New regulations are constantly emerging, and taking the steps to meet and prove compliance can consume major time and resources. An insurance company estimated it would take a team of five people two months to conduct the research and compile the documentation for compliance with the Digital Operational Resilience Act (DORA).

As cyber threats become more sophisticated and frequent, DORA provides a framework to help financial institutions withstand, respond to, and recover from ICT-related disruptions. Established in January 2023 by the EU through the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA), and the European Securities and Markets Authority (ESMA), DORA sets up a unified approach to operational resilience.

With it coming fully into force on 17 January 2025, organisations are facing the pressures of keeping day-to-day operations going while managing this complex, resource-intensive implementation. From reviewing vendor contracts to establishing compliant processes, meeting DORA’s requirements demands precision and time.

Noncompliance carries severe penalties. The European Supervisory Authorities (ESAs) can impose fines of up to 2% of total annual worldwide turnover on firms or a maximum of €1,000,000 on individuals. For third-party providers deemed critical by the ESAs, fines escalate to €5,000,000 or €500,000 for individuals. Failure to report major ICT-related incidents or threats can also result in substantial penalties.

Legal AI, such as LEGALFLY, can make a difference when it comes to comliance and risk  managment. By handling repetitive tasks, automating contract reviews, and streamlining compliance reporting, legal AI allows legal teams to focus on higher-value work, such as interpreting regulatory nuances and ensuring strategic alignment.

In this blog, we’ll explore how legal AI like LEGALFLY, helps organisations achieve DORA compliance. But first, let’s recap what DORA entails.

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Key objectives of DORA

DORA establishes a clear and comprehensive framework for digital operational resilience. It requires financial institutions in the EU to embed resilience into their core operations. The framework focuses on four key areas:

ICT risk management: Institutions must build robust systems to effectively identify, assess, and mitigate ICT risks.

Incident reporting: Institutions are required to establish efficient processes for reporting and addressing ICT disruptions.

Resilience testing: Organisations must conduct regular tests to ensure their systems can withstand real-world threats.

Third-party risk management: Institutions need to proactively monitor and manage risks associated with external service providers.

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The compliance challenges DORA presents

DORA will enhance the financial sector's defense against cyber threats. However, achieving compliance comes with several challenges:

Balancing operations with compliance

A major challenge is maintaining operational efficiency while adapting to DORA’s new requirements. Institutions have to find ways to integrate new compliance checks into workflows without disrupting critical functions or service delivery.

Cost

Adapting to DORA’s requirements will entail substantial financial investment. A McKinsey survey indicates that 70% of respondents anticipate permanently higher operational costs for technology and its controls due to ongoing DORA compliance.

Third-party risk oversight

DORA places strong emphasis on managing risks associated with third-party ICT service providers. Financial institutions must ensure that both their internal systems and those of external providers comply with resilience standards. This requires continuous monitoring and clear contractual agreements to maintain compliance.

Legal AI and DORA compliance

Legal AI platforms, such as LEGALFLY, can help institutions achieve DORA compliance. By automating and streamlining complex legal and compliance tasks, it enables organisations to meet DORA’s requirements efficiently and effectively, while minimising operational disruptions and additional costs.

Third-party risk management: Managing third-party risks is a key focus of DORA. Legal AI can streamline the review of vendor contracts, ensuring they include the necessary clauses for compliance. It also enables legal teams to maintain an up-to-date repository of vendor agreements, helping monitor and enforce third-party resilience obligations.

ICT risk management: Legal AI can draft and review ICT risk management policies for compliance with DORA. By automating document creation and analysing regulatory text, it ensures policies are accurate, comprehensive, and tailored to the institution’s needs.  

Reporting: DORA mandates streamlined processes for reporting ICT disruptions. Legal AI can automate the creation of incident reporting templates, ensuring consistency and compliance with regulatory requirements. Additionally, it can centralise incident documentation, making it easier to track, review, and audit reports as needed.

Resilience testing: Legal AI helps legal teams draft contracts, policies, and other documents needed to facilitate resilience testing. It can also provide clear insights into contractual obligations related to testing, ensuring third-party vendors are aligned with DORA’s requirements.

Cross-border compliance: Legal AI simplifies cross-border compliance by ensuring policy frameworks align with both DORA and local regulatory requirements across EU jurisdictions. This ensures insurers and other financial institutions can maintain consistent compliance across multiple regions, bridging gaps between EU-wide regulations and specific local laws.

Contract review and drafting: Contract review and drafting are essential to DORA compliance, particularly in managing third-party risk. Legal AI streamlines this process by ensuring that service agreements reflect DORA’s requirements for third-party oversight. The platform identifies vulnerabilities in existing contracts and proposes amendments to address these gaps, ensuring compliance and mitigating risks effectively.

Documentation for audits: Legal AI helps insurers by automating the preparation of incident reports, enabling faster and more consistent responses to ICT disruptions. It also assists in drafting ICT risk management policies, resilience testing documentation, and monitoring frameworks, allowing insurers to integrate DORA’s requirements into their operations.

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Why use LEGALFLY for DORA compliance?

By automating regulatory analysis, playbook creation, and contract reviews, LEGALFLY:

• Saves thousands of hours of manual work.
• Reduces compliance costs.
• Scales efficiently to handle large volumes of contracts.
• Ensures fact-based, accurate compliance checks backed by clear document references.

How to use LEGALFLY for DORA compliance

LEGALFLY simplifies DORA compliance by automating time-consuming reviews and ensuring accuracy. Here's how it works:

1. Extract compliance requirements

LEGALFLY extracts critical compliance points relevant to ICT agreements. Each requirement is linked to its source within the document, ensuring traceability and fact-based accuracy. This eliminates the need for manual interpretation, letting your team focus on implementation.

2. Use the DORA compliance playbook

LEGALFLY uses the extracted insights to create a compliance playbook, which is a structured checklist of requirements tailored to your needs. Each item can be categorised and expanded with additional details, providing a framework to immediately assess contracts.

3. Apply the playbook to contracts

Upload contracts (such as an ICT service agreement) and apply the compliance playbook. LEGALFLY reviews each contract, flags compliance issues, and highlights non-compliant sections. Team members can focus on contracts that require changes, considering the changes suggested by the legal AI associate that would bring the agreement into compliance.

4. Scale and monitor compliance

Extend the playbook across all contracts in your organisation. LEGALFLY enables batch processing, identifying non-compliance and generating actionable items for your team. Updates to DORA regulations are reflected in playbooks, helping keep compliance strategies up-to-date.

Transform compliance with LEGALFLY

Navigating new regulations like the Digital Operational Resilience Act (DORA) can be a time-consuming and resource-intensive challenge.

LEGALFLY makes this process manageable and efficient. By automating repetitive tasks like regulatory analysis, contract review, and policy drafting, it allows your legal and compliance teams to focus on high-value work. Whether it’s managing ICT risks, ensuring third-party oversight, or preparing for audits, LEGALFLY provides the tools needed to meet DORA requirements while saving significant time and resources. For many organisations, this translates into thousands of hours saved and reduced compliance costs.