Impact of the EU’s NIS 2 Directive on businesses and institutions

Your expert on the Directive:

Peter Durojaiye
Partner
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Dániel Nagy
Senior Manager
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Dávid Takács 
Manager
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What you need to know about NIS 2

NIS 2 (Network and Information Security Directive 2)

In full: Directive on measures for a high common level of cybersecurity across the Union (NIS 2 Directive)

What does NIS 2 regulate?

The digital transformation of society has led to an expansion of the cyber threat landscape, bringing about new challenges, which require adapted and innovative responses. As a result, the European Parliament and the Council published the NIS 2 Directive on 27 December 2022, which entered into force on 16 January 2023.

The NIS 2 Directive sets out a number of requirements for the cybersecurity and information security of EU Member States. In Hungary, Act XXIII of 2023 on Cybersecurity Certification and Cybersecurity Supervision clarifies the basic issues of national cybersecurity certification and supervision, and implements the provisions of the NIS 2 Directive.

Supervision is carried out by the Hungarian Supervisory Authority for Regulated Activities (SZTFH).

How?

The NIS 2 Directive extends cybersecurity requirements and sanctions to harmonise and improve Member States’ levels of cybersecurity, setting stricter requirements for different sectors. Companies and organisations need to address a number of important aspects, including managing, controlling and monitoring cyber risks, handling incidents efficiently, and ensuring business continuity. In addition, the Directive extends the scope of the entities subject to the Directive, and imposes stricter liability rules for the management bodies of the entities concerned.

Timeline

Registration deadline

Publishment of the directive

Deadline for conducting an audit contract

Conducting the first audit

Our services related to NIS 2

Upon request, we will provide you with a full legal interpretation and assess whether you are affected by the NIS 2 Directive, after which we will lay the foundations for preparing for NIS 2.

Important: The authorities will not assess whether the Directive applies to you, nor will they notify you if it does. Your company or institution must self-assess on the basis of criteria that include both sectoral elements and size considerations and notify the authorities in a timely manner. For example, even if your business falls into the micro- or small business category, it may still be engaged in a high-risk” sectoral activity that falls within the scope of the Directive.

If your company does not have a proper business impact analysis or risk management framework, we will assist you.

We will assess the current level of maturity and identify the organisational and technological gaps that need to be filled for compliance.

Our team of experts, who have extensive industry experience, will propose ways to address gaps and assist in the implementation of a complex action plan.

As required by law, the companies concerned must establish and operate a risk management framework under which they identify, assess, manage and monitor security risks.

As required, we support our clients during implementation projects for each improvement or provide tailored professional advice during the NIS 2 audit to help make the audit easier and ensure its successful completion.

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Are you affected by NIS 2?

The NIS 2 Directive is a legislative act on the security of network and information systems across the EU that entered into force on 16 January 2023. The new Directive will significantly increase the number of businesses affected, and will impose stricter requirements on them. Pressure to comply with the Directive is also increasing, as evidenced by stricter sanctions and accountability at the management level.

Our short impact analysis will help you find out whether your company is subject to the NIS 2 Directive. (Contact us now!)


NIS 2 requirements

The NIS 2 Directive distinguishes between “sectors of high criticality” and “critical sectors”. Entities in critical sectors are subject to lower fines and are under the reactive supervision of the competent authorities, as opposed to proactive supervision reserved for entities in sectors of high criticality.

The purpose of a uniform set of rules is to ensure that ceilings are the same across the EU, and that a “uniform criterion” is used to determine the entities falling within the scope of the Directive. Medium-sized and large enterprises should be subject to such regulation.

  • Medium-sized enterprise: 50 to 249 employees, with either an annual turnover of less than EUR 50 million or a balance sheet total of less than EUR 43 million.
  • Large enterprise: 250 or more employees, with either an annual turnover of at least EUR 50 million or a balance sheet total of at least EUR 43 million.
    In Hungary, this categorisation significantly extends the scope of entities covered.

Extension/tightening of liability

Entities in sectors of high criticality may be subject to fines of up to EUR 10 million or 2% of the annual turnover. For companies in critical sectors, fines may be up to EUR 7 million or 1.4% of the annual turnover. In both cases, the higher of the two amounts will be imposed.

The businesses and institutions concerned should take appropriate measures in areas such as cybersecurity risk management, supply chain security, business continuity, encryption, access control, as well as reporting and corrective measures.

Sanctions regime

  • Multi-level approach to fines of up to EUR 20 million.
  • Intentional or negligent infringement.
  • For organisations operating in critical sectors, the maximum fine is EUR 7 million or 1.4% of the total global turnover in the previous financial year.
  • For organisations operating in sectors of high criticality, the maximum fine is EUR 10 million or 2% of the total global turnover in the previous financial year.

Liability risk to management

  • Example: Cyberattacks that disrupt operations due to inadequately monitored risk management processes in a sector of high criticality.
  • Consequences:
    • Payment of claims
    • Paying external service providers
    • Payment of fines

The NIS 2 Directive affects not only critical national infrastructure

NIS 2 goes far beyond well-known critical infrastructures. For example, in the energy sector, NIS previously applied only to companies that produced, transported or regulated energy in the electricity and gas sectors. However, NIS 2 requirements cover the entire supply chain, e.g. manufacturers of wind turbines or operators of charging stations for electric vehicles.

Organisations operating in sectors of high criticality

Energy

  • Electricity
    • electricity undertakings within the meaning of the Act on electricity

      *(with the exception of public lighting operating licence holders
  • District heating and cooling
    • licence holders within the meaning of the Act on district heating
  • Oil
    • licence holders establishing and operating hydrocarbon transmission lines under the Act on mining
    • operators of facilities used for processing and storing oil under the Act on mining
    • central stockholding entities under the Act on emergency stockholding of imported petroleum and petroleum products
  • Gas
    • gas industry undertakings engaged in activities requiring a licence under the Act on gas supply

      *(with the exception of one-stop-shop capacity sellers, organised gas market licence holders, and piped LPG providers)
  • Hydrogen
    • operators of hydrogen production, storage and transmission

Transport

  • Air transport
    • organisations contributing to air transport security within the meaning of the government decree on the rules of civil aviation security and on the powers, tasks and operational rules of the Aviation Security Committee
  • Rail transport
    • railway infrastructure managers within the meaning of the Act on rail transport
      *(other than managers of private railway infrastructure and industrial sidings) 
    • railway undertakings
    • rail capacity allocation organisations
  • Road transport
    • service providers operating intelligent road transport systems within the meaning of the decree issued by authorisation of the Act on road transport
    • traffic management organisations within the meaning of the decree issued by authorisation of the Act on road transport
  • Water transport
    • legal persons and economic operators without a legal personality engaged in shipping activities within the meaning of the Act on water transport
  • Public transport
    • public service operators within the meaning of Article 2 d) of Regulation (EC) No 1370/2007 of the European Parliament and of the Council of 23 October 2007

Healthcare

  • healthcare providers within the meaning of the Act on healthcare
  • operators of high-security biological laboratories
  • organisations managing healthcare reserves and blood supplies
  • entities carrying out research and development activities of medicinal products
  • entities manufacturing basic pharmaceutical products and pharmaceutical preparations
  • medicinal product wholesalers
  • entities manufacturing medical devices of critical importance, included in the list of devices of critical importance during a public health emergency
  • organisations holding a distribution authorisation under Article 79 of Directive 2001/83/EC of the European Parliament and of the Council of 6 November 2001 on the Community code relating to medicinal products for human use

Drinking water, wastewater

  • Water utility service providers
    • water utility service providers within the meaning of the Act on water utility services

Electronic communications services

  • electronic communications service providers within the meaning of the Act on electronic communications
  • internet exchange service providers within the meaning of the Act on electronic communications
  • trust service providers within the meaning of the Act on the general rules of electronic administration and trust services

Digital infrastructure

  • cloud computing service providers
  • data centre service providers
  • top-level domain name registries
  • DNS service providers
  • content delivery network providers

Outsourced ICT services

  • outsourced (managed) information and communication service providers
  • outsourced (managed) information and communication security service providers

Space-based services

  • operators of ground-based infrastructure supporting the provision of space-based services

Organisations operating in critical sectors

Postal and courier services

  • postal service providers within the meaning of the Act on postal services

Production, processing and distribution of food

  • food businesses within the meaning of the Act on the food chain and its authority supervision

Waste management

  • waste prevention service providers
  • waste management facilities

Production and distribution of chemicals

  • manufacturers and distributors within the meaning of Article 3 of Regulation (EC) No 1907/2006 of the European Parliament and of the Council of 18 December 2006

Manufacturing

  • Manufacture of medical devices and in vitro diagnostic medical devices*
    • entities manufacturing medical devices within the meaning of Article 2, point (1) of Regulation (EU) 2017/745 of the European Parliament and of the Council of 5 April 2017
    • entities manufacturing in vitro diagnostic medical devices within the meaning of Article 2, point (2) of Regulation (EU) 2017/746 of the European Parliament and of the Council of 5 April 2017
      *(other than entities manufacturing medical devices of critical importance, included in the list of devices of critical importance during a public health emergency)
  • Manufacture of computer, electronic and optical products
    • economic operators carrying out the activity of “Manufacture of computer, electronic and optical products” under Division 26 of Regulation (EC) No 1893/2006 of the European Parliament and of the Council of 20 December 2006
  • Manufacture of electrical equipment
    • economic operators carrying out the activity of “Manufacture of electrical equipment” under Division 27 of Regulation (EC) No 1893/2006 of the European Parliament and of the Council of 20 December 2006
  • Manufacture of machinery and equipment n.e.c.
    • economic operators carrying out the activity of “Manufacture of machinery and equipment n.e.c.” under Division 28 of Regulation (EC) No 1893/2006 of the European Parliament and of the Council of 20 December 2006
  • Manufacture of motor vehicles, trailers and semi-trailers
    • economic operators carrying out the activity of “Manufacture of motor vehicles, trailers and semi-trailers” under Division 29 of Regulation (EC) No 1893/2006 of the European Parliament and of the Council of 20 December 2006
  • Manufacture of other transport equipment
    • economic operators carrying out the activity of “Manufacture of other transport equipment” under Division 30 of Regulation (EC) No 1893/2006 of the European Parliament and of the Council of 20 December 2006
  • Manufacture of cement, lime and plaster
    • economic operators carrying out the activity of “Manufacture of cement, lime and plaster” under Division 23.5 of Regulation (EC) No 1893/2006 of the European Parliament and of the Council of 20 December 2006

Digital service providers

  • providers of online marketplaces
  • search providers within the meaning of Act CVIII of 2001
  • providers of social networking services platforms
  • domain name registration service providers

Research

  • research organisations


The list is for information purposes only; you can find more detailed information in Annexes 1 and 2 to Act XXIII of 2023.

Are you also affected by NIS 2?

Our short impact analysis will help you find out whether your company is subject to the NIS 2 Directive.

Contact us

Peter Durojaiye

Peter Durojaiye

Partner, PwC Hungary

Dániel  Nagy

Dániel Nagy

Senior Manager, PwC Hungary

Dávid Takács

Dávid Takács

Manager, PwC Hungary

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