The NIS 2 Direc­ti­ve: con­tent and imple­men­ta­ti­on in practice

The Direc­ti­ve “con­cer­ning mea­su­res for a high com­mon level of secu­ri­ty of net­work and infor­ma­ti­on sys­tems across the Uni­on” (the NIS Direc­ti­ve for short) took effect in 2016. Due to the steady pro­gress of digi­tiz­a­ti­on and net­wor­king, and the pro­li­fe­ra­ti­on of cyber-risks, the EU Com­mis­si­on pre­pa­red an update of the NIS Direc­ti­ve some time ago. This update, the NIS 2 Direc­ti­ve, has been the sub­ject of tri­lo­gue nego­tia­ti­ons bet­ween the EU Com­mis­si­on, the EU Par­lia­ment and the Coun­cil sin­ce 13 Janu­a­ry 2022. The fol­lowing arti­cle will exp­lain what com­pa­nies should pre­pa­re for and which steps will have to be taken to imple­ment the Directive.

I. Mas­si­ve exten­si­on of the scope

Based on our cur­rent infor­ma­ti­on, the scope of the NIS Direc­ti­ve will be exten­ded signi­fi­cant­ly. The pro­po­sed new Direc­ti­ve will app­ly to com­pa­nies with more than 50 employees and annu­al reve­nues or total assets in excess of EUR 10 mil­li­on which belong to a sec­tor clas­si­fied as “essen­ti­al” or “important.” The defi­ni­ti­on of the sec­tors which are sub­ject to the Direc­ti­ve will also be mas­si­ve­ly exten­ded. For examp­le, the essen­ti­al “health care” sec­tor will now inclu­de not only health care pro­vi­ders, but also labo­ra­to­ries, medi­cal rese­arch and phar­maceu­ti­cals, as well as manu­fac­tu­rers of medi­cal devices. The defi­ni­ti­on of the essen­ti­al “digi­tal infra­st­ruc­tu­re” sec­tor will also be signi­fi­cant­ly exten­ded, and will now inclu­de cloud pro­vi­ders, data cen­ters and con­tent deli­very net­works. The sec­tors defi­ned as “important” will now inclu­de the ent­i­re indus­tri­al sec­tor, par­ti­cu­lar­ly manu­fac­tu­rers of medi­cal devices and com­pu­ters, as well as the mecha­ni­cal engi­nee­ring and mobi­li­ty sectors.

III. New requi­re­ments for com­pa­nies and seve­re fines

The NIS 2 Direc­ti­ve pro­vi­des for various risk manage­ment actions and repor­ting duties for com­pa­nies, and the natio­nal regu­la­to­ry aut­ho­ri­ties will be char­ged with super­vi­sing com­pli­an­ce and impo­sing pen­al­ties if necessa­ry. The requi­re­ments for risk manage­ment actions are spe­ci­fied in Arti­cle 18(2) of the NIS 2 Direc­ti­ve. They par­ti­cu­lar­ly inclu­de the crea­ti­on of risk ana­ly­sis and secu­ri­ty poli­ci­es for infor­ma­ti­on sys­tems, hand­ling inci­dents, dis­clo­sure of weak points and ensu­ring secu­ri­ty in the sup­ply chain. The Direc­ti­ve pro­vi­des for a dual repor­ting sys­tem. Once they beco­me awa­re of an inci­dent, com­pa­nies have 24 hours to trans­mit a preli­mi­na­ry report, fol­lo­wed by a final report no later than one mon­th after. The Direc­ti­ve also pro­vi­des for stric­ter regu­la­to­ry mea­su­res by the natio­nal aut­ho­ri­ties, as well as stric­ter enfor­ce­ment requi­re­ments. In par­ti­cu­lar, the aut­ho­ri­ties would have the opti­on of per­forming regu­lar assess­ments, inclu­ding on-site inspec­tions. The Direc­ti­ve also aims to intro­du­ce more con­sis­tent prac­ti­ces in the mem­ber sta­tes when it comes to impo­sing pen­al­ties. Aut­ho­ri­ties will be able to levy fines of up to EUR 10 mil­li­on or 2% of the company’s total glo­bal reve­nues, whiche­ver is higher.

IV. Recom­men­da­ti­on for companies

The drafts of the NIS Direc­ti­ve which have been publis­hed to date are non-binding. It remains to be seen what the final text of the Direc­ti­ve will be once the tri­lo­gue nego­tia­ti­ons are con­clu­ded. Once the Direc­ti­ve takes effect, the mem­ber sta­tes will be requi­red to imple­ment it wit­hin the pre­scri­bed imple­men­ta­ti­on peri­od. While the Com­mis­si­on set an imple­men­ta­ti­on peri­od of 18 mon­ths, the Coun­cil would pre­fer to give the mem­ber sta­tes 24 mon­ths ins­tead. Howe­ver, it is alrea­dy clear that the legal requi­re­ments with regard to cyber­se­cu­ri­ty will beco­me much stric­ter. At the same time, we can expect the imple­men­ta­ti­on peri­ods to be short given the limi­ted avai­la­bi­li­ty of cyber­se­cu­ri­ty experts and the expen­se asso­cia­ted with imple­men­ta­ti­on of tech­ni­cal and orga­niz­a­tio­nal impro­ve­ments. Com­pa­nies should the­re­fo­re con­si­der which new legal requi­re­ments they will have to satisfy as part of their cyber­se­cu­ri­ty com­pli­an­ce manage­ment sys­tem, and they should so by the time that the NIS 2 Direc­ti­ve is adop­ted at the latest.

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