The Digital Operational Resilience Act, the EU regulation known as DORA comes into effect on 17th January 2025. It’s designed to ensure financial entities and their critical service providers— including SaaS or other tech companies supporting the financial sector—can withstand, respond to, and recover from operational disruptions, particularly those caused by cyber threats.
Although DORA is an EU regulation, if your UK business provides critical services to EU financial institutions (such as cloud computing, SaaS or IT infrastructure) you’ll need to comply or it could impact your ability to do business within the EU financial sector.
DORA sets out a framework that requires businesses to:
- Proactively identify and manage their tech risks;
- Build robust incident detection and response capabilities;
- Regularly test systems for vulnerabilities through digital resilience testing;
- Ensure third-party providers are vetted and meet resilience standards; and
- Collaborate across organisations to share critical information and defend against emerging cyber threats.
To comply with DORA you’ll need to take the following steps:
Perform a comprehensive risk assessment
Map out critical systems, identify vulnerabilities, and quantify risks associated with ICT disruptions. Use tools like risk matrices to prioritise your action plans.
Establish incident detection and response protocols
Create a streamlined process for identifying and addressing operational disruptions, complete with designated roles, automated monitoring, and clear escalation paths.
Integrate digital resilience testing into operations
Schedule regular stress testing and simulations to evaluate your systems’ robustness against cyber threats or hardware failures. Incorporate these tests into your development cycles.
Audit and vet third-party providers
Develop a checklist to evaluate your vendors’ compliance with DORA standards. Ensure contracts include clauses requiring adherence to operational resilience benchmarks.
Train your team on resilience practices
Provide training sessions to ensure employees understand their roles in preventing and mitigating risks. Equip them with the tools and knowledge to act swiftly in case of disruptions.
Invest in technology solutions for monitoring and reporting
Adopt platforms that help track compliance metrics, manage incident reporting, and centralise risk management processes. Examples include security information and event management (SIEM) tools and automated compliance dashboards.
Why you should care about DORA
As a service provider to financial institutions, such as a scaling SaaS company, meeting DORA standards is not only required, but can also become a strategic advantage. Here’s why:
- Gain customer trust: customers, especially financial institutions, demand service providers that can guarantee high levels of operational reliability and security. By complying with DORA, you send a clear message to clients that your company meets stringent, standardised resilience benchmarks.
- Mitigate the cost of disruption: operational failures can lead to revenue losses, customer dissatisfaction, and reputational damage. Implementing DORA’s guidelines ensures that risks are detected and mitigated early, minimising downtime and costs.
- Unlock market opportunities: DORA compliance could likely become a prerequisite for providing services to EU regulated financial businesses and give you a head start for any future requirements adopted in the UK. By aligning your business with DORA’s principles, you position your company as a reliable partner in a demanding market.
- Drive operational efficiency: building digital resilience often uncovers inefficiencies and bottlenecks in IT systems. DORA’s structured approach can help you optimise processes and reduce costs while improving system reliability.
- Demonstrate value to investors: adopting a proactive, compliance-forward approach signals to investors that your business is prepared to handle operational risks and navigate complex regulatory environments with the potential growth opportunities that they can bring.
Final Thoughts
DORA compliance will become critical for providing services to EU financial institutions so it’s important to understand its requirements and even if you are not fully compliant in mid- January, to start down the path of meeting its standards.
By working towards compliance, you will also be building a sustainable competitive advantage. Whether you’re navigating entry into EU markets, strengthening operational safeguards, or looking to bolster investor confidence, DORA’s compliance framework should help to achieve these goals. To find out how we can help, get in touch on info@legaledge.co.uk
