How Much Effort is Required to Be DORA Compliant?

Introduction to DORA Compliance

The Digital Operational Resilience Act (DORA) is a comprehensive EU regulatory framework introduced to enhance the ICT infrastructure of the financial markets. DORA aims to ensure that financial institutions can withstand, respond to, and recover from various ICT-related disruptions, thus safeguarding the financial system’s integrity. For them, becoming and remaining DORA compliant involves several key areas, including maintaining a robust risk function, conducting yearly policy reviews, and ensuring accurate and timely reporting to the regulator (e.g., CSSF in Luxembourg or equivalent national supervisors). Additionally, institutions must decide which functions can be safely and effectively outsourced to third parties and how to deal with the third-party risks.

The DORA deadlines have passed, and compliance is no longer optional. Yet not all organisation are fully compliant, and gaps to be closed remain, the main reason being that many organisations have underestimated the complexity of the requirements. The following is an overview for companies to better understand DORA and all the aspects that need to be taken into consideration.

1. Risk Function: Building and Maintaining Operational Resilience

Effort Required

The risk function under DORA is central to ensuring operational resilience. Institutions must establish a comprehensive ICT risk management framework. This involves:

• Risk Assessment and Monitoring: Regular assessment of ICT risks, including cyber threats, system failures, and data breaches. Continuous monitoring is essential to detect and respond to emerging threats in real-time.

• Incident Management: Developing and maintaining an incident management plan that outlines procedures for detecting, reporting, and responding to ICT incidents. This includes training staff to handle incidents and conducting simulations to test the effectiveness of the plans.

• Risk Reporting: Creating detailed reports on the institution’s ICT risk exposure and mitigation strategies. These reports must be communicated to senior management and, in some cases, to regulatory authorities.

Challenges

• Complexity: The risk environment for financial institutions is highly complex, requiring continuous adaptation of the risk management framework to address new threats.

• Resource Intensity: Maintaining an effective risk function demands significant resources, including experienced personnel, advanced monitoring tools, and continuous training.

2. Policy Review: Ensuring Up-to-Date Compliance

Effort Required

DORA mandates that financial institutions review and update their operational resilience policies at least annually. This review process includes:

• Policy Evaluation: A thorough evaluation of all existing policies related to ICT risk management, incident response, and operational continuity. This evaluation must consider changes in the threat landscape and updates to technological advancements and regulatory requirements.

• Stakeholder Involvement: Engaging relevant stakeholders, including IT, compliance, risk management, and senior management, in the policy review process to ensure that all perspectives are considered.

• Documentation: Updating policy documents to reflect any changes and ensuring that these updates are communicated effectively across the organization.

Challenges

• Keeping Pace with Change: The rapid evolution of technology and cyber threats requires institutions to be proactive in their policy reviews. Failure to do so can lead to vulnerabilities in operational resilience.

• Coordination: Effective policy reviews require coordination across multiple departments, which can be challenging, especially in larger organizations.

3. Reporting to the Regulator: Compliance and Transparency

Effort Required

Financial institutions must report their ICT-related risks and incidents to the regulator, demonstrating compliance with DORA requirements. The reporting process involves:

• Incident Reporting: Timely and accurate reporting of significant ICT incidents to the regulator. This includes providing detailed information on the nature of the incident, its impact, and the measures taken to address it.

• Regular Reporting: Submitting periodic reports on ICT risk management activities, including risk assessments, policy updates, and incident management practices.

• Audit and Review: Ensuring that all reports are thoroughly reviewed and audited before submission to maintain accuracy and compliance.

Challenges

• Regulatory Scrutiny: The regulators will closely monitor reports to ensure compliance. Any discrepancies or delays in reporting can lead to penalties or increased regulatory scrutiny.

• Data Accuracy: Ensuring that all reported data is accurate and up-to-date requires meticulous record-keeping and verification processes.

4. Register of Information: Building and Maintenance

Effort Required

DORA requires the creation of a structured report that regulated financial entities must maintain about all their third-party ICT service providers, critical dependencies, and relevant contracts that might impact their operational resilience.:

• Risk Management: The Register of Information is vital for risk management, providing an overview of external dependencies. It helps institutions assess risks linked to outsourcing, such as concentration risk from relying on a single provider and operational risk from service outages.

• Maintenance: Regular reviews of the Register are essential, particularly when new contracts are established, services change, or risk profiles shift. This practice guarantees that the institution's oversight of its ICT providers stays up-to-date and in compliance with DORA's requirements.

Challenges

• Automation: Maintaining the Register of Information can be done manually by editing sheets in Excel. However, larger institutions would prefer to reduce the inherent risks associated with human errors.

• Availability to Regulators: The Register of Information must be regularly updated and accessible to regulators. This transparency allows regulators to effectively oversee how financial institutions are handling third-party ICT risks.

5. Outsourcing: What Can Be Delegated?

What Can Be Outsourced?

DORA supposes that financial institutions outsource certain ICT functions, provided that they maintain overall responsibility and control. Outsourcing can include:

• ICT Operations: Institutions can outsource ICT operations, such as data storage, cybersecurity monitoring, and system maintenance, to third-party service providers.

• Incident Management: Elements of incident detection and response can be outsourced to specialized cybersecurity firms that offer 24/7 monitoring and rapid response capabilities.

• Policy Review Support: External consultants can assist in conducting yearly policy reviews, providing expertise on the latest regulatory requirements and best practices.

Outsourcing Considerations

• Vendor Due Diligence: Institutions must conduct thorough due diligence on potential service providers to ensure they have the necessary capabilities and are compliant with DORA.

• Contractual Safeguards: Contracts with service providers must include clear provisions on data security, incident reporting, and compliance with regulatory requirements.

• Ongoing Oversight: Even when outsourcing, institutions must retain oversight of outsourced functions and ensure that service providers adhere to agreed-upon standards and practices.

Conclusion: Balancing Compliance with Efficiency

Financial institutions must carefully assess their capabilities and risks and decide which functions must be implemented in-house and which may be delegated or outsourced. By doing so, they can maintain compliance with DORA while focusing on their core competencies, ultimately achieving a balance between resilience, regulatory adherence, and operational effectiveness.

DORA compliance requires significant effort across various functions within a financial institution. While risk management functions, yearly policy reviews, and reporting to the regulator demand substantial resources and coordination, external advisory and ICT governance solutions can help manage the workload and ensure that institutions meet regulatory requirements without compromising operational efficiency.

How can MAQIT help?

MAQIT S.A. is a Luxembourg-based RegTech solution provider and IT management company. We provide IT regulatory and AML/KYC advisory services, helping businesses become compliant, stay compliant, and turn compliance into a competitive advantage.

Proactively assisting financial entities, we leverage our deep expertise and RegTech software to ensure full DORA compliance and cutting-edge ICT governance. This past quarter (Q2 2025), we successfully supported our clients in meeting the challenging DORA deadlines for filing their Registers of Information.

Do you need help with DORA or other IT regulations? We are here to help.

Don't hesitate to get in touch with us: info@maqit.lu