January 17, 2025, marks the deadline for the Digital Operations Resilience Act (DORA). After that date, financial entities in the European Union (EU) are required to comply with this complex framework aimed at improving operational resilience.

In this article, we explain what DORA is, who it impacts, and why it’s important for MSPs to start preparing, (if they haven’t already.)

The Background

Financial institutions often focus their risk management efforts on the allocation of capital. In essence, they ensure they have enough money to cover the potential losses caused by a cyber incident.

There are several drawbacks to this approach:

Reactive rather than proactive: It focuses on mitigating the financial fallout of a breach and does little to prevent the incident or minimize its impact.

Doesn't address all losses: Financial reserves cover fines, legal fees, and customer compensation, but don't address:
- Loss of customer trust.
- Disruption to business operations.
- Loss of critical data.
- The resources needed to restore systems and rebuild trust.
Doesn't incentivize prevention: If organizations rely on financial reserves, there's less incentive to invest in proactive cybersecurity measures.

An operational resilience approach to risk management, on the other hand, focuses on the ability to withstand, respond to, and recover from cyber incidents.

DORA: Regulating Resilience

The Digital Operations Resilience Act is an EU regulation intended to improve the operational resilience of financial entities against digital threats. Because they can impact the entire financial system, DORA places particular importance on safeguarding against Information and Communication Technology (ICT) incidents and disruptions.

Measures

DORA requires EU financial institutions to implement measures covering everything from protection and containment to recovery and repair. Some of these measures include:

Identify and classify assets, functions and their associated risk
Implement systems and tools to minimize risks
Regular penetration and vulnerability testing
Continuous monitoring and effective detection and response measures
Incident reporting, business continuity, and disaster recovery policies and processes
Third-party risk management
Information sharing

Enforcement

European Supervisory Authorities (ESAs) are responsible for the enforcement of DORA compliance. ESAs can request access to documents or data held in any form, and they have the right to perform on-site investigations. As part of those investigations, they can summon the representatives of financial entities for explanations and interview any person who consents to be interviewed.

Penalties

EU Member States define their own rules and penalties, but they have the power to apply the following, at least:

Require the cessation of any practice or conduct that’s in breach of DORA.
Apply any type of measure to ensure compliance, including significant financial penalties.
Issue public statements that indicate the identity of the entity in breach.
Impose criminal penalties in the case of severe violations.

Impact

DORA applies to all the usual financial entities, including banks, investment firms, and insurance companies. But DORA is unique in that it extends to entities that have not previously been subject to this type of regulation, such as crypto asset service providers and data reporting providers. It also places a strong focus on third-party risk management.

DORA Compliance Opportunities for MSPs

Many financial entities, especially smaller ones, lack the in-house expertise and resources to fully implement and maintain compliance with complex DORA requirements. This creates a demand for external services that MSPs are well-positioned to supply.

DORA CaaS

MSPs can offer specialized expertise and ongoing management of ICT risks through Compliance as a Service (CaaS). To help financial entities meet DORA requirements, MSPs might offer CaaS packages that include:

Risk assessments
Policies and processes (i.e. incident response, disaster recovery)
Resilience testing
Continuous monitoring
Security controls (i.e. multifactor authentication, antivirus, encryption)
Ongoing compliance monitoring and reporting

Why offer DORA CaaS?

DORA compliance is not a one-time effort. It requires ongoing monitoring, maintenance, and improvement, which creates a recurring revenue stream. Positioning your MSP as a trusted advisor in a highly regulated sector also differentiates your MSPs from generalist providers and attracts new clients seeking expert guidance with this framework.

MSPs and DORA Third-party Requirements

DORA requires covered financial entities to ensure the operational resilience of third-party ICT service providers. If your MSP provides service to a covered DORA entity, the focus on third-party risk management may result in greater scrutiny on your operations.

Consequences of non-compliance

That’s true whether you’re located in the EU or not. DORA extends to ICT providers outside the EU if their services are critical to the operations of EU-based financial institutions.

Non-compliance could lead to contractual challenges, potentially affecting business relationships with EU clients. What’s more, if an incident occurs due to an MSP's failure to meet its obligations, both the MSP and the financial entity could face penalties.

Benefits of DORA compliance

By ensuring DORA compliance, MSPs not only meet their obligations but also gain a significant competitive advantage and strengthen their position in the market.

Demonstrating DORA compliance can be a major differentiator for MSPs bidding for contracts with financial entities. It signals a commitment to high standards of security and operational resilience and opens the EU market for MSPs that can demonstrate compliance.

Prepare for DORA With Compliance Scorecard

With the deadline for compliance just around the corner, financial entities should be well on their way to implementing their DORA program. For those that haven’t, it’s important to get started immediately. Establishing operational resilience requires significant time and effort, and delaying action could lead to non-compliance and potential penalties.

For MSPs ready to step up for their financial clients (and themselves), we’ve got just the thing. Along with all the policy docs, reporting tools, scorecards, and integrations you need to manage a successful DORA compliance program, we’ve created a DORA assessment to help you align with the framework’s control objectives. Book a live demo and learn how to become a DORA compliance superstar.