DORA compliance – Why financial firms can’t afford to fall behind

The financial sector is under increasing pressure to strengthen its defences against cyber threats. With digital transformation accelerating, financial institutions are more exposed than ever to cyberattacks that could disrupt operations, compromise sensitive data, and damage market stability. To address these risks, the European Union has introduced the Digital Operational Resilience Act (DORA), a regulation designed to ensure financial entities and their third-party ICT providers can withstand and recover from cyber incidents.

DORA goes beyond traditional cybersecurity regulations, setting out strict requirements for operational resilience, incident reporting, and third-party risk management. It aims to create a unified approach to security across the EU financial sector, reducing systemic risks that could impact the broader economy. But for businesses affected by the regulation, including UK-based firms servicing EU clients, compliance is not just a best practice; it is a necessity.

The financial industry has long been a top target for cybercriminals. Banks, insurers, and investment firms handle vast amounts of sensitive data and process millions of transactions daily. Any disruption to these services can have far-reaching consequences, not just for individual businesses but for entire economies.

Threat actors know this all too well, with ransomware gangs, state-sponsored hackers, and cybercriminal syndicates continuously seeking ways to exploit vulnerabilities within financial networks. High-profile incidents in recent years have demonstrated how a single breach can ripple across global markets. From the Swift bank attacks to the Capital One data breach, financial institutions have been forced to reckon with the reality that cyber resilience is no longer optional.

DORA acknowledges this heightened risk by mandating continuous security testing, robust risk management frameworks, and enhanced reporting mechanisms for cyber incidents. These measures ensure that organisations can identify, respond to, and recover from threats before they cause significant harm. Unlike past regulations that focused on security policies, DORA demands evidence of effective resilience in action.

Failing to comply with DORA is not just a regulatory issue, it’s a financial and reputational risk. The EU has introduced tough penalties for organisations that do not meet the new requirements, including fines of up to 1% of daily turnover for as long as six months. For large financial institutions, this could translate into millions in lost revenue.

But fines are just one part of the equation. A failure to meet resilience standards can also increase an organisation’s exposure to cyberattacks, leading to prolonged outages, data breaches, and financial losses. Customer confidence is crucial in the financial sector, and any indication that an institution cannot protect its assets can drive clients toward competitors with stronger security measures.

For UK-based firms operating within the EU financial market, the stakes are even higher. Without compliance, these businesses risk losing access to key markets, cutting them off from European clients and business opportunities. With Brexit already reshaping regulatory landscapes, UK financial firms cannot afford to fall behind when it comes to meeting EU standards.

Meeting DORA’s stringent requirements can seem overwhelming, particularly for smaller organisations with limited resources. However, financial firms do not have to start from scratch. Established security frameworks such as ISO 27001 provide a structured approach to meeting many of DORA’s key mandates, including risk management, incident response, and operational resilience.

ISO 27001 offers a well-defined information security management system (ISMS) that aligns closely with DORA’s focus on proactive risk assessment and continuous improvement. Organisations that have already implemented ISO 27001 will have a strong foundation in place to address many of DORA’s requirements, reducing the burden of compliance.

Beyond ISO 27001, other frameworks such as NIST’s Cybersecurity Framework and the CIS Controls can provide additional guidance on securing ICT infrastructure and responding to threats. By leveraging these standards, organisations can streamline compliance efforts, demonstrate a commitment to resilience, and create a scalable approach that allows them to adapt to future regulatory changes.

For many businesses, achieving DORA compliance will require significant investment in security infrastructure, resilience testing, and skilled personnel. However, the cost of inaction is far greater.

Building operational resilience is not just about meeting regulatory expectations, by strengthening ICT security, implementing rigorous testing procedures, and enhancing incident response capabilities, financial institutions can gain a competitive edge in an industry where trust and reliability are paramount.

Financial organisations that take proactive steps now will be better positioned to navigate the evolving threat landscape, protect their assets, and maintain their standing in the European market. Those that delay risk financial penalties, reputational damage, and exposure to ever-growing cyber threats.