The EU’s Digital Operational Resilience Act (DORA) is set to become a defining regulation for the financial services industry from January 2025. Designed to unify and strengthen the EU’s digital resilience landscape, DORA introduces tough new standards for managing ICT (information and communication technology) risks, testing operational resilience, reporting incidents, and supervising critical service providers.
For firms based in the United Kingdom, there is an understandable temptation to view DORA as “someone else’s regulation.” After all, the UK is no longer an EU member state, and its financial entities are subject to their own domestic rules under the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA). However, the reality is more nuanced.
Many UK institutions rely on EU-based ICT providers or serve EU clients. In these cases, DORA’s requirements around third-party risk will inevitably cascade across borders. This article explores why DORA matters for UK firms, how it interacts with the UK’s own regulatory frameworks, and the practical steps firms should take now to get ahead.
Why UK Firms Should Care About DORA
At its core, DORA is about ensuring that the financial system can withstand, respond to, and recover from ICT-related disruptions — whether from cyberattacks, system failures, or third-party outages. It goes beyond internal risk controls and explicitly targets the broader ecosystem of ICT service providers, from cloud computing firms to core banking vendors.
UK firms should care because:
- Indirect obligations will apply. EU-regulated entities will push DORA-aligned obligations down to their UK suppliers and partners, requiring contractual commitments to resilience, transparency, and reporting.
- Market competitiveness is at stake. Firms unable to demonstrate DORA-aligned practices may be seen as higher risk, making them less attractive partners for EU institutions.
- Cross-border operations are intertwined. Many ICT providers operate on a global scale. A disruption in one region can affect services everywhere, meaning DORA’s expectations will spill across borders.
In short, DORA is not just an EU issue. It is quickly becoming a benchmark for operational resilience that UK firms will be expected to align with if they want to remain trusted partners in Europe.
Key Features of DORA’s Third-Party Risk Regime
To understand the impact on UK firms, it helps to focus on the specific areas where DORA touches third-party risk.
1. ICT Risk Management Framework
DORA requires financial entities to implement a comprehensive dora ict risk management framework. This framework covers governance, identification of risks, protection and detection measures, incident response, recovery capabilities, and continuous improvement. Crucially, it extends not just to internal systems but also to outsourced ICT services.
This means that EU firms must assess and manage risks from their ICT suppliers — and by extension, those suppliers must be able to demonstrate resilience. UK vendors will therefore need to align with DORA’s expectations even if they are not directly regulated.
- Contractual Requirements with ICT Providers
DORA sets detailed rules for contractual arrangements between financial entities and ICT service providers. Contracts must include clear obligations for audit rights, incident reporting, subcontractor transparency, resilience testing, and exit strategies.
For UK firms working with EU clients or providing ICT services to EU entities, this means existing contracts may be renegotiated to include DORA-aligned terms. Those who fail to adapt risk losing business to competitors who can provide the required assurances.
- Oversight of Critical Providers
One of DORA’s most far-reaching features is its oversight of ICT providers deemed critical. Services that support critical or important functions — such as payment processing, trading platforms, or essential data services — may subject providers to direct supervision by EU authorities.
For UK firms, this raises two issues:
- If they depend on an EU provider classified as “critical,” they will need to comply with whatever obligations that provider imposes to remain compliant.
- If they themselves provide ICT services to EU financial institutions, they may risk being designated as critical providers and drawn into the EU oversight regime indirectly.
- Incident Reporting Obligations
DORA introduces a harmonized framework for incident reporting. Financial entities must detect, classify, and report major ICT incidents to regulators within strict timelines.
Even if a disruption occurs at a UK vendor, if it affects an EU client, that vendor may be required to provide data and cooperate with reporting processes. This means UK firms need playbooks, escalation processes, and communication protocols aligned with DORA’s requirements.
How DORA Interacts with the UK’s Operational Resilience Rules
The UK already has its own operational resilience regime. The PRA and FCA rules require firms to identify important business services, set impact tolerances, and ensure they can continue to deliver these services during disruptions.
The difference is that the UK’s framework is principles-based, while DORA is more prescriptive and ICT-specific. For example:
- UK rules: Focus on maintaining service delivery and setting impact tolerances.
- DORA: Adds detailed obligations for ICT risk, third-party contracts, and incident classification/reporting.
For UK firms with EU links, aligning with both frameworks makes strategic sense. Doing so not only avoids friction but also enhances overall resilience.
Practical Steps for UK Firms
To prepare, UK entities should take the following actions:
- Map Dependencies on EU Providers
Identify all EU-based ICT suppliers and the services they provide. Flag where they support critical or important functions. - Review and Update Contracts
Expect EU clients and providers to introduce DORA-driven terms. Be proactive in reviewing agreements for audit rights, subcontractor transparency, resilience clauses, and exit plans. - Strengthen Vendor Due Diligence
Incorporate DORA-aligned assessments into your supplier management process. This includes resilience testing, incident management capabilities, and recovery arrangements. - Align Incident Management Processes
Build escalation processes that support DORA’s strict incident reporting timelines. Establish communication channels with EU partners to ensure smooth reporting when disruptions occur. - Develop Exit Strategies
DORA requires firms to have contingency and exit plans if a critical vendor fails. UK firms should simulate scenarios, validate fallback providers, and ensure operational continuity. - Board-Level Engagement
Senior management and boards should oversee third-party risk as a strategic issue. Regular updates, resilience testing, and scenario planning should be reported at the highest levels.
Looking Ahead
DORA is more than a European compliance requirement; it is a blueprint for global best practice in digital resilience. For UK firms, it represents both a challenge and an opportunity. Those who adapt early can strengthen trust with EU partners, differentiate themselves in competitive markets, and reduce vulnerabilities in an increasingly interconnected financial ecosystem.
Even without direct legal obligations, UK entities cannot afford to ignore DORA. By embracing the principles embedded in the dora ict risk management framework, preparing for incident reporting, and identifying their exposure to critical or important functions, UK firms will not only mitigate regulatory risk but also build long-term operational resilience.
In a world where resilience is no longer optional, aligning with DORA could be the difference between being a supplier of choice or a weak link in the chain.
