Understanding DORA: How the Digital Operational Resilience Act Impacts UK Financial Entities

DORA compliance is becoming a top priority for financial firms in the UK. Even though the UK is no longer part of the EU, the Digital Operational Resilience Act (DORA) holds significant implications for any financial entity doing business with the EU or serving EU clients. If your firm deals with digital services, cloud providers, or cross-border transactions, DORA is something you cannot ignore.

What is DORA?

DORA, or the Digital Operational Resilience Act, is an EU regulation designed to strengthen the IT security and digital resilience of financial institutions. It was adopted in December 2022 and will be fully enforceable by January 2025. DORA ensures that banks, insurers, investment firms, and even third-party IT providers can handle cyber threats and system failures without disrupting operations.

While DORA is an EU regulation, UK financial entities still need to pay attention. If your services touch the EU market in any way, you’re expected to meet the standards of DORA compliance.

Why DORA Matters for UK Financial Firms

Operational disruptions are costly. Cyberattacks, IT failures, and data breaches have become more frequent and damaging. DORA is designed to make sure financial systems stay strong, even during digital crises.

For UK-based firms operating across borders, DORA is not just a regulatory hurdle—it’s a chance to build stronger, more resilient systems. Being DORA-compliant also boosts client trust and shows a commitment to security.

Who Needs to Comply?

DORA applies to a wide range of financial entities, including:

• Banks and building societies
• Insurance and reinsurance companies
• Investment firms
• Credit rating agencies
• Crowdfunding platforms
• ICT third-party service providers (such as cloud hosting providers)

If your UK business serves EU clients or partners, you may fall under DORA’s scope. It’s essential to conduct a risk assessment to see how your services align with DORA’s framework.

Key Areas of DORA Compliance

To comply with DORA, UK financial firms must focus on five main areas:

1. ICT Risk Management

You need strong internal systems to detect, protect, and respond to IT-related risks. This includes patch management, system updates, and cybersecurity policies.

2. Incident Reporting

All major IT incidents must be reported in a structured and timely manner. DORA sets out timelines and formats for how incidents must be logged and shared with regulators.

3. Digital Operational Resilience Testing

Regular stress testing of your IT systems is required. These tests should simulate cyberattacks and system breakdowns to identify weak points.

4. ICT Third-Party Risk Management

You must assess and monitor any third-party digital service providers you work with. Contracts must include clear terms around data security and service uptime.

5. Information Sharing

DORA encourages financial firms to share threat intelligence with peers. This helps strengthen the industry’s overall resilience.

If you want to dive deeper into these core principles, check out our detailed guide: Five Pillars of the DORA Act: Your Guide to Data Ownership & Rights.

How Can UK Firms Prepare?

Here are some practical steps UK firms can take to get ready:

• Conduct a gap analysis: Identify where your current systems fall short of DORA requirements.
• Review third-party contracts: Ensure they include clauses for risk management and reporting.
• Train staff: Make sure everyone understands their role in maintaining digital resilience.
• Invest in cybersecurity: Update outdated systems and increase security monitoring. If you lack in-house expertise, partnering with a trusted cybersecurity consultancy can help implement effective measures.
• Establish reporting workflows: Create a clear process for reporting and managing IT incidents.

Final Thoughts

DORA is reshaping how financial firms across Europe—and beyond—manage digital risk. For UK financial entities, it’s a wake-up call to improve IT resilience, even post-Brexit. Staying ahead of DORA compliance can protect your reputation, maintain client trust, and reduce the financial impact of digital threats.

Whether you operate in London or Leeds, the time to prepare is now. DORA isn’t just about meeting EU regulations—it’s about building a stronger future for your financial business.

DORA Compliance: Frequently Asked Questions

1. How does DORA affect third-party ICT providers?

DORA requires UK financial firms to assess and monitor the digital service providers they rely on. Firms must ensure that third-party contracts include clear terms on data security, service uptime, and risk management, in line with DORA’s regulations.

2. What are the penalties for non-compliance with DORA?

Non-compliance with DORA can result in significant fines and penalties. Regulatory authorities may impose penalties based on the severity of the breach, including financial sanctions or other corrective measures to ensure adherence to digital resilience standards.

3. What is the timeline for DORA implementation?

DORA is set to be fully enforced starting January 17, 2025. Financial firms are expected to have all necessary systems and processes in place by this date to comply with the new regulations and ensure operational resilience.