Understanding the differences between DORA and NIS2

Are you prepared for the new cyber storm on the horizon? Major regulatory changes are coming that will impact many European organizations. With the rise of cyber threats in recent years, European governments have introduced new regulations to strengthen the cybersecurity requirements for organizations across industries.

Two major upcoming directives—DORA and NIS2 from the European Union—aim to bolster cyber resilience for essential services. Strengthening defenses is crucial, yet sorting through shifting security rules and standards can feel overwhelming.

While both address improving cyber defenses, these regulations differ in scope and requirements. This guide is here to help you navigate the changes with clarity. We'll explore the key details of each directive, compare their differences, and discuss how to prepare your organization for compliance.

What is DORA?

The Digital Operational Resilience Act (DORA) is an EU regulation aimed at ensuring the financial sector within the EU can withstand, respond to, and recover from all types of ICT-related disruptions and threats. It focuses specifically on financial entities like banks, investment firms, and others that provide critical financial services.

The primary goal of DORA regulation is to enhance operational resilience and manage risks associated with third-party service providers. Set to take effect in January 2025, DORA will significantly impact financial sector organizations operating within the European Union.

What is NIS2?

The Revised Network and Information Systems (NIS2) Directive is an updated EU cybersecurity law that expands the scope of its 2013 predecessor. NIS2 broadens the categories of "important" and “essential” entities subject to the regulation beyond just operators of critical infrastructure like energy, transport, banking, financial market infrastructures, and health.

The directive also imposes new requirements for supply chain security, risk assessments, incident reporting, and third-party risk management. The NIS2 Directive will be enforced starting in October 2024 and apply to any essential service provider operating within the EU.

Why are NIS2 and DORA important?

Attacks can disrupt essential functions and compromise privacy as more services and personal data move online. To mitigate cyber risks, both NIS2 and DORA aim to increase operational resilience and security practices across crucial sectors.

Therefore, the two directives are crucial for businesses due to several compelling reasons:

• Enhanced cybersecurity. DORA focuses on the financial sector, emphasizing operational resilience and risk management, ensuring financial entities can withstand and quickly recover from cyber incidents. NIS2 applies to a broader range of essential service providers, significantly bolstering their cybersecurity measures.
• Regulatory compliance. Both directives set strict regulatory requirements. Non-compliance can lead to hefty fines, sanctions, and damage to a company’s reputation. Ensuring compliance helps businesses avoid these financial and legal risks, maintaining a positive standing with regulators and customers.
• Customer trust & confidence. Compliance with NIS2 and DORA demonstrates a business’s commitment to protecting personal and financial data, fostering trust and confidence among customers. This trust can translate into customer loyalty and a competitive edge in the market.
• Operational resilience. Both directives aim to enhance the resilience of critical infrastructure. DORA ensures that the financial sector can continue operating smoothly during cyberattacks, whereas NIS2 focuses on ensuring the continuity of services provided by essential entities across various sectors.
• Supply chain security. NIS2 requires businesses to assess and manage risks associated with their third-party vendors, mitigating potential vulnerabilities. DORA also includes provisions for third-party risk mitigation, ensuring robust measures are in place to manage risks from external service providers.
• Incident reporting & response. Both NIS2 and DORA mandate comprehensive incident reporting and response mechanisms, ensuring businesses can promptly detect, respond to, and recover from cyber incidents. Regular breach reporting and analysis help improve overall cybersecurity strategies.
• Harmonized standards. These directives aim to harmonize cybersecurity standards across the EU, creating a more consistent and secure digital environment. This simplifies compliance efforts and ensures businesses operate at the highest security standards across all regions.
• Future-proofing. As cyber threats evolve, regulatory requirements are likely to become more stringent. By complying with DORA and NIS2, businesses position themselves ahead of the curve, proactively adopting best practices to adapt to future regulatory changes.

Key differences between NIS2 and DORA

Even though NIS2 and DORA directives may seem similar, there are some key differences organizations should be aware of. While both frameworks aim to bolster security, their scopes, sectors, compliance dates, and requirements vary.

• Scope: DORA applies to financial sector entities within the EU, while NIS2 Directive covers all essential service providers across the EU
• Sectors: DORA targets the financial sector, whereas NIS2 expands to industries like health, energy, and more
• Compliance date: DORA is set to take effect in January 2025, while NIS2 Directive goes into effect in October 2024
• Requirements: DORA regulation emphasizes operational resilience, whereas NIS2 includes comprehensive supply chain reviews and stringent reporting obligations
• Non-compliance penalties: Entities found non-compliant with DORA may face fines up to 2% of annual global turnover or €1 million for individuals, whereas NIS2 establishes larger fines of up to €10 million or 2% of turnover—whichever is higher—for non-compliance

By recognizing these distinctions, businesses can better navigate their compliance strategies, ensuring they meet the necessary standards and improve their cybersecurity defenses.

Compliance doesn't have to be a hassle. Learn all about implementing the NIS2 Directive and be compliance-ready in October.

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