is a European Union regulation that establishes a comprehensive framework for managing information and communication technology (ICT) risks in the financial sector. Adopted in 2022 and in force from January 2025, DORA aims to ensure that financial entities (including banks, insurance companies, investment firms, and their critical third-party ICT service providers) can withstand, respond to, and recover from ICT-related disruptions and threats.
Why it Matters
DORA represents a significant shift in how financial institutions approach operational resilience in an increasingly digital world. As cyber threats grow more sophisticated and financial services become more dependent on technology and third-party providers, a single ICT disruption can cascade across the entire financial system, affecting millions of customers and threatening market stability.
Beyond compliance, DORA drives competitive advantage. Institutions that excel in operational resilience build stronger customer trust, reduce the likelihood of costly disruptions, and position themselves as reliable partners in an ecosystem where a single vendor's failure can impact multiple institutions. The regulation also levels the playing field by bringing critical third-party ICT providers—previously outside direct regulatory oversight—under supervisory scrutiny for the first time.
Key requirements under DORA include:
- ICT Risk Management: Financial entities must implement robust governance and control frameworks to identify, protect against, detect, respond to, and recover from ICT-related incidents.
- Incident Reporting: Mandatory reporting of major ICT-related incidents to relevant authorities within strict timeframes.
- Digital Operational Resilience Testing: Regular testing programs, including advanced testing such as threat-led penetration testing (TLPT) for significant entities.
- Third-Party Risk Management: Enhanced oversight and management of risks arising from third-party ICT service providers, including contractual requirements and monitoring.
- Information Sharing: Arrangements for sharing information and intelligence about cyber threats and vulnerabilities among financial entities.
DORA represents a harmonized approach across EU member states, replacing fragmented national rules and strengthening the operational resilience of the European financial system against cyber threats and operational disruptions.
