Fix "Docker daemon failed to start" error after (Mac) OS upgrade

After getting numerous messages saying I should upgrade my OS, I have finally decided to upgrade to macOS Big Sur v11.6.1.

Unfortunately, docker doesn't work anymore.

I'm getting an error:

Fatal Error

Docker daemon failed to start

and

2021-12-07T09:47:14Z dockerd time="2021-12-07T09:47:14.957430297Z" level=debug msg="Calling GET /version"

I can see the option to Reset Docker to factory defaults but I'm afraid of resetting because it means I will also erase all my docker images.

Is there any easy way to fix this issue without erasing my work?