Understanding DORA compliance: A complete guide

When your systems rely on third parties, resilience is no longer optional. The Digital Operational Resilience Act(DORA) makes that law. If your teams cannot trace the risk, they cannot manage the fallout. 

Adopted by the EU in 2022, DORA forces financial institutions to prove operational continuity during disruptions. Compliance now is all about demonstration. Entities must show they can detect, withstand, and recover from digital risks, including third-party, cloud, and internal systems. 

For compliance teams, this means operational proof, not just policy updates. DORA sharpens audits, sets clear expectations, and eliminates guesswork. The margin for error is gone, along with the luxury of reactive compliance.

What is the Digital Operational Resilience Act (DORA)?

DORA stands for Digital Operational Resilience Act. It’s a European Union regulation focused on making the financial sector digitally strong. It aims to combat any IT-related hiccups, whether it’s a cyberattack, system failure, or third-party software glitch.

It applies to banks, insurance firms, investment companies, and third-party ICT service providers. It dictates strict rules around risk management, incident reporting, resilience testing, and oversight of third-party tech vendors.

Key takeaway: If you run any kind of IT, SecOps, or compliance infrastructure that touches financial data or services in the EU, DORA applies to you.

Why was DORA developed?

Before DORA, financial regulation in the EU was scattered across various directives and lacked focus on digital resilience. But as cyberattacks became more frequent and damaging (ransomware attacks alone spiked 105% globally in 2021)^[1], the cracks were impossible to ignore.

In response, the European Commission proposed DORA in 2020. The idea: one regulation to bring uniformity, focus, and teeth to digital risk management in finance.

DORA became official law in January 2023, and entities had until January 17, 2025, to comply.

Operational challenges that the DORA regulation will eliminate

In the pre-DORA world, operational resilience in financial services was a mess of fragmented guidelines, inconsistent enforcement, and cross-border headaches. DORA regulation aims to sweep up the chaos. Here’s what it tackles head-on:

1. Fragmented Regulations: Different rules across EU countries created confusion.
2. Inconsistent Cyber Defenses: Some firms are secured, others exposed, no common standard.
3. Unsupervised ICT Providers: Critical vendors operated with little oversight.
4. Weak Incident Reporting: Slow, vague disclosures delayed response and recovery.

DORA steps in to fix all these missteps applying to both financial institutions and the tech providers they rely on to stay operational.

5 key requirements for DORA

DORA sets a clear expectation: financial entities must operate securely, recover quickly, and stay compliant at all times. Here’s what that means in practice:

1. ICT Risk Management: You need documented policies to identify, assess, and mitigate ICT risks across systems, people, and processes. This includes asset inventories, risk classification, and ongoing control reviews.
2. Incident Reporting: Significant ICT incidents must be reported to regulators within 24 hours. You must classify incidents by impact, share root cause analysis, and update authorities throughout resolution.
3. Digital Operational Resilience Testing (DORT): Regular testing is non-negotiable. This includes scenario-based testing and advanced threat-led penetration tests (TLPTs) to prove you can withstand real-world attacks.
4. Third-Party Risk Management: You must manage ICT vendors with formal contracts, performance tracking, and documented exit plans. DORA brings critical third-party providers like cloud platforms under direct regulatory scrutiny.
5. Information Sharing: DORA encourages secure, structured information exchange between firms and regulators to build collective resilience. It’s about reducing systemic risk, not just individual exposure.

Who does DORA apply to?

DORA applies to a range of financial entities, including:

• Banks and credit institutions: Whether you’re a major commercial bank or a regional credit union, you’re in scope.
• Investment firms and trading platforms: Market infrastructure operators must ensure operational resilience at all times.
• Fintechs and SMBs: Even the smallest providers must comply with DORA when offering critical financial services.
• Insurance and reinsurance companies: These institutions hold vast amounts of sensitive personal and financial data, making operational continuity critical.
• Crypto-asset service providers: As the EU formalizes regulation of digital assets, crypto firms fall squarely under DORA requirements.
• Payment institutions and e-money companies: Anyone facilitating payments or managing digital wallets needs to meet DORA’s ICT risk standards.
• ICT third-party service providers: If your business supplies IT systems, cloud services, or cybersecurity tools to any of the above, you’re part of the regulatory scope too.
• DORA and the ESAs: The European Supervisory Authorities (ESAs), EBA, ESMA, and EIOPA, are DORA’s muscle. They draft standards, audit systems, inspect providers, and enforce DORA, especially for cross-border and outsourced tech.

Incident reporting under DORA

DORA isn’t playing around with delays. Incident reporting requirements are fast and detailed. Organizations must:

• Classify ICT incidents based on impact
• Report major incidents to authorities within strict timelines (often 24 hours)
• Provide root cause analysis and remediation steps
• Keep regulators in the loop throughout the resolution

This forces teams to have automated detection and streamlined communication ready to go. Slow response? That’s a red flag under DORA.

Benefits of DORA compliance

1. Boosted trust and reputation: Being DORA-compliant signals that your organization takes cyber resilience seriously. That trust translates to stronger customer relationships and fewer questions from regulators.

2. Clearer oversight and governance: DORA compliance forces businesses to know what’s in their tech stack, who’s managing it, and how it all connects. This clarity helps IT admins tighten controls and cut down risk.

3. Reduced downtime: DORA regulation pushes for continuous monitoring and real-time threat detection. Less downtime means smoother operations and less firefighting for SecOps teams.

4. Streamlined vendor management: With ICT third-party risk under the DORA act microscope, organizations gain better visibility into vendor resilience. That’s a win for compliance officers who have to answer “what if” questions during audits.

5. Audit readiness: DORA builds documentation and testing into its framework. So when auditors show up, you’re not scrambling. You’re ready.

According to ENISA, nearly 50% of EU-based financial incidents in 2023 were linked to third-party failures. DORA directly addresses that gap.

Best practices for meeting DORA requirements

Compliance doesn’t have to feel like a grind. Here are practical best practices to meet DORA regulation standards and stay ahead of enforcement:

1. Start with a gap analysis: Run a Digital Operational Resilience Act (DORA) gap analysis to map where you are vs. where you need to be. Prioritize:

• Inventory ICT assets – to know your systems and dependencies.
• Map risks – to identify weak spots.
• Review third-party contracts – to define roles before a crisis hits.
• Assess response plans – to ensure they work in practice.
• Benchmark against DORA – to structure your current state with the official framework.

Pro tip: Bring in outside experts. An independent DORA audit will catch blind spots your internal team might miss.

2. Build a cross-functional task force: DORA isn’t an IT-only affair. Involve Legal, Compliance, Security, and Risk Management teams early. This ensures all angles are covered: tech, policy, and legal.

3. Document everything: From your ICT risk management policy to incident response runbooks, make sure documentation is up to date and accessible. You’ll need it during audits or regulatory reviews.

4. Test your resilience: Annual threat-led penetration testing is required under DORA EU regulation. Budget for red-teaming and include it in your yearly plan.

5. Monitor third-party risks continuously: Don’t treat vendor assessments as a once-a-year checkbox. Automate third-party monitoring and keep tabs on contractual SLAs tied to resilience.

Why organizations need to care about DORA compliance

There are three main reasons why entities should comply with the DORA regulation:

1. Regulatory Penalties: Failure to comply can result in fines of up to 2% of the organization’s total worldwide annual turnover.
2. Stakeholder Confidence: Demonstrating operational resilience can help maintain trust among customers, investors, and partners.
3. Legal Requirement: Compliance is not optional. The Digital Operational Resilience Act becomes mandatory across the EU by January 2025.

Aligning with DORA requirements, along with meeting the legal obligations, can improve system stability, reduce downtime, and support broader compliance goals.

How Scalefusion Veltar helps in DORA compliance

The DORA European regulation is a digital transformation mandate. For those in IT, compliance, or security, DORA compliance must be a top priority. But before tackling complex regulatory mandates, it’s essential to fortify your foundation. CIS compliance is a baseline security foundation essential before advancing to DORA requirements. Without it, your stack remains exposed at the core.

And Scalefusion Veltar is the right answer for that matter. With its automated CIS compliance solution, it enables deep visibility, swift remediation, and consistent baseline security hardening, setting the stage for scalable, audit-ready compliance across any regulation, DORA included.

Start now, or risk scrambling later.

References:

1. Ransomware Statistics

FAQs

1. What is the DORA compliance statement?

DORA compliance statement is your organization’s formal proof that you meet DORA’s rules for digital operational resilience. This statement affirms you have identified critical ICT risks, documented controls, established incident response plans, tested continuity strategies, and set up governance for third-party providers. Essentially, it’s a signed declaration to regulators that you’re truly prepared.

2. What is the purpose of DORA?

DORA exists to make sure financial services and any tech partners supporting them can withstand, recover from, and report ICT disruptions without threatening the broader EU financial system. The aim is to standardize resilience practices across banks, insurers, payment providers, and even small fintech vendors so that a single weak link doesn’t cause systemic chaos.

3. Is DORA based on NIST?

DORA isn’t formally built on NIST, but there are some familiarities. It borrows principles from NIST, ISO 27001, and global risk frameworks. If you already follow NIST Cybersecurity Framework or ISO standards, you’ll have a head start, but DORA still imposes its own specific requirements, especially around third-party oversight and mandatory reporting timelines.

4. How to do the DORA audit checklist?

To build your DORA audit checklist, gather evidence across five areas: ICT risk management policies, incident response and reporting procedures, resilience testing logs, contracts detailing third-party risk controls, and governance records. Regularly review, update, and audit these materials so you’re ready for inspections without scrambling at the last minute.