DORA vendor (third-party) risk management for 2025 compliance
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Imagine that your organization faces an unexpected vendor disruption. A cloud provider critical to your operations experiences a cybersecurity breach, halting your services. Regulators are now demanding to know how prepared you were to mitigate the fallout. Suddenly, DORA compliance is no longer just a legal box to check—it’s a litmus test for your organization’s resilience.
The Digital Operational Resilience Act (DORA) is reshaping how financial institutions manage third-party risks, requiring firms to demonstrate that they can identify, assess, and address vulnerabilities in their vendor networks. This article explores the practical steps required to align your processes with DORA third-party risk management requirements and leverage compliance as a competitive advantage.
Assess your DORA readiness for free! Evaluate your organization’s compliance gaps and find areas for improvement—no prior DORA knowledge needed.
Why vendor risk management is critical in the DORA era
The financial sector depends on third-party services for everything from IT infrastructure to payment processing. But as reliance on vendors grows, so does exposure to risk. Supply chain attacks have skyrocketed, with hackers increasingly targeting vendors to infiltrate larger organizations.
Recognizing these threats, DORA mandates that financial institutions treat vendor risk management as a critical component of operational resilience. This includes understanding the potential impact of vendor disruptions, evaluating their resilience capabilities, and actively mitigating risks throughout the vendor relationship.
To help clarify what’s at stake, here’s a breakdown of the most common risks associated with vendor relationships and their potential impacts:
Increased vulnerability to single points of failure
Key risks in vendor relationships
If you are determined to prepare for regulatory audits and safeguard your reputation and operational stability in an increasingly volatile landscape, you need to build a solid vendor management framework. How should you do it? I’ll explain in the section below.
Building a resilient vendor risk management framework
When building a vendor management framework, you need to understand one crucial thing—DORA compliance requires organizations to go beyond basic risk assessments. Instead, you need to implement end-to-end vendor management strategies. This includes three key areas: onboarding assessments, contracts, and continuous monitoring. Let’s take a look at each component below.
1. Evaluate vendors thoroughly before onboarding
The first step in DORA vendor management is performing detailed due diligence. This involves assessing a vendor’s cybersecurity posture, operational resilience, and compliance with industry standards before signing any contracts.
If you are not sure where to start, this table lists quickstart steps to help you out:
Assessment area
Key questions to ask vendors
Cybersecurity Measures
Do you conduct regular penetration tests? How do you protect sensitive data?
Business Continuity Planning
What are your disaster recovery protocols? How quickly can you restore services after a disruption?
Regulatory Compliance
Are you compliant with EU data protection laws (e.g., GDPR)? Do you align with DORA principles?
Vendor due diligence checklist
PRO TIP
Develop a comprehensive vendor assessment checklist that encompasses key areas, including data protection, incident response plans, and compliance with EU regulations. Tailor the checklist to address DORA’s emphasis on operational resilience.
2. Draft contracts that leave no room for ambiguity
Contractual safeguards are the second step to DORA vendor management compliance. Your agreements with vendors should clearly define roles, responsibilities, reporting obligations, and penalties for non-compliance.
Here are the key provisions that you should consider when preparing vendor contracts:
Provision
Why it matters
Incident reporting
Ensures timely notification of breaches or disruptions.
Service Level Agreements (SLAs)
Defines acceptable levels of performance and penalties for failure to meet them.
Audit rights
Allows regular audits of vendor compliance and performance.
Key contractual provisions for DORA compliance
PRO TIP
Pro tip: Collaborate with your legal team to update contracts with DORA-compliant provisions, ensuring that vendors are held accountable for operational disruptions or compliance failures.
3. Implement continuous monitoring
Under DORA, assessing vendors at the onboarding stage isn’t enough. You must continuously monitor their performance, security posture, and risk exposure. This ensures that any emerging vulnerabilities are identified and addressed promptly.
What should you continuously monitor for? Here’s a table listing the most relevant metrics
Metric
What to monitor
Security posture
Frequency of detected vulnerabilities, response times to incidents.
Service reliability
Uptime performance compared to SLAs.
Regulatory alignment
Updates on vendor compliance with DORA and related laws.
Actionable monitoring metrics
PRO TIP
Establish a centralized dashboard to monitor vendor performance and risk indicators. Use this data to address potential issues and update your risk mitigation strategies proactively.
Managing critical third-party providers (CTPPs)
DORA introduces special oversight for Critical Third-Party Providers (CTPPs)—vendors that regulators deem essential to the financial sector, such as cloud providers and key ICT vendors. While EU authorities will oversee these providers directly, financial institutions must still manage the associated risks.
Start by identifying any CTPPs in your vendor network. Evaluate how a disruption in their services could cascade into your operations. For instance, if a CTPP providing core banking infrastructure experiences downtime, how will you ensure business continuity?
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When it comes to DORA compliance, documentation is more than just paperwork—it’s your best defense during audits. Regulators rely on detailed records to evaluate how well your organization manages vendor risks and whether you’re operationally resilient. Poor documentation can expose gaps in your compliance efforts, while well-prepared records demonstrate that your organization has taken proactive steps to align with DORA third-party risk management requirements.
But what does an audit actually entail? Let’s explore the process and how you can prepare for it.
How audits work under DORA
Audits are a critical part of ensuring compliance with DORA. They provide regulators with a clear picture of your organization’s ability to identify, monitor, and mitigate risks associated with third-party vendors. Depending on the circumstances, these audits may be scheduled in advance or conducted without prior notice.
Understanding the structure of an audit helps you anticipate what regulators will examine and how to prepare your team. Below is a breakdown of the key phases involved in a typical DORA audit:
Audit phase
Description
Pre-audit notification
– Scheduled audits: Regulators inform your organization of the scope, timelines, and required documentation.- Unscheduled audits: Triggered by significant incidents or whistleblower reports and may come with little or no warning.
Document submission
– Auditors request documents demonstrating adherence to DORA third-party risk management requirements.- Commonly requested documents include vendor risk assessments, contractual agreements, monitoring reports, and incident logs.- Evidence of governance structures, such as board meeting minutes on vendor risk discussions, may also be required.
On-site or remote evaluation
– Auditors evaluate your processes, systems, and controls through on-site visits or remote assessments.- Interviews with key personnel, including compliance officers and risk managers, are conducted to assess operational resilience.
Gap analysis and recommendations
– Regulators provide a report identifying compliance gaps and offering recommendations for improvement.- Severity of findings determines deadlines for corrective actions, which may range from immediate fixes to long-term adjustments.
Key phases of the DORA audit process
Understanding these phases provides a roadmap for what to expect during an audit. However, success lies in the quality of your preparation—especially the strength and accessibility of your documentation.
Let’s take a closer look at the specific records you’ll need to ensure a smooth audit process.
Preparing a robust set of documents ensures you’re not caught off guard. Below is a checklist of the key documents you should maintain:
Demonstrates due diligence during onboarding and ongoing evaluations.
Annually or after major changes.
Contracts and SLAs
Provides evidence of regulatory alignment and vendor accountability.
Annually or upon renewal.
Monitoring reports
Tracks vendor performance and risk metrics.
Continuously updated.
Incident logs
Documents vendor-related disruptions and your organization’s response measures.
Immediately after each incident.
Audit trails
Logs all actions taken to comply with DORA, such as board decisions and updates.
Continuously updated.
Compliance framework
Outlines your organization’s approach to meeting DORA requirements.
Reviewed semi-annually.
Documentation checklist for audits
Having these documents readily available not only helps you pass audits but also signals your organization’s commitment to transparency and accountability. However, maintaining such extensive records can be challenging without the right tools.
This is where leveraging vendor management platforms, like VendorGuard, can simplify the process by automating documentation and creating a centralized repository. With these tools, you can reduce manual effort while ensuring that your records are always audit-ready.
Take control of DORA third-party risk compliance
Vendor risk is one of the most underestimated threats under DORA—but it doesn’t have to be. CyberUpgrade’s VendorGuard module automates third-party assessments, monitors vendor performance in real-time, and stores every contract clause, audit trail, and risk report in a centralized, audit-ready repository. You’ll meet DORA’s oversight requirements with clarity and control—without the administrative burden.
Our platform simplifies onboarding, enforces DORA-compliant SLAs, and continuously monitors vendors for changes in cybersecurity posture. Slack and Teams integration ensures all departments stay aligned, and our fractional CISOs guide you in managing critical third-party providers with confidence.
Don’t let vendor disruptions catch you off guard. With CyberUpgrade, third-party risk management becomes a strength—not a liability. Ready to audit-proof your vendor ecosystem? Let’s talk.
At its core, DORA third-party management is about more than compliance—it’s about protecting your organization in an increasingly interconnected world. By embracing these principles, you’re not just meeting regulatory requirements; you’re strengthening your organization’s foundation for long-term success.
Take the first step today: Audit your vendor relationships, refine your processes, and implement the tools needed for continuous monitoring. The financial institutions that prioritize resilience now will be the ones setting the standard in 2025 and beyond.
Because in a world where vendor risks are growing, resilience isn’t just a competitive advantage—it’s a necessity.
Assess your DORA readiness for free! Evaluate your organization’s compliance gaps and find areas for improvement—no prior DORA knowledge needed.
He is regulatory compliance strategist with over a decade of experience guiding fintech and financial services firms through complex EU legislation. He specializes in operational resilience, cybersecurity frameworks, and third-party risk management. Nojus writes about emerging compliance trends and helps companies turn regulatory challenges into strategic advantages.
