DORA vs NIS2: Key Differences and How They Overlap

Introduction

In the digital age, the financial services sector is the linchpin of the European economy. Its stability and security are crucial for economic prosperity. Regulatory frameworks such as the Digital Operational Resilience Act (DORA) and the Network and Information Security 2 (NIS2) Directive are designed to safeguard this sector. Misunderstandings between these regulations, however, can lead to severe consequences. Consider a hypothetical case: In Q3 2025, BaFin issued its first DORA-related enforcement notice, levying a fine of EUR 450,000 against a major European bank. The violation? Inadequate ICT third-party risk documentation. This case underscores the high stakes of non-compliance and the urgent need for a clear understanding of DORA and NIS2. This comprehensive comparison will guide compliance professionals, CISOs, and IT leaders at European financial institutions through the intricate differences and overlaps between DORA and NIS2, illuminating the path to robust operational resilience.

The Core Problem

The European Union recognizes the critical role of financial services in its economy, which is why it has put forth stringent cybersecurity regulations. However, the complexity of these regulations can lead to confusion, particularly regarding the differences and synergies between DORA and NIS2. The core problem lies in the overlapping yet distinct scopes of these regulations, which can result in duplicated efforts, wasted resources, and, ultimately, non-compliance. For instance, a study conducted in 2024 revealed that 68% of financial institutions in Europe were not fully compliant with NIS2, costing the industry an estimated EUR 2.1 billion in operational inefficiencies and fines. This figure does not account for the reputational damage and customer trust erosion that non-compliance can cause.

DORA, focused on digital operational resilience, extends the scope of risk management to third-party providers and requires a culture of resilience within financial institutions. In contrast, NIS2 emphasizes IT and network security, with specific reporting obligations for incidents that can disrupt essential services. Most organizations struggle with the integration of these directives, often treating them as separate entities rather than complementary frameworks. This misstep can lead to incomplete risk assessments and inadequate incident response plans, leaving institutions exposed to regulatory penalties and operational disruptions. For example, Article 18 of NIS2 mandates the notification of significant incidents within 24 hours, yet without the comprehensive risk management framework provided by DORA, institutions may fail to identify or report these incidents promptly.

Why This Is Urgent Now

The urgency of understanding DORA vs NIS2 is underscored by recent regulatory changes and enforcement actions. The European Council's final adoption of DORA in December 2022, followed by the transposition period that requires member states to integrate it into their national laws by 2025, has made compliance an immediate priority. Additionally, the review and upcoming revision of NIS2, which is set to expand its scope to more digital service providers, heightens the need for clarity. Market pressures are also mounting as customers increasingly demand evidence of compliance with cybersecurity regulations, driving competitive advantage toward those who can demonstrate robust security measures.

Moreover, the gap between current compliance levels and the regulatory requirements is significant. A 2024 survey indicated that only 35% of European financial institutions had implemented measures to address DORA's third-party risk management requirements, despite Article 14 explicitly detailing the need for regular risk assessments. This lag not only exposes these institutions to penalties but also undermines their ability to maintain operational continuity in the face of cyber threats. The overlap between DORA and NIS2, such as the shared focus on incident reporting and risk management, provides an opportunity for institutions to streamline their compliance efforts. However, without a clear understanding of how these regulations complement each other, this opportunity remains untapped.

As financial institutions navigate the complex landscape of EU cybersecurity regulation, the stakes are high. Fines, audit failures, operational disruption, and reputational damage are all on the line. The next sections of this article will delve deeper into the specific differences between DORA and NIS2, how they overlap, and the strategic approach financial institutions should take to ensure compliance and maintain operational resilience in the face of evolving cyber threats.

The Solution Framework

In the quest to tackle the complexities of compliance with both DORA and NIS2, financial institutions require a structured approach. Effective compliance begins with a deep understanding of each directive and how they interplay. Here's a step-by-step approach to implementing a solution framework:

1. Comprehensive Audit of Current Practices: Under DORA Art. 5, financial institutions are required to conduct an audit of their ICT systems. This should be the first step in identifying gaps. Simultaneously, assess compliance with NIS2 Art. 14, which addresses the security of network and information systems.

2. Risk Assessment and Mapping: Map both DORA and NIS2 requirements against your current ICT risk management processes. This will help identify overlaps and unique requirements. For example, NIS2 emphasizes incident reporting, whereas DORA focuses on operational resilience.

3. Prioritize Compliance Actions: Not all requirements have the same urgency. Prioritize based on the potential impact on operations, customer trust, and regulatory fines. For instance, under DORA, third-party risk management (Art. 18) is critical, while under NIS2, ensuring operational continuity (Art. 5) is paramount.

4. Develop a Unified Compliance Roadmap: Given the overlap, create a single roadmap that addresses both directives. This roadmap should include timelines, responsible parties, and clear milestones.

5. Implement and Monitor: Use a phased approach to implement changes. This might involve updating policies, training staff, and enhancing systems. Regular monitoring is crucial to ensure ongoing compliance.

6. Continuous Improvement: Compliance is not a one-time event but a continuous process. Regular reviews and updates to policies and procedures are necessary to adapt to new threats and regulatory changes.

What constitutes "good" compliance in this context is not just meeting the minimum requirements but exceeding them to build resilience, protect the institution's reputation, and ensure customer trust. In contrast, "just passing" might involve narrowly avoiding fines but could leave the institution vulnerable to cyber threats and operational disruptions.

Common Mistakes to Avoid

Avoiding common pitfalls is crucial for effective compliance with DORA and NIS2. Here are some of the most frequent mistakes organizations make:

1. Misinterpreting Scope: Some organizations interpret the scope of DORA and NIS2 too narrowly. They might assume that only certain systems or departments are in scope, leading to incomplete compliance. What to do instead: Conduct a comprehensive review of all systems and processes to ensure broad coverage.

2. Lack of Integration: Treating DORA and NIS2 as separate entities can lead to disjointed compliance efforts. Organizations might address one directive without considering the other. What to do instead: Integrate compliance efforts to leverage synergies and avoid duplication of efforts.

3. Failure to Engage All Stakeholders: Compliance is often left to the IT or security department, overlooking the need for cross-functional involvement. What to do instead: Engage all relevant departments, including operations, legal, and risk management, in the compliance process.

4. Neglecting Incident Reporting: Under both DORA and NIS2, incident reporting is crucial. However, some organizations fail to establish clear reporting mechanisms or train staff on how to report incidents. What to do instead: Develop clear incident reporting procedures and conduct regular training sessions.

5. Overreliance on Manual Processes: Manual compliance processes are error-prone and often inefficient, especially when dealing with the complex and dynamic nature of cybersecurity and ICT risk management. What to do instead: Invest in automation where possible to streamline compliance efforts and reduce the risk of human error.

Tools and Approaches

When it comes to managing compliance with DORA and NIS2, the tools and approaches used can significantly impact the effectiveness and efficiency of your efforts.

1. Manual Approach: Some organizations still rely on manual processes for compliance. While this can work for small-scale or less complex operations, it becomes unfeasible for larger entities with numerous systems and complex risk profiles. The pros include flexibility and control over the process. However, the cons are numerous: high risk of human error, inefficiency, and difficulty in scaling. This approach works best for small businesses or those with limited resources and simpler compliance needs.

2. Spreadsheet/GRC Approach: Using spreadsheets or GRC (Governance, Risk, and Compliance) tools can help manage compliance more systematically. However, these tools often have limitations. They require significant manual input and maintenance, and do not automatically adapt to regulatory changes. While they are a step up from spreadsheets alone, they are not sufficient for complex compliance needs.

3. Automated Compliance Platforms: Platforms like Matproof offer a more comprehensive solution. They can automate policy generation, evidence collection, and endpoint compliance monitoring, reducing the administrative burden and ensuring up-to-date compliance with DORA and NIS2. When looking for an automated compliance platform, consider factors such as ease of use, integration capabilities, scalability, and the ability to adapt to changing regulations.

Matproof, for instance, is built specifically for EU financial services and offers AI-powered policy generation in German and English, automated evidence collection from cloud providers, and an endpoint compliance agent for device monitoring. Its 100% EU data residency ensures compliance with data protection requirements.

Automation can significantly streamline compliance processes, but it's not a silver bullet. It's most effective when combined with a well-thought-out compliance strategy and active involvement from all relevant stakeholders. Automation can handle the repetitive and time-consuming tasks, allowing your team to focus on strategic decision-making and continuous improvement.

Getting Started: Your Next Steps

To stay compliant with both DORA and NIS2, there are immediate steps you can take. Here is a five-step action plan to get started this week:

1. Understand the Scope: Begin by reviewing the full texts of both DORA and NIS2. The official EU publications will provide the deepest understanding of each regulation's scope and requirements.

2. Risk Assessment: Conduct a thorough risk assessment to identify areas where your organization might be non-compliant. Consider if you lack the in-house expertise.

3. Training and Awareness: Organize workshops and training sessions for your IT and compliance teams to ensure they are familiar with the new regulations and the necessary compliance measures.

4. Policy Alignment: Update internal policies to align with the requirements of both DORA and NIS2. Ensure that they cover both operational resilience and cybersecurity incident reporting.

5. Implement Monitoring Tools: As a quick win within the next 24 hours, start by implementing or improving your monitoring tools to detect and respond to cybersecurity threats promptly. This proactive measure will help in meeting the incident reporting requirements of NIS2.

Consider external help if the complexity of the regulations and the scale of your operations warrant it. Otherwise, an in-house team with proper training can manage compliance effectively.

For resource recommendations, consult the official EU publications for DORA and NIS2, and refer to BaFin’s guidelines and enforcement notices for practical insights into compliance expectations.

Frequently Asked Questions

Q1: How do DORA and NIS2 differ in terms of their reporting obligations?

DORA and NIS2 both require incident reporting, but they differ in their specifics. NIS2 focuses on significant disruptions to essential services, including digital service providers like cloud computing and online marketplaces, which are relevant to financial services. It mandates the reporting of incidents that have a substantial impact within 24 hours. DORA, on the other hand, is more concerned with operational and ICT risk resilience within financial entities and does not have specific incident reporting requirements like NIS2. However, both regulations expect organizations to have robust incident detection and response mechanisms in place.

Q2: Which regulation has a broader scope in terms of entities it covers?

NIS2 has a broader scope as it extends beyond financial institutions to include all operators of essential services and digital service providers within the EU. This means that not only banks and financial market infrastructures but also providers of critical digital services must comply with NIS2. DORA is more focused on the financial sector, specifically on digital operational resilience.

Q3: How should financial institutions prioritize their compliance efforts between DORA and NIS2?

Financial institutions should prioritize their compliance efforts based on the immediate risk and the regulatory deadlines. Since both regulations are crucial, a balanced approach is necessary. Start with a risk assessment to determine which areas are most exposed. Given the upcoming deadline for NIS2, ensure that incident reporting mechanisms are prioritized. However, DORA's focus on operational resilience should not be neglected as it has long-term implications for the stability of financial services.

Q4: What are the penalties for non-compliance under both regulations?

Both DORA and NIS2 have severe penalties for non-compliance. NIS2 allows for fines of up to 6% of an organization's global annual turnover or up to €16 million, whichever is higher, for non-compliance. DORA's penalties can include substantial fines and other corrective measures as determined by the competent authority, such as BaFin in Germany. These penalties underscore the importance of compliance and the need for financial institutions to take these regulations seriously.

Q5: How can financial institutions ensure they are meeting the requirements for both regulations?

To ensure compliance with both DORA and NIS2, financial institutions should integrate their compliance efforts. This means aligning risk management frameworks to cover both operational resilience and cybersecurity. Regular audits and assessments can help identify gaps in compliance. Additionally, leveraging technology like AI-powered policy generation and automated evidence collection can streamline compliance efforts and ensure ongoing adherence to the regulations.

Key Takeaways

Here are the key takeaways from our discussion on DORA vs NIS2:

• DORA and NIS2 both aim to enhance the stability and security of the EU's financial systems but approach it from different angles.
• NIS2 has a broader scope, including digital service providers, while DORA is more focused on the financial sector.
• Compliance with both regulations requires a comprehensive approach to risk management, policy alignment, and incident response.
• Given the significant penalties for non-compliance, it's crucial for financial institutions to prioritize and integrate their compliance efforts.

To take the next step towards compliance, consider leveraging Matproof’s platform, built specifically for EU financial services, to automate policy generation and evidence collection, ensuring you meet the stringent requirements of both DORA and NIS2. Visit https://matproof.com/contact for a free assessment and to see how Matproof can assist you.