How to Ensure Your Contracts Are DORA-Compliant

Introduction

The EU's Digital Operational Resilience Act (DORA) fundamentally changes how financial institutions manage third-party technology risk. Contracts are now central to operational resilience and third-party risk management. Under DORA, every contract with an ICT service provider must explicitly allocate responsibilities and include detailed clauses to uphold resilience. This represents a significant shift from previous practice: earlier outsourcing guidelines were advisory, but DORA's requirements are legally binding and apply to all ICT services, not just traditional outsourcing.

Poorly managed vendor contracts can lead to service outages, data breaches, and compliance failures. Regulators have warned that failure to comply with DORA can result in fines, penalties, and reputational damage. In an era where critical banking services rely on cloud and fintech providers around the globe, weak contracts undermine resilience. Notably, regulators found that a significant share of critical ICT providers are outside the EU, heightening oversight challenges.

Many firms struggled to meet DORA's January 2025 compliance deadline, scrambling to update hundreds or thousands of contracts. Those who treated contract updates as a one-time tick-box exercise are at risk. DORA expects a continuous process: contractual clauses must be specific, comprehensive, and actively managed across all ICT third-party relationships.

The role of contracts in operational resilience

Contracts with ICT providers play a pivotal role in operational resilience. They dictate how a third-party will support your business in good times and bad. A strong contract can require a vendor to maintain specific uptime levels, notify you of cyber incidents immediately, and continue services during a disaster. In third-party risk management (TPRM), contracts are a primary control to ensure vendors uphold your resilience standards.

Under DORA, this contractual role becomes even more critical. DORA's contract requirements represent a shift from previous practices by mandating very granular provisions. Historically, many organizations updated vendor contracts only during procurement or renewal, often using generic templates. Now, DORA demands precision: every contract must clearly spell out responsibilities and resilience measures.

The risks of ignoring these requirements are high. A missing clause could mean a vendor is not obliged to report an outage or allow an audit, leaving the financial institution blind to problems. Regulators can treat such omissions as compliance violations. Indeed, DORA gives regulators authority to force banks to terminate contracts that pose undue risk.

Understanding DORA's contractual obligations

DORA applies to all contracts with ICT third-party service providers. DORA defines ICT services broadly to include any digital, IT, or data services provided by external vendors. This ranges from cloud infrastructure and core banking software to payment processing, data centre hosting, SaaS tools, and even intra-group IT services. If a third party provides technology that your financial institution relies on, the contract must meet DORA's standards.

Article 30 of DORA is the key section detailing contractual obligations. Article 30(2) lists nine must-have contractual clauses for any ICT service contract. These are baseline contractual safeguards to ensure resilience. Article 30(3) adds additional requirements if the contract involves a critical or important function, for example, more extensive audit and access rights, obligations for the provider to participate in threat-led penetration testing, and stricter controls on subcontracting critical functions.

The big difference from previous guidelines is that DORA makes these terms mandatory across all ICT contracts and enforceable by law. By January 17, 2025, financial entities needed to ensure every in-scope vendor agreement included the required terms. Regulators also introduced the concept of a DORA Register of Information, which is essentially an inventory of all ICT third-party contracts and key details that must be submitted to regulators and updated annually.

Key clauses to include in DORA-compliant contracts

DORA spells out a number of key clauses that must be included in contracts with ICT service providers. Here are the most important provisions your contracts should cover to be DORA-compliant (Article 30(2) baseline, plus some enhanced terms for critical functions):

Scope of services and subcontracting‍

The contract should contain a complete description of the ICT services being provided, including all functions or processes the vendor will handle. Be explicit about what is in scope (and arguably what is out of scope). Additionally, the contract must state whether subcontracting is allowed. If the provider may subcontract any of the services (especially those supporting critical functions), the contract should set conditions on this, for example, requiring the financial institution’s prior approval for any subcontractor, or at least notification of changes. This ensures you maintain visibility into the supply chain. Uncontrolled subcontracting is risky, so DORA pushes for transparency. (If the service is critical, also consider requiring the vendor to flow down key clauses to its subcontractors or limit sub-outs altogether.)

Service levels and performance metrics

‍DORA expects contracts to include appropriate service level agreements (SLAs) for performance‍. This means defining metrics like uptime availability, recovery times, support response times, processing throughput, etc., depending on the service. Clear performance targets help ensure the provider’s performance is measurable and enforceable. Include provisions for regular reporting on service levels and remedies if SLA targets are missed. For critical services, regulators anticipate detailed service levels and monitoring.

Don’t rely on generic promises; quantifiable metrics are needed (e.g. 99.9% uptime, 4-hour response to high-severity incidents, etc.). These performance clauses tie directly into resilience; if the service degrades, you have contractual recourse to fix it or exit if necessary.

Information security and incident notifications

‍Contracts must address how the provider will ensure the confidentiality, integrity, and availability of data and systems under its control. This typically includes commitments to comply with your security policies or industry standards, use appropriate encryption, access controls, etc. Crucially, DORA requires clauses on ICT incident handling: the provider is obliged to assist the financial entity during an ICT incident and to notify the firm without undue delay if an incident occurs. For example, if the vendor suffers a cyberattack or outage that affects your services, they must inform you immediately and provide support in investigating and resolving it (often at no extra cost).

Timely incident notification is key because DORA imposes strict reporting timelines to regulators (major incidents must be reported by the financial entity within hours). Your contract should specify the notification window (e.g. provider informs you within 1 hour of incident discovery) and the assistance they will provide (e.g. forensic data, mitigation steps). These security and incident clauses ensure the vendor is contractually bound to uphold your cybersecurity expectations and not leave you in the dark during a crisis.

Audit and access rights (including subcontractor oversight)

Under DORA, firms must retain robust rights to audit their ICT service providers. Every contract should include the financial institution’s right to access relevant information, inspect the provider’s business processes and security measures, and audit their performance and compliance. For critical functions, this goes further: DORA expects “unrestricted” audit and access rights, meaning you can inspect the service and even on-site operations at will. In practice, there can be arrangements for pooled audits or external certifications to avoid constant on-site visits, but the contract needs to give you the option.

Importantly, audit rights should extend to subcontractors involved in delivering critical services. If your cloud provider outsources a piece to another company, you should have either direct audit rights of that sub-, or the obligation for your provider to do it and report back.

Also, include that regulators and supervisors get similar access on request, DORA explicitly requires providers to cooperate with regulators, and contracts must not impede that. In short, include clauses that allow you (and regulators) to see what’s going on under the hood of the service at any time. Lack of audit rights is a common weakness; DORA won’t tolerate “we can’t show you because it’s proprietary” excuses from vendors.

Termination rights, exit strategy, and data portability

‍Your contract needs robust termination and exit provisions. DORA mandates that contracts include the right for the financial entity to terminate the agreement, especially if the provider breaches legal or regulatory requirements or if the service becomes unsatisfactory. There should be appropriate notice periods for termination, but also the ability to terminate without undue delay in case of serious issues (e.g. a major security breach, regulatory order, or the provider no longer being viable). Alongside termination, an exit strategy clause is critical; this details how services will be transitioned or wound down if the contract ends. DORA wants firms to ensure continuity of business even if a vendor relationship is terminated.

So, contracts should cover things like: the provider’s duty to continue providing services for a defined transition period after notice; handover of data back to the firm (or to a new provider) in a readable format (data portability); support and training during migration; and deletion of data from the provider’s side once done.

According to the European Banking Authority, too many outsourcing contracts in the past lacked detailed exit plans (one analysis found over half had no exit strategy at all). Under DORA, regulators expect every critical outsourcing to have a documented, workable exit strategy in the contract. This ensures that if things go wrong, you can pull the plug on a vendor with minimal disruption to your operations or customers.

‍Business continuity and disaster recovery obligations

‍Beyond just reacting to termination, DORA requires planning for continuity during ongoing operations. Contracts should oblige the ICT provider to have adequate business continuity and disaster recovery (BC/DR) capabilities in place. For example, the contract can stipulate that the provider maintains backup systems, conducts regular disaster recovery testing, and can recover services within agreed Recovery Time Objectives. In contracts supporting critical functions, you may need the vendor to commit to specific resilience measures, e.g. redundant data centres, failover arrangements, etc.

DORA’s Article 11 and others indirectly emphasise that third-party services must not be single points of failure. So include clauses that the provider will implement and test contingency plans for various scenarios. Also, consider service continuity during contract exit (as above) part of BC/DR, such as the provider helps keep things running until you’ve transitioned. Essentially, the contract should ensure the vendor is prepared for disruptions (power outage, cyberattack, pandemic, etc.) and can continue or resume services quickly to avoid breaking your business processes.

Location of data processing and storage

‍DORA contracts need to specify the locations where ICT services will be provided and where data will be stored or processed. This is a transparency requirement to address geopolitical and data sovereignty risks. Your contract should list the countries or regions in which the service operates (data centre locations, support centre locations, etc.). If the provider wants to change those locations, they must notify you in advance and perhaps obtain approval. Knowing the data location is also vital for regulatory compliance (e.g. GDPR data transfers, and DORA oversight, critical services outside the EU may trigger extra scrutiny).

By including locations in the contract, you avoid unpleasant surprises like finding out later that your core banking data moved to a far-off country without your knowledge. Some firms set clauses like “Services will be delivered from within the EU/EEA only, unless prior written consent is given for other locations.” At a minimum, ensure you have the right to be informed of any changes in data/service location. Given that regulators noted about 22% of critical outsourced services are provided from non-EU countries, it’s crucial to know where your vendor’s operations sit.

Compliance with laws and regulatory cooperation

‍Finally, include a clause that the ICT provider will comply with all applicable laws and regulations (such as data protection laws, financial sector regulations, etc.) in providing the services. More specifically, under DORA, the contract should obligate the provider to cooperate with regulators and supervisory authorities as needed. This includes participating in any official inspections or inquiries and providing information to you so that you can fulfil your own regulatory reporting duties.

For instance, DORA requires providers to participate in the financial entity’s security awareness training and operational resilience exercises, meaning if you run a cyber resilience drill or training for staff, your key vendors might need to be involved. Such requirements should be reflected in the contract. Essentially, the vendor must agree to be helpful in enabling your compliance with DORA. If a regulator asks you for information about the vendor’s risk controls, the contract should ensure the vendor will promptly supply it. This prevents scenarios where a vendor stonewalls a regulator’s request. Under DORA, that would be unacceptable. A strong compliance clause aligns the provider’s obligations with the financial entity’s own regulatory obligations under DORA and other laws.

Step-by-step approach to achieving DORA contract compliance

1. Inventory and prioritise

Start by compiling a complete inventory of all ICT third-party contracts. This may require pulling data from procurement systems, contract databases, accounts payable, and business units. Once you have the list, prioritise it by identifying which contracts involve "critical or important functions" (CIFs) and high-risk vendors. Focus your remediation effort where it matters most.

2. Gap analysis

Perform a gap analysis against DORA's requirements by reviewing each contract to see if it contains the required clauses. Compare existing contract clauses with what Article 30 mandates. Create a checklist or matrix of the DORA clauses and tick off for each contract whether it has them. This step identifies compliance gaps and helps determine needed changes per contract.

3. Remediation plan

Develop a plan to remediate gaps using several strategies:

• Amendments/Addenda: Draft a standardised DORA contract addendum that inserts all required clauses
• Renegotiation/Replacement: For contracts up for renewal or too out-of-date, renegotiate the entire contract
• Termination: As a last resort, consider switching providers if vendors won't agree to the necessary terms

4. Approval and governance

Ensure proper governance around contract changes by involving all relevant stakeholders. Set up a cross-functional DORA contracts task force including Legal, Compliance, IT Risk, Procurement, and business representatives. Document your approvals and rationale for any deviations.

5. Ongoing monitoring

Achieving compliance isn't the end – it's an ongoing process involving:

• Tracking Contract Changes: Monitor contract lifecycle events and renewals
• Provider Performance: Use SLA and reporting clauses to review provider performance
• Register Updates: Maintain the DORA Register of Information as a live inventory
• Periodic Reviews: Sample contracts annually to verify clauses remain current

Leveraging technology for DORA contract compliance

Meeting DORA’s contract requirements can be extremely data- and document-intensive. This is where the right technology and DORA tools make a huge difference. By using purpose-built solutions (such as 3rdRisk’s third-party risk platform), compliance teams can move from manual, reactive updates to an automated, proactive process. Here are ways technology can help:

Centralised contract repository with clause tagging

A foundational step is to house all your ICT vendor contracts in a centralised contract management system. This repository becomes the single source of truth (and effectively serves as your DORA Register of Information). Modern contract management tools allow you to tag or categorise contracts and even specific clauses. For DORA, you could tag where in each contract the required provisions are (e.g., tag the termination clause, the audit clause, etc.). This makes it easy to search across all contracts for a particular clause or term. For example, you can instantly find which contracts already have an “incident notification within 24 hours” clause and which don’t.

Clause tagging and search save enormous time in the gap analysis and later monitoring. If a new guideline comes out (say, an update to what “data portability” means), you can quickly pull up all contracts and see if their exit clauses meet the new guidance. A central repository also improves visibility – no more hunting through shared drives or email for contracts. Every stakeholder (legal, risk, IT) can access the latest executed copies and see the embedded DORA terms. This addresses the 42% visibility gap in many firms and ensures no contract falls through the cracks.

AI-powered clause extraction and risk flagging

Reviewing hundreds of contracts manually is tedious and prone to error. Artificial intelligence can turbocharge this process. AI-driven contract analytics tools can scan your contract text and automatically extract clauses or detect the absence of required language. For instance, an AI tool could highlight that a contract lacks any mention of “subcontractor” or “exit,” flagging it for review. It could classify clauses (termination, SLA, data protection, etc.) and compare them against a DORA template. Some advanced platforms (including 3rdRisk) use AI to flag risks or gaps, e.g., if a contract’s notification period is longer than DORA’s requirement, it would flag that as non-compliant. This not only speeds up the initial remediation but also ongoing monitoring.

Whenever you onboard a new contract, AI can immediately assess it for DORA compliance. In the 3rdRisk platform, for example, the system “automatically flags DORA-specific contract data you need to collect, based on the third party's role and risk profile”. That means it knows if a vendor is critical vs. non-critical and prompts you to ensure the contract has the corresponding required terms. AI can also help align contracts with supplier risk profiles; if a vendor is high risk, the AI might suggest stronger clauses or more frequent reviews.

Linking contract terms to supplier risk profiles

DORA compliance shouldn’t happen in a silo separate from your broader vendor risk management. A good platform will link your contract data with your third-party risk data. For example, in 3rdRisk, you can connect each contract to the vendor’s profile, including their risk rating, criticality, etc. This lets you do interesting things: you can generate a report of all critical vendors and see at a glance if their contracts have all the Article 30(3) enhancements. Or, if a vendor’s risk rating increases (say due to poor performance or an incident), you can quickly pull the contract to see what your rights are (maybe you have a right to request an audit, etc., which you might now exercise). Conversely, if you identify a contract gap, you can note that as a risk in the vendor’s profile and track remediation.

Centralised tracking of DORA-related contract terms also helps with reporting to management and regulators. You can demonstrate, for instance, that 100% of critical supplier contracts now include the required clauses (a key compliance metric). By integrating contract terms into your TPRM system, you ensure that those terms are actually used to govern the relationship – not just filed away. The platform can even tie into issue management: e.g., if a provider fails an audit, log it and see if the contract allows termination or requires a fix within X days as per SLA.

Automated alerts and workflows

Staying compliant long-term means never missing a beat when contracts change or come up for renewal. Technology can provide automated reminders for key dates. For example, alert the contract owner 6 months before a contract renewal so they can plan any needed DORA updates or renegotiations. You can set triggers like: if a contract is due to expire, initiate a workflow to review clauses against the latest requirements. Automation can also help enforce processes: for instance, integrating with procurement so that any new ICT contract must go through a DORA compliance check (with approvals in the system) before signing. If someone tries to onboard a new IT vendor without going through Legal, the system could flag it. For existing contracts, if an amendment is added, the system can prompt to re-run clause analysis.

Essentially, the platform becomes an active assistant, ensuring no contract skips compliance. This is far superior to an ad-hoc manual process, where it’s easy to forget a smaller contract or assume someone else handled it. Workflow automation also reduces effort – tasks like sending a batch of DORA addenda to 50 vendors can be templated and tracked, with the system recording who has signed and who hasn’t, and sending chaser emails as needed.

Pre-built templates and knowledge base

‍Another tech benefit is access to pre-built DORA clause libraries or templates. Some solutions provide a library of model DORA-compliant clauses vetted by legal experts. This can serve as a starting point for your contracts or addenda, ensuring you don’t miss any required elements. Likewise, having a knowledge base integrated (maybe a checklist within the platform) reminds users of the regulatory context for each clause. For example, a tooltip in the contract record might show “Article 30(2)(h) – Termination: Ensure contract has X, Y, Z” as guidance. This can be especially helpful for non-legal users or when training new staff on maintaining DORA compliance. Essentially, the system embeds regulatory expertise so you don’t have to reinvent the wheel for each contract.

By leveraging these technological capabilities, financial institutions can streamline compliance and reduce the burden on their teams. Instead of combing through contracts in Word and tracking changes in spreadsheets, you have intelligent software handling much of the heavy lifting. It’s the difference between a reactive scramble and a proactive, controlled process. 3rdRisk, for instance, combines a central contract register, AI-driven analytics, and workflow tools to help you continuously monitor DORA clauses. This enables compliance teams to focus on decision-making and risk management, rather than paperwork. In short, technology allows you to operationalise DORA contract management – making it an integrated part of your vendor risk program that runs with much less manual effort and far greater accuracy.

Case example: Proactive DORA contract compliance

Consider a mid-sized European financial services company ("FinCo") that successfully aligned over 200 ICT provider contracts with DORA requirements in under six months:

• ‍Starting Point: 220 contracts with inconsistent quality and many lacking key provisions like incident reporting or exit clauses.‍
• Approach: Used 3rdRisk's platform to centralise contracts, employed AI for gap analysis, created standardised addenda, and implemented tracking workflows.‍
• Results: 100% of critical contracts amended within five months, complete documentation trail, and improved operational resilience demonstrated during subsequent cyber incidents.

Conclusion

Contractual readiness is foundational to DORA compliance. You cannot achieve digital operational resilience if vendor contracts leave loopholes or ambiguities. DORA forces firms to create the legal framework needed to control third-party risks.

Moving from reactive, one-off updates to proactive, ongoing processes distinguishes successful organisations. Those who treat DORA contract compliance as a living program will not only satisfy regulators but also significantly reduce risk exposure. Structured workflows, centralised tracking, and AI-assisted reviews can dramatically reduce effort while improving accuracy.

Technology solutions like 3rdRisk's platform can automate heavy lifting through integrated contract registers, AI clause analysis, templated workflows, and real-time risk linkage. This transforms contract compliance from a headache into a competitive advantage, ensuring every contract supports your journey toward digital operational resilience.

Ready to strengthen your contract resilience? Consider leveraging specialised tools to automate and streamline your DORA contract compliance process, transforming regulatory requirements into operational advantages.