DORA Compliance: An Overview for Financial Institutions


The European Union’s Digital Operational Resilience Act (DORA) represents a significant shift in the regulatory landscape for financial institutions (FIs). This legislation demands strategic preparation to ensure compliance and to strengthen digital operational resilience. Here’s a breakdown of how financial institutions should prepare to ensure compliance with DORA:




Understanding DORA

DORA aims to bolster the operational resilience of financial entities by enforcing robust requirements for managing and mitigating cyber risks. The legislation encompasses all critical aspects of digital operational resilience, including risk management, incident reporting, ICT third-party risk, and more. It entered into force on January 16, 2023, and will go into effect on January 17, 2025. 


DORA will apply to any FI that conducts business in the European Union (EU). FIs include more traditional financial businesses such as banks and credit unions, but also extends to more modern organizations, such as crypto businesses and FinTechs.




Key Preparatory Steps for DORA Compliance

There are six key steps that FIs should be taking in preparation for the upcoming deadline. 



1. Comprehensive Risk Assessment

As with most financial regulations, the first step lies in assessing current compliance processes and risks. It’s vital to start here to have a full understanding of areas of strength, weaknesses and where improvement or additional work may be needed. This assessment should include:


  • A thorough assessment of current risk management frameworks

  • Identify gaps in existing processes and systems that DORA mandates

  • Develop a roadmap to address these gaps, prioritizing high-risk areas



2. Enhance Incident Reporting Capabilities

DORA requires FIs to report incidents within 4 hours of classification or within 24 hours of initial detection. As a result, FIs must strengthen their reporting processes and capabilities to be able to act quickly. This should include:


  • Implementing or upgrading incident detection and reporting mechanisms to meet DORA’s stringent requirements

  • Ensuring real-time monitoring and swift incident response protocols are in place

  • Training staff on new reporting procedures and compliance expectations

  • Create detailed documentation of all risk management and compliance processes

  • Utilize automated reporting solutions that can generate required reports with ease

  • Ensure documentation is easily accessible for audits and regulatory reviews



3. Strengthen Third-Party Risk Management

In addition to looking in-house, it’s important to assess third parties that your FI conducts business with. This should include:


  • Reviewing and updating policies for managing ICT third-party providers

  • Establishing robust due diligence and ongoing monitoring processes

  • Ensuring all third-party contracts include clauses that address DORA compliance



4. Technology and Cybersecurity Investments

With DORA’s primary focus being the enhancement of the digital resilience of FIs, having a robust technological and cybersecurity infrastructure is imperative. As a result, FIs should:


  • Invest in advanced cybersecurity tools and technologies to enhance protection against cyber threats
  • Regularly test and update cybersecurity measures to stay ahead of emerging threats
  • Collaborate with cybersecurity experts to ensure systems are resilient and compliant



5. Employee Training and Awareness

Having employees educated on DORA’s objectives and requirements greatly increases your FI’s probability of compliance. It is recommended to:


  • Conduct regular training sessions to keep employees informed about DORA requirements and compliance procedures

  • Promote a culture of resilience and preparedness across the organization

  • Implement regular drills and simulations to test and improve readiness



6. Engage With Regulatory Bodies and Industry Peers

As we know, regulations and legislation are constantly changing. One of the best ways to stay ahead of these changes is to be in constant discussion with regulatory bodies and industry peers. Your FI should:


  • Stay informed about updates and guidance from EU regulators

  • Participate in industry forums and working groups to share best practices and gain insights

  • Establish open communication channels with regulators to ensure alignment and address any compliance uncertainties.



Opportunities for Financial Institutions

DORA not only presents compliance challenges but also opportunities for financial institutions to innovate and strengthen their operational resilience. By developing robust risk management and incident reporting frameworks, financial institutions can enhance their reputation increasing trust with clients and stakeholders, as well as avoid potential fines and punishments. Furthermore, investing in advanced cybersecurity measures can provide a competitive edge in an increasingly digital financial landscape.


Innovating and strengthening operational resilience, risk management processes and incident reporting framework should include investments into modern RegTech solutions. Utilizing integrated compliance solutions can automate tedious processes and eliminate the element of human error. 


At Alessa, we provide  comprehensive AML compliance software  and fraud management solutions that includes a variety of modules. They can operate as stand-alone solutions, or work together for streamlined compliance and fraud management. These solutions include:



Contact us today for a quick free demonstration of our products. 

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