DORA Compliance Costs: Why Many UK and EU Businesses are Facing €1M Overhead
Compliance with the Digital Operational Resilience Act (DORA) has become a significant financial burden for many financial institutions across the UK and EU. Recent research by Rubrik Zero Labs reveals that businesses are grappling with soaring compliance costs, often exceeding €1 million ($1.02 million) as they race to meet the January 17, 2025 deadline.
What is DORA and Why Is It Important?
The Digital Operational Resilience Act (DORA) is an EU regulation aimed at strengthening the financial sector’s resilience to Information and Communication Technology (ICT) risks. It introduces a unified framework for managing cybersecurity risks across financial services, ensuring institutions are prepared for operational disruptions and cyberattacks.
Key focus areas of DORA include:
- ICT Risk Management
- Incident Reporting
- Operational Resilience Testing
- Third-Party Risk Management
- Information Sharing
Rising Compliance Costs: A Financial Strain
Rubrik’s research, based on surveys of 350 CISOs in finance and banking sectors, highlights the growing financial and operational burden of DORA compliance:
- 47% of UK and 38% of EU organizations have spent over €1 million on compliance.
- 28% in the UK and 30% in the EU reported spending between €501,000–€1 million.
- For large financial institutions, costs could escalate into the tens of millions due to the complexity of integrating new security frameworks.
Why Are Costs So High?
- Specialist Hiring: Firms are hiring cybersecurity experts to implement and maintain compliance frameworks.
- Technology Investments: Upgrades in cybersecurity infrastructure, including EDR, SIEM, and cloud security solutions.
- Continuous Testing: Rehearsals and validation of cybersecurity protocols require ongoing investment.
- Third-Party Monitoring: DORA mandates continuous oversight of ICT service providers, adding to operational expenses.
The Human Cost of Compliance
Beyond financial pressures, compliance has also impacted the well-being of cybersecurity professionals:
- 79% of CISOs reported that DORA compliance has negatively affected their mental health.
- 60% said the regulation has increased pressure on their role.
- 23% of CISOs are considering transitioning to less regulated industries due to the strain.
Top Cybersecurity Risks for Financial Institutions
1. Ransomware Attacks
- 46% of UK CISOs and 33% in the EU identified ransomware as the biggest threat.
- Among firms with 2,500+ employees, this figure rises to 57%.
2. Third-Party Compromise
- 20% of CISOs cited risks stemming from third-party vendors.
- DORA mandates rigorous due diligence and continuous monitoring of third-party ICT providers.
3. Supply Chain Vulnerabilities
- 19% of CISOs highlighted supply chain attacks as a major concern.
- These attacks can exploit weak security in vendor systems to infiltrate larger networks.
Building Resilience: More Than Just Compliance
Rubrik’s James Hughes, VP of Solutions Engineering, stressed that compliance alone isn’t enough—resiliency must become a core business strategy. Companies need to shift from purely defensive strategies to proactive operational resilience.
Key Strategies for DORA Compliance and Cyber Resilience
- Invest in Advanced Security Tools
- Adopt AI-driven threat detection, SIEM, and EDR tools for early detection and response.
- Continuous Resilience Testing
- Regularly test incident response protocols and cybersecurity systems to handle evolving threats.
- Third-Party Risk Management
- Conduct ongoing due diligence on ICT vendors and implement strict access controls.
- Incident Response Readiness
- Develop and rehearse detailed response plans for cybersecurity incidents like ransomware attacks.
- Employee Awareness Training
- Train employees to recognize phishing attempts and follow security best practices.
Looking Ahead: The Future of Compliance
As the DORA deadline approaches, financial institutions must prioritize resilience over simple regulatory compliance. While the upfront costs are significant, they are necessary to prevent potentially devastating operational disruptions from cyberattacks.
DORA compliance is reshaping the cybersecurity landscape, pushing organizations to invest in long-term strategies that ensure both compliance and operational resilience. Businesses that embed these practices into their culture will be better positioned to navigate future cyber risks.
FAQs
1. What is DORA compliance?
DORA is an EU regulation that standardizes cybersecurity and operational resilience requirements for financial services institutions.
2. Why are DORA compliance costs so high?
Expenses stem from hiring cybersecurity experts, upgrading technology, ongoing risk assessments, and testing resilience.
3. How does DORA address third-party risks?
DORA mandates continuous monitoring and due diligence of ICT service providers to prevent supply chain vulnerabilities.
4. Why is ransomware a top concern?
Ransomware can cripple operations and lead to significant financial and reputational damage, especially in financial sectors.
5. How can organizations balance compliance and resilience?
By investing in proactive security measures, employee training, and robust incident response planning.
6. When is the DORA compliance deadline?
Financial institutions must comply with DORA by January 17, 2025.
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