The Digital Operational Resilience Act (DORA) has set the stage for a harmonized digital resilience framework across the European Union’s financial sector. However, its implementation in Germany introduces some critical adjustments.
Notably, the Federal Financial Supervisory Authority (BaFin) plans to phase out existing supervisory requirements, such as BAIT, to avoid double regulation. This shift signals a streamlined compliance environment, but also necessitates a clear understanding of how DORA and these changes impact financial institutions and related industries.
In this article we will explore DORA’s implementation in Germany, its alignment with existing regulations, and what businesses need to know to ensure compliance.
What makes DORA critical for Germany?
DORA establishes a unified approach to digital operational resilience across the whole EU, not only Germany. Its provisions include:
- ICT risk management frameworks.
- Reporting of significant ICT-related incidents.
- Resilience testing for digital systems.
- Oversight of ICT third-party service providers.
This regulation is now in effect across all the Member States in the EU—including Germany—as of January 17, 2025. Importantly, DORA establishes Level 1 requirements, supplemented by Level 2 regulatory and implementing technical standards (RTS/ITS). Together, these measures create a robust, tiered system for managing risks in the financial sector.
How does Germany adapt to DORA?
When it comes to navigating DORA in Germany, understanding how it integrates with existing regulations and elevates oversight is key. We’ve seen many organizations struggle to balance legacy frameworks with new EU-wide mandates, but DORA aims to simplify this process by streamlining compliance and raising resilience standards.
In the sections that follow, we’ll explore three critical aspects of DORA’s implementation in Germany: the phasing out of overlapping national frameworks like BAIT, the enhanced oversight for ICT service providers, and the introduction of technical standards that provide detailed guidance for compliance. By breaking these down, we’ll show you how these changes can shape your approach to operational resilience.
Phasing out existing frameworks
BaFin has announced plans to repeal several existing supervisory requirements to prevent overlapping regulations. This includes:
- BAIT (Supervisory Requirements for IT in Financial Institutions)
- ZAIT (Payment and E-Money Institutions)
- VAIT (Insurance Undertakings)
- KAIT (Asset Managers)
These frameworks, such as BAIT, were originally designed to guide IT resource and risk management in financial institutions based on Section 25a(1) of the German Banking Act (KWG). BAIT also implemented the EBA Guidelines on ICT and Security Risk Management (2019), which remain relevant under DORA’s principles. With DORA’s direct applicability, these supervisory tools will no longer be necessary, simplifying compliance efforts.
Further details on BAIT and its alignment with DORA are available on the Bundesbank’s official page.
Strengthened oversight for ICT service providers
DORA introduces an EU-wide oversight framework for critical ICT third-party service providers, a significant enhancement over Germany’s existing requirements. This ensures that providers operating in multiple EU states adhere to consistent standards, simplifying cross-border operations for financial institutions.
A focus on technical standards
DORA’s Level 2 standards (RTS/ITS), will provide detailed technical requirements for implementing ICT risk management, reporting, and resilience testing. These standards complement the broad directives under DORA’s Level 1 framework and will be critical for German institutions to ensure compliance.
It’s clear that implementing DORA presents unique challenges for German organizations, but it also opens the door to valuable opportunities. Let’s explore them below.
Challenges and opportunities for businesses
As previously mentioned, the transition to DORA brings a blend of challenges and opportunities for businesses.On the challenge side, organizations must harmonize their existing processes with the new EU-wide requirements, which may involve significant adjustments to ICT risk management and resilience testing practices. Adapting to DORA’s EU-wide oversight framework for third-party providers adds another layer of complexity, particularly for businesses reliant on critical service providers.
However, the opportunities offered by DORA are equally compelling. The repeal of overlapping German regulations, such as BAIT, simplifies compliance efforts, reducing administrative burdens. DORA also enhances operational resilience, helping organizations minimize risks from ICT disruptions. For multinational companies, the consistency of cross-border regulations under DORA facilitates streamlined operations across the EU, creating a unified compliance landscape.
Why DORA represents a strategic shift
DORA isn’t just a compliance requirement—it’s an opportunity to future-proof your organization. With a focus on harmonization, robust risk management, and streamlined reporting, DORA enables businesses to strengthen their digital defenses and build trust with stakeholders.
For financial institutions in Germany, the repeal of frameworks like BAIT signals a move toward a unified and simplified regulatory environment. At the same time, the integration of DORA’s Level 1 and Level 2 requirements ensures that institutions remain at the forefront of operational resilience standards.
Preparing for DORA in 2025
So, how do you effectively navigate the arising challenges of DORA implementation? As a first step, we suggest organizations in Germany review their existing ICT risk management frameworks and align them with DORA’s requirements. Since BaFin phases out guidelines like BAIT, ZAIT, VAIT, and KAIT, the focus should shift toward adopting DORA’s unified standards.
Then, organizations should ensure that DORA’s incident reporting processes adhere to strict timelines, with clear escalation protocols for significant ICT events. Oversight of third-party providers, particularly those critical to operations, should be strengthened through robust service-level agreements (SLAs) and regular audits.
It’s also important to invest in operational resilience testing, such as penetration tests and disaster recovery simulations, which are crucial for ensuring compliance with DORA’s technical standards. Additionally, monitoring updates from BaFin and European Supervisory Authorities will help organizations stay informed on evolving requirements. Finally, don’t forget that training staff on DORA-specific responsibilities is also crucial for organization-wide readiness.
Embracing operational resilience
DORA marks a pivotal shift for financial institutions and related industries in Germany, harmonizing resilience standards across the EU while simplifying compliance through the repeal of overlapping frameworks.
For businesses, this change is an opportunity to enhance digital defenses, streamline operations, and lead in a secure financial ecosystem. By aligning with DORA’s requirements and adopting proactive strategies, organizations can turn compliance into a competitive edge, ensuring long-term resilience and growth.
