NIS2: How New EU Regulations Impact Businesses Worldwide

As technological advancements continue to shape our world, the European Union is proactively strengthening the security of its digital infrastructure. The upcoming NIS2 Directive, set to be enforced from October 2024, represents a significant step in this direction. It broadens the scope of cybersecurity governance by incorporating additional industries and sectors, enhancing reporting mechanisms, involving senior management in cybersecurity efforts, and increasing accountability through legal and financial penalties. This directive is poised to revolutionize the cybersecurity landscape in Europe, empowering companies to embrace technological innovations with greater confidence.

Ripple Effects on Global Businesses

NIS2’s influence will extend far beyond European borders due to the interconnected nature of today’s business environment. The directive’s ripple effects will significantly impact global businesses in several ways:

1. Supply Chain Security

One of the most significant aspects of NIS2 is its emphasis on securing the supply chain. Non-EU companies that do business with EU entities must ensure their cybersecurity measures meet the directive’s stringent requirements. This necessitates significant investments in cybersecurity practices to maintain business relationships within the EU.

NIS2 compliance will impact over 160,000 European businesses, potentially rising to over 1 million globally due to interconnected supply chains.

The following diagram illustrates the critical sector dependencies, highlighting that no region can operate independently, thus expanding the impact of NIS2 compliance beyond EU boundaries. 

Source( Mckinsey)

2. Data Protection and Privacy

The directive mandates rigorous data protection standards, impacting any business handling EU citizens’ data. This extends the reach of the General Data Protection Regulation (GDPR), compelling global companies to align their data protection strategies with EU standards. Non-compliance can lead to substantial fines and loss of business opportunities within the EU market.

GDPR has already imposed fines totalling over €1.5 billion since its enforcement, highlighting the financial implications of non-compliance. Following Infographic shows the fines imposed under GDPRS. Source (European Data Protection Board).

3. Incident Reporting and Transparency

NIS2 requires prompt incident reporting and increased transparency regarding cybersecurity incidents. Global companies must adapt by implementing mechanisms to swiftly and comprehensively report incidents. This shift promotes a culture of transparency and accountability, enhancing cybersecurity practices worldwide.

Prompt incident reporting can significantly reduce the cost of a data breach, with studies showing that companies with robust reporting mechanisms save an average of 10% on breach-related costs.

4. Increased Compliance Costs

Compliance with NIS2 can entail significant costs, particularly for businesses outside the EU. Companies will need to invest in cybersecurity infrastructure, training, and compliance measures. While these investments enhance overall security, they also present a financial challenge, especially for small and medium-sized enterprises (SMEs) seeking to operate in the EU market.

The average cost of achieving full NIS2 compliance for a medium-sized enterprise is estimated to be between €200,000 and €500,000.

5. Impact on Digital Services and Products

Businesses offering digital services and products must ensure their offerings comply with NIS2 regulations. This includes cloud service providers, software developers, and more. Companies will need to implement security-by-design principles and regularly update their products to address emerging threats.

Over 60% of European businesses are expected to update their cybersecurity measures to comply with NIS2, impacting global digital service providers.

Way Forward

NIS2 establishes a robust cybersecurity framework that is likely to inspire similar regulations globally. Its stringent standards may set a new benchmark for cybersecurity practices worldwide. Non-EU companies that comply with these standards will stay competitive and gain the trust of their EU partners and customers, contributing to a more cohesive and secure global digital ecosystem. 

As the NIS2 Directive takes effect, businesses worldwide must adapt. Start your compliance journey today by completing downloading our free NIS2 applicability assessment: here. For more in-depth support, contact Tisalabs at

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