NIS-2 Directive: What companies need to consider to ensure cybersecurity

In today’s digital era, businesses are more dependent than ever on the benefits of modern technologies. But with this advancing digitalization also comes increased risks, particularly with regard to cyberattacks and data breaches. To ensure the security of information systems and strengthen the protection of data, the new NIS-2 directive has been introduced.

As a business, you should not underestimate the NIS-2 directive, as it sets out extensive obligations that you must comply with to ensure the protection of your IT infrastructure and cybersecurity. To help you meet the requirements of this new legislation, we have summarized the key points below.

The NIS-2 directive now applies to smaller companies than before. Companies with at least 50 employees, an annual turnover of 10 million euros or an annual balance sheet total of 10 million euros are covered by this directive. Violations of the directive are subject to severe sanctions similar to those of the General Data Protection Regulation (GDPR). The member states of the European Union have an obligation to transpose the NIS-2 Directive into national law by October 17, 2024. Although the national implementation law is not yet available, it is advisable that companies already deal with the extended obligations and possible sanctions of the new directive.

1. Which companies are affected by the NIS-2-Directive?

The Directive generally applies to companies that belong to either a “high criticality sector” as defined in Annex I of the Directive or an “other critical sector” as defined in Annex II. In addition, these companies must be classified as medium-sized, meaning they employ at least 50 people or have an annual turnover of at least 10 million euros or an annual balance sheet total of at least 10 million euros. Furthermore, they must provide their services within the European Union.

“High criticality sectors” include, for example, energy, transport, banking, financial market infrastructures, healthcare, drinking water, wastewater, digital infrastructure, ICT services management (B2B), public administration and space. “Other critical sectors” include, but are not limited to, postal and courier services, waste management, chemical production, manufacturing, and trade, food production, processing, and distribution, manufacturing/manufacturing (data processing equipment, mechanical engineering, motor vehicle manufacturing, other vehicle manufacturing), digital service providers (online marketplaces, online search engines, social networking service platform providers), and research.

2. Risk Management Measures

The NIS-2 Directive places great emphasis on an effective risk management culture within organizations. Major and important institutions are required to take appropriate technical, operational and organizational measures to ensure the security of their network and information systems. These include, for example, risk analyses, security concepts, backup and crisis management, access controls, and encryption concepts. It is important that these measures are state of the art and appropriate to the individual risks.

3. Cross-Threat Approach

Cyber threats can have different causes, so your risk management measures should take a cross-threat approach. This means that you need to protect not only against cyberattacks, but also against physical threats such as theft, fire, or unauthorized access to your information and data processing assets. Decisions about the risk management measures taken should be based on your organization’s exposure to risk and proportionate to the societal and economic impact of a security incident.

4. Security Incident Reporting Requirements

Under NIS-2, essential and major facilities are required to immediately report security incidents that have a significant impact on their services. These reports are made in a multi-step process that includes an early warning, a report of the incident itself, and a final report. In addition, you may be required to notify affected customers and users of significant security incidents that could impact the delivery of your services.

5. Governance and Accountability

The NIS-2 Directive places great emphasis on the responsibilities of corporate governance bodies. They must ensure that adequate resources are allocated to cybersecurity assurance and that there is a clear division of responsibilities within the organization. In addition, regular cybersecurity assessments should be conducted and adjustments made as necessary to keep pace with changing threats.

6. Enforcement and fines

The NIS-2 Directive endows the supervisory authority with broad powers, distinguishing between essential and important facilities. Authorities now have the power to conduct on-site inspections and to request certain information and data access. Essential facilities are subject to broader oversight powers, including non-emergency measures such as audits, regardless of risk assessment.

In enforcing the duties, authorities can take the same actions against operators of essential facilities as against operators of essential facilities. The authorities have various tools at their disposal, such as issuing binding instructions, setting deadlines, and imposing fines. In the case of essential facilities, the authorities can even order the temporary removal of management personnel.

In addition, there is the threat of severe fines in the event of violations. For operators of essential facilities, the maximum fine is either 10 million euros or 2 percent of annual worldwide turnover, whichever is higher. For operators of essential facilities, the maximum is either 7 million euros or 1.4 percent of annual worldwide turnover, whichever is greater.

Companies subject to the NIS-2 Directive facilities should always also comply with the provisions of the General Data Protection Regulation (GDPR) in the event of a significant security incident. It is possible that personal data will also be affected in the event of a significant security incident. Irrespective of a notification under the provisions of the NIS-2 Directive, the incident must also be reported to the data protection authority in accordance with Article 33 of the GDPR within a reasonable period of time.

In relation to the GDPR, there is a single overriding provision in the NIS-2 Directive. If the DPA imposes a fine under the GDPR, a fine under Article 35 (2) of the NIS-2 Directive is excluded for the same breach. However, other enforcement actions remain possible.

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