The Digital Operational Resilience Act (DORA) came into force on January 17, 2025. Compliance isn’t optional if your business operates within or interacts with the EU financial sector; it’s essential. Here’s what you need to know, especially if you’re a small or medium-sized enterprise (SME) or a non-EU firm with limited EU presence.
What is DORA and Who Does it Impact?
DORA aims to enhance the digital resilience and cybersecurity of Europe’s financial services sector. The regulation covers banks, investment firms, insurance companies, payment institutions, crypto-asset providers, and ICT third-party service providers.
It lays out five key obligations:
- ICT Risk Management: Establish comprehensive policies and strategies to protect ICT assets.
- Incident Reporting: Swiftly detect, classify, manage, and report ICT incidents.
- Resilience Testing: Regularly test your ICT systems to ensure they withstand cyber threats.
- Third-Party Risk Management: Clearly manage and document your risks with external ICT providers.
- Information Sharing: Collaborate by sharing threat intelligence across the sector.
Beyond these obligations, DORA also mandates clear accountability at the board level, meaning senior executives are directly responsible for ensuring ICT risks are appropriately managed and documented.
Why SMEs Should Pay Attention
DORA recognises that not all financial firms are created equal. Smaller entities benefit from proportionality, meaning you can adopt simplified compliance frameworks that align better with your operational scale and risk profile. However, simplification doesn’t mean exemption. You’ll still need robust, documented ICT risk management systems.
Limited resources, complex regulatory language, and third-party risk management are the main challenges SMEs face. However, these hurdles don’t reduce the necessity of compliance—ignoring DORA could lead to fines, operational disruptions, or reputational damage.
Moreover, compliance can be viewed as a strategic investment rather than just a regulatory cost. By proactively aligning your business with DORA, you can significantly reduce the risk of disruptive cyber incidents, gain customer trust, and improve overall operational efficiency.
Implications for Non-EU Financial Firms Operating in Europe
DORA has extraterritorial reach. If your non-EU firm offers financial services within the EU or interacts significantly with EU-based clients, you’re subject to DORA’s stringent requirements. You’ll need to ensure your ICT infrastructure meets EU standards, demonstrate clear third-party risk management, and consider establishing an EU subsidiary if deemed critical by regulators.
For smaller non-EU entities, this presents a challenge but also an opportunity. Compliance signals to clients that you’re serious about cybersecurity and operational resilience. Additionally, DORA compliance can standardise your cybersecurity practices globally, leading to efficiencies across different jurisdictions.
How Non-EU Firms with Satellite Offices or Limited EU Presence Can Navigate DORA Compliance
For non-EU companies with limited EU operations, full-scale compliance can feel daunting. The key is proportionality. Conduct a focused gap analysis to understand exactly where your firm stands against DORA requirements. Prioritise practical and straightforward compliance steps:
- Implement foundational network security controls.
- Clearly document your risk management processes.
- Align your ICT security practices with broader international standards for consistency and efficiency.
Smaller organisations should leverage available resources and external expertise. Engaging specialist consultants or managed service providers (MSPs) can provide clarity, reduce the complexity of compliance, and help ensure your firm meets regulatory expectations without straining internal resources.
Loxada’s secure network edge routers can significantly simplify compliance, offering secure, centrally-managed solutions tailored to firms needing straightforward yet robust security without large-scale complexity. Automated firmware updates, centralised management, secure VPN capabilities, and integrated threat protection are just a few ways Loxada simplifies DORA compliance.
Practical Steps for Achieving DORA Compliance
To make compliance manageable, consider the following actionable steps:
- Risk Assessment: Clearly identify and document your ICT risks and vulnerabilities, including third-party providers.
- Policy Development: Develop clear ICT risk management policies and procedures that align with DORA standards.
- Staff Training: Regularly train employees on cybersecurity best practices and regulatory expectations.
- Regular Testing: Schedule and conduct regular vulnerability assessments and penetration testing to proactively address weaknesses.
- Incident Response Planning: Establish robust incident response plans and regularly review and update these based on testing outcomes and evolving threats.
Turning Compliance into Strategic Advantage
Compliance with DORA protects your business, enhances your operational resilience, and builds trust with your clients and regulators. SMEs and smaller international firms can use compliance strategically, positioning themselves ahead of competitors who view regulation merely as a burden.
At Loxada, we’re committed to helping your organisation easily meet DORA’s requirements, ensuring your ICT infrastructure is secure, resilient, and compliant wherever you operate. By proactively managing digital risks, your firm can confidently navigate regulatory landscapes, ensuring long-term success and operational stability.
