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In 2016, the first cybersecurity law spanning the European Union (EU) came into effect. Officially called the Directive on security of network and information systems, but more commonly referred to as the NIS Directive, the law marked a significant step in moving the EU’s member states to a higher and more even level of cybersecurity for network and information systems.
However, since the introduction of the NIS Directive, the cybersecurity industry has undergone many changes, such as:
Accordingly, the EU recognized that an update to the NIS Directive was needed. On January 16, 2023, the “Directive on measures for a high common level of cybersecurity across the Union” — the NIS2 Directive — entered into force, and member states have until October 17, 2024 to transpose its measures into national law.
As we will cover below, the NIS2 Directive has major implications for the EU’s member states and the businesses and other organizations operating within them.
It’s important to note that under the EU’s minimum harmonization concept, NIS2 only establishes minimum requirements — individual member states within the EU are free to go above and beyond (e.g., expand the sector list, impose stricter obligations for companies, etc.). Therefore, specific details may vary from country to country, and it’s important for your organization to stay informed as each country writes and passes their respective national laws.
Per The NIS2 Directive Briefing by the European Parliament, the three general objectives of the NIS2 Directive are to:
These objectives are intended both to account for the changes in threat landscape and technological context noted above, and to address some noted shortcomings of the original NIS Directive that became apparent over the years, with the main issues being:
NIS2 distinguishes between “essential” and “important” entities, which impacts what rules apply to an organization. Whether a particular organization is considered to be essential or important depends upon both its sector and its size (based upon number of employees or annual revenue). The Directive divides sectors into two groups:
Sectors of high criticality
Other critical sectors
An organization is an “essential” entity if it operates in one or more of the sectors of high criticality AND has more than 250 employees OR annual revenue of over €50 million.
An organization is an “important” entity if it operates in one or more of the sectors of high criticality OR one or more of the other critical sectors AND has more than 50 employees OR annual revenue of over €10 million.
However, it’s important to note that NIS2 also “leaves certain discretion to member states to identify smaller entities with a high security risk profile that should also be covered by the obligations of the new Directive.” In other words, smaller organizations may still fall within the scope of NIS2 if they are deemed sufficiently important and at risk.
In particular, this applies to organizations that are the only provider of an essential service within a member state and those for whom disruption would have significant impact on public safety, security or health. This has the practical impact that public administration and some digital services fall within the scope of NIS2 regardless of the organization’s size.
From the perspective of businesses and other organizations operating with the EU, the NIS2 Directive introduces several important changes compared to the original NIS. Some of the most significant changes are outlined below, but the subjects and the accompanying explanations are intended to be illustrative rather than exhaustive or comprehensive.
Compared to NIS, the new directive strengthens security requirements that organizations must meet. It does so by imposing a risk management approach to cybersecurity that includes a minimum list of basic security elements, including:
Also, while NIS2 imposes the same security requirements upon essential and important entities, the Directive attempts to accommodate different operating contexts by recognizing that effective risk management measures consider an organization’s size and risk profile, and the wider consequences of a cyberattack. The takeaway is that essential entities will have a higher bar.
Supply chain security is a particular point of emphasis within the new directive, which requires individual companies to address cybersecurity risks in supply chains and supplier relationships.
Fortunately, the burden of supply chain security doesn’t fall solely onto individual organizations. As mentioned in the European Parliament’s briefing, “To address key supply chain risks and to assist entities in managing cybersecurity risks related to the ICT supply chain, the NIS Cooperation Group, together with the Commission and ENISA, would be tasked to carry out a coordinated risk assessment per sector of critical ICT services, systems, or products including relevant threats and vulnerabilities. The supply chain risk assessments would consider both technical factors (hardware- or software-related) and, where relevant, non-technical factors (such as suppliers being subject to interference by a non-EU country or state-backed players).”
In addition to the preventative measures outlined above, NIS2 introduces more precise provisions for reporting significant cybersecurity incidents to the national competent authorities, the content of the reports, and the timelines that govern them. In short:
NIS2 introduces several minimum supervisory measures to help ensure effective compliance by organizations operating within the EU. For example, competent authorities may:
Essential entities will be subject to stronger supervision, and will face regular, targeted, and ad hoc audits; important entities face audits only after security incidents.
The new directive is also very clear about the role of enforcement. As explained by the European Commission in an online FAQ, “So far there has been an overall reluctance across Member States to apply penalties to entities failing to put in place security measures or report incidents. This can have negative consequences for the cyber resilience of entities. To make enforcement effective, the new Directive sets up a consistent framework for sanctions across the Union. It therefore establishes a minimum list of administrative sanctions for breach of the cybersecurity risk management and reporting obligations laid down in the NIS2 Directive”
These consequences include:
Plus, “in order to ensure real accountability for the cybersecurity measures,” NIS2 introduces provisions on the liability of senior managers.
In other words, in addition to enforcement measures that apply to an organization, NIS2 also provides provisions that directly apply to the people who make up the senior management and executive positions within organizations that fail to meet the Directive’s requirements.
NIS2 comes into effect in about 14 months, and it’s likely that your organization will have to make significant changes to your cybersecurity program within that timeframe. It’s important to understand that compliance with the NIS2 Directive is centred on your organization’s ability to achieve cyber resilience – that is, your ability to anticipate cyber threats, withstand current cyberattacks, and recover from incidents with minimal disruption.
At eSentire, we are mission-driven to help you anticipate, withstand, and recover from the most sophisticated cyberattacks so you can build a more resilient security operation. As such, many of our services within our Exposure Management, Managed Detection & Response, and Digital Forensics & Incident Response portfolios align with the NIS2 Directive’s requirements:
To learn more about how eSentire can help you meet your obligations under the NIS2 Directive and achieve regulatory compliance before October 2024, connect with an eSentire cybersecurity specialist.
eSentire, Inc., the Authority in Managed Detection and Response (MDR), protects the critical data and applications of 2000+ organizations in 80+ countries, across 35 industries from known and unknown cyber threats by providing Exposure Management, Managed Detection and Response and Incident Response services designed to build an organization’s cyber resilience & prevent business disruption. Founded in 2001, eSentire protects the world’s most targeted organizations with 65% of its global base recognized as critical infrastructure, vital to economic health and stability. By combining open XDR platform technology, 24/7 threat hunting, and proven security operations leadership, eSentire's award-winning MDR services and team of experts help organizations anticipate, withstand and recover from cyberattacks. For more information, visit: www.esentire.com and follow @eSentire.