EC Adopts NIS2 and DORA Directives
The European Commission (EC) finalized rules on the cybersecurity of sectors through a Directive on the Security of Network and Information Systems (NIS2 Directive). The NIS2 Directive entered into force on January 16, 2023 while EC adopted the Regulation 2022/2554 and the Directive 2022/2556 on digital operational resilience for the financial sector. The DORA Directive and Regulation will enter into force on January 16, 2023 while the European Union members states shall adopt and publish the measures necessary to comply with the DORA "Amending Directive" from January 17, 2025.
The NIS2 Directive aims to strengthen cybersecurity risk management requirements as well as ensure companies that take appropriate and proportionate technical, operational, and organizational measures to manage the cybersecurity risks as well as prevent and minimize the impact of potential incidents. The NIS2 Directive will ensure a safer and stronger Europe by expanding significantly the sectors and type of entities falling under its scope and by strengthening security requirements for companies. The NIS2 Directive will replace the current Directive on Security of Network and Information Systems. The NIS2 Directive focuses on measures including incident response and crisis management, vulnerability handling and disclosure, policies and procedures to assess the effectiveness of cybersecurity risk management measures, and cybersecurity hygiene and training. To help enhance information-sharing and cooperation on cyber crisis management at both national and EU levels, the NIS2 Directive streamlines incident reporting obligations with more precise provisions on reporting, content, and timeline. Furthermore, there are more stringent supervisory measures for national authorities, as well as stricter enforcement requirements, along with the list of administrative sanctions, including fines for breach of the cybersecurity risk management and reporting obligations. Members states will have to transpose the NIS2 Directive into national law within 21 months from the entry into force of the Directive. During this time, member states shall adopt and publish the measures necessary to comply with this Directive.
The DORA Amending Directive (Directive 2022/2556) will amend other Directives to align with DORA, including CRD IV, Solvency II, MiFID II, PSD2, UCITS and AIFMD. In-scope entities include credit institutions, payment institutions, electronic money institutions, investment firms, and crypto-asset service providers. Regulation 2022/2554 sets out uniform requirements concerning the security of network and information systems supporting the business processes of financial entities. It covers rules and requirements:
- applicable to information and communication technology (ICT) risk management; reporting of major ICT-related incidents and notifying, on a voluntary basis, significant cyber threats to the competent authorities; reporting of major operational or security payment-related incidents to the competent authorities by specified financial entities; and digital operational resilience testing; information and intelligence sharing in relation to cyber threats and vulnerabilities; and measures for the sound management of ICT third-party risk
- on the contractual arrangements concluded between ICT third-party service providers and financial entities
- for the establishment and conduct of the Oversight Framework for critical ICT third-party service providers when providing services to financial entities
- on cooperation among competent authorities, and rules on supervision and enforcement by competent authorities in relation to all matters covered by this Regulation
- Press Release on NIS2 Directive
- Regulation on NIS2 Directive
- Factsheet on NIS2 Directive
- Regulation on Digital Operational Resilience
- Directive on Digital Operational Resilience
Keywords: Europe, EU, Banking, Regtech, NIS2, Cyber Risk, DORA, Operational Resilience, ICT Risk, NIS Directive, EC
Previous ArticleEBA Issues Reporting Taxonomy Package and Other Updates
FINMA Approves Merger of Credit Suisse and UBS
The Swiss Financial Market Supervisory Authority (FINMA) has approved the takeover of Credit Suisse by UBS.
BOE Sets Out Its Thinking on Regulatory Capital and Climate Risks
The Bank of England (BOE) published a working paper that aims to understand the climate-related disclosures of UK financial institutions.
OSFI Finalizes on Climate Risk Guideline, Issues Other Updates
The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.
APRA Assesses Macro-Prudential Policy Settings, Issues Other Updates
The Australian Prudential Regulation Authority (APRA) published an information paper that assesses its macro-prudential policy settings aimed at promoting stability at a systemic level.
BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending
BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.
HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks
The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.
MFSA Sets Out Supervisory Priorities, Issues Reporting Updates
The Malta Financial Services Authority (MFSA) outlined its supervisory priorities for 2023
German Regulators Issue Multiple Reporting Updates for Banks
Deutsche Bundesbank published the nationally deactivated validation rules for the German Commercial Code (HGB) users on the taxonomy 3.2, which became valid from December 31, 2022
BCBS Report Examines Impact of Basel III Framework for Banks
The Basel Committee on Banking Supervision (BCBS) published results of the Basel III monitoring exercise based on the June 30, 2022 data.
PRA Consults on Prudential Rules for "Simpler-Regime" Firms
Among the recent regulatory updates from UK authorities, a key development is the first-phase consultation, from the Prudential Regulation Authority (PRA), on simplifications to the prudential framework that would apply to the simpler-regime firms.