NIS2 Compliance Readiness for Organizations across the European Union
The expansive scope, stringent sanctions and pivotal role of management related to the new NIS2 Directive provide a strong foundation to protect against evolving cyber risks.
Key Takeaways
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NIS2, effective on October 18, 2024, aims to enhance the resilience of critical sectors across the EU.
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The directive places significant emphasis on personal accountability for stakeholders in cyber security risk management and includes harsh financial penalties for non-compliance.
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Organizations must implement 10 crucial cyber security measures to comply with the new legislation.
Organizations across the European Union (EU) are pressed to comply with the upcoming Network and Information Systems Directive (NIS2),1 a legislation focused on increasing cyber security. Failure to meet the requirements outlined in the new directive could result in significant fines and reputational damage.
The NIS2 Directive expands its scope beyond the EU NIS Directive to cover more sectors such as supply chains, food production and public administration, and focuses on the need for consistent implementation across all EU member states. NIS2 also introduces size-cap rules. This means that all medium-sized and large entities operating within covered sectors are now subject to the directive's provisions. This expansion aims to improve cyber security across infrastructure and industries that are critical to the economy.
The primary objective of NIS2 is to enhance the cyber resilience of organizations across the EU by fostering a proactive stance on cyber security and ensuring stronger collaboration between organizations and their third-party vendors.
Main Changes Under the NIS2 Directive
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1. Broader Scope
- NIS2 expands the scope to include more sectors and services as either “essential” or “important” organizations.
- Companies with headquarters outside of EU member states (with or without subsidiaries) that provide products to EU member states in scope of NIS2 must comply.2
- Cyber security risk management is expanded to include supply chain security.
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2. Stricter Requirements
- NIS2 introduces more stringent cyber security risk management measures.
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3. EU-wide Cooperation
- The directive serves as the foundation for establishing the European cyber crisis liaison organization network.3
The NIS2 not only urges organizations to improve their own cyber resilience, but also hopes to foster cooperation among sectors so that companies can share information and advice about future threats and how to handle them.
Under NIS2, organizations must adhere to stringent security requirements to ensure cyber resilience. These requirements include robust risk management practices, business continuity planning, corporate accountability and reporting obligations.
NIS2 Requirements
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Risk Management
- Organizations are mandated to take decisive actions to adhere to the new directive and mitigate cyber risks effectively.
- This involves implementing robust incident management protocols, bolstering supply chain security, fortifying network defenses, enhancing access control mechanisms and adopting encryption practices.
- Proof of implemented cyber security policies, such as the results of security audits and the respective underlying evidence, are also required.
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Business Continuity
- Entities must strategize on ensuring uninterrupted business operations in the event of significant cyber incidents.
- This entails formulating comprehensive plans for system recovery, establishing emergency protocols and assembling a dedicated crisis response team.
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Corporate Accountability
- NIS2 imposes accountability on corporate management to oversee, endorse and undergo training on the organization's cyber security measures. Failure to address cyber risks adequately could lead to penalties for management, including potential liability and temporary bans from managerial roles.
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Reporting Obligations
- The directive delineates specific reporting obligations and timelines. Non-compliance with these reporting procedures may result in administrative fines.
- Timely notifications to the Computer Security Incident Response Team are crucial, with deadlines set at 24 hours, 72 hours and one month. Companies should facilitate the assessment of damage severity and ensure all stakeholders are informed of their roles in the notification process.
Greater Liability and Obligations Ahead
Management bodies are responsible for overseeing and approving cyber security measures, as well as ensuring compliance with the directive. Failure to fulfil these responsibilities can result in significant financial penalties, highlighting the importance of proactive engagement from senior leadership.
“Cyber security risk management knowledge is often lacking, especially at smaller companies,” says Juliette Roest, Cyber Risk Consultant for Aon in the Netherlands. “While the IT department tends to be responsible for information security management, they generally do not have an overview of business needs and the risks associated with those needs.”
Implementing NIS2 governance encourages management and board members to effectively oversee company risks and provide all the necessary information and resources to ensure resilience in the event of a cyber incident.
€10M
or 2 percent of the total global annual turnover is the maximum fine that can be imposed on essential entities for non-compliance of the NIS2 Directive.
Source: Article 32 – Supervisory and enforcement measures in relation to essential entities
While senior leadership and the board were always held accountable, the new directive will make them formally liable for any infringements. This directive underscores the pivotal role of cyber security as a board-level concern.
Case study: NIS2 Gap Analysis Helps Major Manufacturing Company Interpret and Implement Required Controls
What’s the Story?
When a large Nordic multinational manufacturing company found itself under the scope of NIS2, it sought Aon’s help to identify its main cyber risks and assess the current status and preparedness of security controls, cyber risk management and governance.
Why it Matters
Multinational organizations face potentially significant impact in every country that they operate in. Therefore, compliance with the NIS2 Directive would help the manufacturing company to improve its cyber resilience across all territories.
Outcomes
Aon successfully developed a risk and security assessment, including a NIS2 gap analysis with concrete actions to take. The manufacturing company received a board-ready report to present the current status and requirements for leadership to ensure they are prepared.
Take Action to Improve Cyber Security Resilience Now
The NIS2 Directive encompasses a comprehensive array of measures, spanning operational cyber risk management, cyber hygiene, incident response, incident reporting and supply chain security.
NIS2 Requirements | Actions to Consider |
---|---|
Effective cyber security risk management measures | Optimize finite budget investments to help achieve better maximum return on security investments. |
Policies on risk analysis and information system security | Develop or review appropriate risk management systems and ensure they are aligned with enterprise risk management frameworks. |
Effective general risk management measures | Develop frameworks for risk assessments at an organizational level, combined with scenario-specific stress testing, to examine overall risk management for:
|
Basic cyber hygiene | Provide an assessment of your firm’s cyber posture and general hygiene practices, as well as cyber security training to evaluate and pinpoint risk and security control gaps. |
Multi-factor/continuous authentication | Provide strategic support for the selection, adoption and deployment of appropriate multi-factor or continuous authentication solutions, secured voice, video and text communications and secured emergency communication systems. |
Policies and procedures for the use of cryptography and encryption | Implement the use of encryption, in particular end-to-end encryption, where necessary. |
Supply chain security | Align cyber risk in the supply chain to your existing corporate risk appetite framework and develop a company-specific approach to better analyze and target improved supply chain cyber resilience. |
Comprehensive cyber incident management protocols | Analyze your incident response preparedness, including the prevention, detection and response to incidents. |
Effective cyber incident reporting | Assess your incident reporting capabilities, responsiveness and design or adjust existing incident reporting procedures to ensure alignment with new regulatory requirements. This includes awareness and training of employees on cyber threats and phishing. |
Security in network and information systems | Systematically hunt generic and targeted threats within the network and information systems acquisition, development and maintenance, including vulnerability handling. Monitor the internet for leaked assets and threats. |
Start preparing for the NIS2 Directive now by elevating your cyber resilience and asking the following questions:
- Is my company affected by NIS2?
- Is our risk management at the right level for NIS2?
- Can my company report cyber security incidents properly?
- What is the state of my company's supply chain risk management when it comes to cyber security?
“Regardless of your organization's classification as essential or important, it is imperative for every entity to thoroughly examine the requirements outlined in NIS2,” advises Amine Menaa, Cyber Engagement Leader and Aon's Cyber Consulting Head Nordics, EMEA. “Proactively assess their compliance well in advance of the October 2024 implementation deadline.”
General Disclaimer
This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.
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Article 2 mins
The Aon Difference
How Aon is moving further, faster to bring new, innovative solutions that address companies’ risk and people challenges.
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Article 5 mins
The Rise of the Skills-Based Organisation
Today's employers need to continually learn and adapt to emerging technologies and skills if they are to thrive in the talent landscape.
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Article 3 mins
The Year of the Vote: How Geopolitical Volatility Will Impact Businesses
Companies that operate around the world need to have a global appreciation of the heightening geopolitical risk.
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Article 6 mins
Three Ways Collective Retirement Plans Support HR Priorities
Collective retirement plans are growing in popularity and improving employees’ financial wellbeing in the process. Other advantages that haven’t been as widely explored include how these retirement structures allow HR to shift its focus to strategy.
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Article 8 mins
How North American Construction Contractors Can Mitigate Emerging Risks
Getting ahead of risk is vital for North American construction contractors, as they aim to manage evolving issues, while delivering job safety, solving workforce shortages and containing project costs.
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Alert 6 mins
U.S. Department of Labor Restores and Extends Overtime Protections
The Department of Labor released a final rule increasing overtime protections for the standard salary level threshold for the “white collar" exemptions and the threshold for employees classified as Highly Compensated Employees. Employers need to prepare for these significant changes.
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Article 10 mins
How Insurers Can Capture Climate Opportunities
Climate change adaptation and the transition to net zero present huge premium growth opportunities for insurers. The key question is how to get started.
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Article 7 mins
How to Navigate the EMEA Cyber Risk Insurance Market
As the cyber insurance landscape continues to evolve in EMEA, companies need actionable insights and solutions to strengthen their cyber risk strategies.
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Article 9 mins
Insurers Seek Risk Transfer Solutions to Offset Higher Retentions and Resume Growth
The challenges of 2023 eroded the buffers that many insurers had previously enjoyed, bringing an increased focus on capital management and a variety of capital sources according to Aon’s capital poll.
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Report 18 mins
Evolving Technologies Are Driving Firms to Harness Opportunities and Defend Against Threats
While advancements in AI, cyber and data technology are helping companies operating in an increasingly digital world gain a significant competitive edge, they also introduce new and evolving risks.
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Article 6 mins
How to Make the Most of Voluntary Benefit Plans in the U.S.
As healthcare costs rise, voluntary benefits are a critical component of engaging employees, while also helping to manage direct and indirect medical expenses. Here are three strategies for employers to make the most of their voluntary benefits.
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Article 8 mins
London Insurance Market: Unveiling Demands for New Skills in 2024
The London insurance market seeks a generation of game-changers who can navigate uncertainties and drive innovation to ensure the industry’s future success in a digitalised world.
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Article 3 mins
Better Decisions in Trade, Technology, Weather and Workforce
From global supply chain risks to climate insecurity, organizations face challenges and complexities on a scale rarely seen before.
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Article 15 mins
How Artificial Intelligence is Transforming Human Resources and the Workforce
Artificial intelligence is having a measurable impact across all aspects of HR — from talent management to compensation, health and benefits, and retirement planning. To effectively harness the technology, HR leaders must ensure both their own teams and the wider workforce are prepared.
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Article 3 mins
Risk Capital and Human Capital Perspectives
Risk Capital CEO Andy Marcell and Human Capital CEO Lambros Lambrou discuss how innovations in Risk Capital and Human Capital can help organizations boost resilience and navigate volatility.
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Report 15 mins
Wide-Ranging Trade Issues Confront Global Businesses on Multiple Fronts
Global business leaders highlight risks linked to trade as some of their top concerns — both physical and financial. While the topic is complex and broad, there are opportunities that business leaders can pursue to stay ahead of emerging trade dynamics.
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Report 16 mins
Climate Analytics Unlock Capital to Protect People and Property
Extreme weather and a changing climate are impacting many of the risks businesses face today. To address future exposures, organizations will need advanced climate and natural catastrophe models and expertise that can assess chronic and acute risks.
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Report 14 mins
A Workforce in Transition Prepares to Meet a Host of Challenges
Engaging a changing workforce requires data and innovation. Workers increasingly expect more than just a paycheck. In response, organizations are balancing costs with the ability to provide a compelling employee experience.
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Case Study 3 mins
How Aon Helped M&G Wealth Develop New Advisor Skills
Aon partnered with UK financial advice firm M&G Wealth to help the firm better understand the make-up of a highly successful advisor of the future, including the skills needed given shifts in societal needs, technology and regulation.
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Article 8 mins
Energy Transition Investments: How Advanced Analytics Can Empower Organizations
Advanced analytics can empower organizations with deeper insights into the risks and opportunities surrounding renewables, while also supporting energy transition investment.
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Article 17 mins
Q1 2024: Global Insurance Market Overview
Positive performance in 2023 fueled insurer growth ambitions but underwriting remained disciplined in the first quarter of 2024.
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Article 12 mins
How Life Sciences Build Robust Talent Pipelines in the Age of Digitalization
While digitalization is delivering transformational change to R&D across the sector, it is also rapidly reshaping recruitment and retention strategies.
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Alert 6 mins
U.S. Federal Trade Commission Bans Employee Noncompete Agreements; Here’s What Employers Should Know
The FTC has announced a rule that bans noncompetes and clauses that have a similar effect. While the rule will face legal challenges, employers should take steps now to prepare for an environment where they cannot use noncompete agreements.
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Article 7 mins
Managing Construction Risks: 7 Risk Advisory Steps
Risk advisory services can help construction stakeholders navigate uncertainties, optimize performance and drive growth in their projects.
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Article 9 mins
Floating Offshore Wind Unlocks New Opportunities and Challenges
While there are similarities in the risk profile of floating offshore wind and bottom-fixed offshore wind, challenges like unproven technology and tow-to-port strategies for maintenance require a collaborative approach between owners/developers and their insurance partners.
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Article 4 mins
Parametrics Unlock Solutions For Future Risks
Macrotrends are transforming our world and creating emerging property-casualty exposures, which will have profound implications for the insurance industry.
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Article 7 mins
U.S. Cyber Insurance: Market Trends and Opportunities
Understanding market trends and future projections in an evolving cyber insurance market is paramount to strengthening risk mitigation and transfer strategies.
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Article 5 mins
How Climate Modeling Can Mitigate Risks and Improve Resilience in the Construction Industry
In an era of escalating climate-related challenges, the construction industry is turning to advanced climate modeling to fortify its risk management strategies.
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Article 14 mins
How Technology Will Transform Employee Benefits in the Next Five Years
Advances in technology will not only transform healthcare and treatment outcomes — benefit offerings, access to care, diagnosis, treatment and affordability challenges will also be radically changed. Here is what to expect as these efforts take shape globally.
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Article 10 mins
Key Trends in U.S. Benefits for 2024 and Beyond
As healthcare costs continue to rise, employers are struggling to balance cost control with attracting and retaining talent. The results of Aon's 2024 U.S. Health Survey point to key strategies organizations are using to help.
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Article 11 mins
Capturing Carbon on the Critical Pathway to Net Zero
As the world races to reduce climate risks and limit CO<sub>2</sub> emissions, the demand for scalable and cost-effective decarbonization technologies is increasing. Carbon capture projects form an important part of the low carbon energy transition, bringing both challenges and opportunities.
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Article 7 mins
Protecting North American Contractors from Extreme Heat Risks with Parametric
Growing extreme heat conditions have escalated risks, delays and costs for the construction industry in North America. Parametric insurance can help protect against such risks, offering contractors and building owners agility, efficiency and flexibility.
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Article 9 mins
How Insurance Can Help Hedge Potential Exposures Under the New Unified Patent Court System
The launch of the Unified Patent Court allows for a new patent filing process across Europe using a centralized system. While this brings significant financial and operational benefits, navigating these changes will demand a robust litigation risk management strategy.
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Article 8 mins
Parametric Can Help Mitigate Extreme Heat Risks for Contractors in EMEA
Construction projects in EMEA are often impacted by extreme heat, leading to project delays and increased costs. Many heat exposures are excluded by traditional markets, however, parametric is a flexible solution that can help mitigate these risks.
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Article 12 mins
Understanding and Preparing for the Rise in Pay Transparency
New regulations in the U.S. and Europe will require companies to be more transparent about their pay practices. Combined with willingness among workers to talk about salary, the era of pay transparency is here.
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Article 11 mins
Advancing Women’s Health and Equity Through Benefits and Support
As companies tailor their health and benefits to meet the needs of their employees, vital areas for support include family building and menopause.
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Article 7 mins
Unlocking Capacity and Capital in a Challenging Construction Risk Market
Complex market dynamics in the construction industry are pushing organizations to proactively explore alternative risk transfer solutions, including parametric insurance and captives.
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Article 11 mins
Securing Human Capital in Natural Resources
As new job roles and technologies emerge in the natural resources industry, employee expectations are also shifting. Leaders must rise to the challenge of securing talent to meet the world’s future energy needs.
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Article 5 mins
Navigating Cybersecurity Risk Under New U.S. Rules
Rulemaking from the Securities and Exchange Commission (SEC) highlights the importance of company transparency with investors and regulators around risk management and the impact of cyber events.
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