National Institute of Standards and Technology

A Great Leap Forward: EU Soon to Have Broad Rules on Cybersecurity and Incident Reporting

European Union

On December 7, 2015, more than two and a half years after the first draft, the European Union Council finally reached an important, informal agreement with the Parliament on important network and information security rules (“NIS-Directive”) affecting companies across the EU.  The culmination of the European Commission’s Cybersecurity strategy effort that began in February 2013 with the European Commission’s proposed draft directive on measures to ensure a common level of network and information security.  Final adoption of the NIS-Directive will have several important consequences, including increased focus by Boards of Directors of cybersecurity risk, the need for companies to increase their investment in information security, to prepare and implement cybersecurity incident response plans, to conduct internal comprehensive investigations into the circumstances of a cybersecurity event in order to comply with forthcoming reporting obligations.

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DoD Cybersecurity Rules Expand Contractors’ and Other DoD Awardees’ Obligations to Safeguard Sensitive Data and Report Cyber Incidents

Overview

The United States Department of Defense (“DoD”) recently published two new rules that impose broader obligations to safeguard information that falls within specified categories of sensitive data and to report cyber incidents to the government.  These rules generally apply to companies that have been awarded new DoD procurement contracts, that hold subcontracts under such DoD contracts, or, in some cases, that have been awarded other types of agreements with DoD.  The rules:

  • expand contractors’ and subcontractors’ safeguarding responsibilities and obligations to report and investigate cyber threats;
  • modify the scope of data that contractors and subcontractors must safeguard and the universe of contractors and subcontractors to which the requirements apply;
  • establish requirements for contractors and subcontractors using cloud computing to provide information technology services to DoD, including requiring such contractors to keep government data within the United States, implement DoD-approved safeguards, and limit disclosure of and access to government data;
  • expand and make mandatory DoD’s previously voluntary cyber incident reporting system for defense industrial base (“DIB”) agreement holders; and
  • open DoD’s voluntary cybersecurity information sharing program up to a greater range of agreement holders.

The new rules reflect DoD’s intensified focus on treatment of export controlled technology and other categories of sensitive data.  Awardees of DoD procurement contracts, subcontracts, and other types of instruments such as cooperative agreements are well-advised to make their data-security and export control compliance programs comport with these new requirements.

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Going for Brokerage: SEC Report Highlights Best (and Worst) Practices in Cybersecurity Preparedness

On February 3, 2015, the U.S. Securities and Exchange Commission released a Risk Alert addressing cybersecurity issues at brokerage and advisory firms, along with suggestions to investors on ways they can protect themselves and their online accounts.  FINRA issued a similar, more extensive “Report on Cybersecurity Practices” on the same day.

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