European Union: The Effect Of Brexit On Cyber Security: A National Response To An International Threat?

As the risk of cyber attacks respects no borders, a cohesive and harmonised EU-level approach to cyber security is appropriate. It is therefore understandable that UK organisations have questions following the recent referendum result, and the UK's imminent split from the EU. How your organisation should react to Brexit from a cyber security perspective is still uncertain. However, the UK currently remains part of the EU and will continue to do so until a withdrawal agreement has entered into force, or, by default, at the end of the two-year negotiation period following the invocation of Article 50 of the Lisbon Treaty. As it stands, EU regulations and directives, and the statutory instruments transposing those directives into UK law, still have effect. But what will the future of cyber security in the UK look like?

The Current EU Cyber Security Framework In 2013 the European Commission proposed the Network and Information Security Directive (NISD), with the objective of harmonising the European approach to combating cyber risk. In May 2016 the European Council formally adopted the new rules which aim to:

• Improve cooperation between member states on the issue of cyber security.
• Improve and standardise cyber security capabilities in member states.
• Require each EU country to designate one or more national authorities.
• Ensure that operators of essential services in critical sectors (e.g., banking, health care, energy, and transport), and key digital service providers (e.g., online marketplaces, search engines and cloud services), take appropriate security measures and report cyber security incidents to the national authorities.
• Establish an EU-wide strategy for dealing with cyber threats.

The NISD will build on previous directives such as directives 2002/58/EC and 2002/21/EC, which placed obligations on organisations in the electronic communications sector to implement appropriate technical and organisational measures to ensure the security of personal data and protect the integrity of their systems. The NISD intends to harmonise the varied implementation of these directives by requiring each member state to implement a national network and information security strategy, a minimum threshold for the harmonisation of security, and mandatory incident notification. Cooperation between both public and private entities is an essential component of the NISD, allowing for the circulation of early warnings on risks and incidents to ensure a coordinated response.

The Current UK Cyber Security Framework

The UK currently has a patchwork body of legislation and guidance to deal with cyber risk:

• The Communications Act 2003 places obligations on public electronic communications network and service (PECN/PECS) providers to ensure security and notify breaches and reductions in availability to Ofcom, the regulatory body that enforces the act.
• The Privacy and Electronic Communications (EC Directive) Regulations 2003 as amended in 2011 place obligations on PECS providers to take appropriate technical and organisational measures to safeguard the security of their services. The Information Commissioner's Office (ICO) must be notified of any personal data breach "without undue delay" or at least within 24 hours after the detection of the breach.
• The Data Protection Act 1998 imposes various obligations on data controllers including a requirement to take appropriate technical and organisational measures against unauthorised or unlawful processing and against accidental loss or destruction of or damage to personal data.
• The Computer Misuse Act 1990 as amended by the Serious Crime Act 2015 criminalises cyber offences such as unauthorised access to or interference with a computer and the impairing of a computer such as to cause serious damage.

Both  Ofcom and the ICO have provided extensive guidance on best practice and how to comply with the legal requirements. The majority of cyber risks can be mitigated through the implementation of fairly basic policies and procedures, such as updating outdated software and systems. Organisations can protect themselves even further by implementing more technical compliance measures including the use of encryption, firewalls, and antivirus software.

As we reported in May, the Department for Culture, Media and Sport revealed cyber risk as one of the biggest threats to UK businesses and announced a raft of measures to tackle the issue on a national level. The House of Commons Culture, Media and Sport Committee more recently released a report outlining several cyber security recommendations. These include the implementation of custodial sentences for certain cyber security offences, the identification and sanctioning of those guilty of failing to ensure appropriate levels of cyber security within organisations, the implementation of breach response plans, and a new ICO 'sliding scale' of fines based on failures to respond to previously exploited security vulnerabilities. The National Crime Agency and the Strategic Cyber Industry Group recently released their 2016 cyber crime assessment, highlighting the immediate threat of cyber crime for UK businesses, outlining proposals for addressing this threat, and calling for greater cooperation between businesses, government, law enforcement and other bodies.

The above table illustrates that the UK already matches the EU in its capacity to provide most of the cyber security functions crucial to addressing cyber risk. The importance of an EU-wide coordinated effort to combat cyber risk will not be forgotten during withdrawal negotiations and in deciding whether and to what extent the UK should implement the NISD. Although no stand-alone cyber security act has been implemented in the UK, it does have the issue very firmly on its agenda and boasts a varied offering of legislative protections, regulatory guidance, and information sharing and preparedness schemes.

Cyber Security and Outsourcing

The effect of Brexit on cyber security outsourcing is already evident. The stark drop in the value of the pound directly increases the cost to UK businesses of outsourcing cyber security functions to overseas providers. Compliance with UK and EU (where businesses are trading in the EU) cyber security legislation will therefore represent a higher financial and administrative cost as organisations analyse alternative options, such as bringing online security functions in-house. Unless the pound significantly recovers, this negative consequence is unavoidable and organisations should simply be aware of it and factor these increased costs into their budgets.

The Future of UK Cyber Security

As the UK remains part of the EU until negotiations close and a withdrawal agreement has been signed (or the two year negotiation period has elapsed), it is technically under an obligation to transpose the NISD into its national law. The NISD is likely to enter into force this autumn, following which member states will have a 21 month period to implement its provisions. The UK, in the absence of any finalised withdrawal agreement, will therefore be required to adopt the NISD. This should not be a point of concern as most commentary on the NISD has been positive: it outlines a practical and reasonable approach to countering cyber risk on a European scale through planning requirements, the exchange of information, cooperation and common security requirements.

What if the UK decided against the implementation of the NISD? The UK bodies which currently address the cyber threat and ensure compliance with cyber security legislation already cover many of the functions that EU cyber security bodies such as ENISA provide, including those that will be set up under the NISD. However, the NIS Cooperation Group (established by the NISD) will provide a unique and mutually beneficial tool in the prevention of cyber crime. As cyber risk is such an international issue, it would be unlikely that the UK would elect to tackle cyber risk alone, in the face of the clear benefits that a coordinated European information-sharing effort would provide. Further, the setting of minimum cyber security standards and planning requirements is of clear mutual benefit. It may therefore be wise for organisations operating in the UK to proceed under the expectation of a UK implementation of the NISD.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.