NIS2
EU directive strengthening cybersecurity for critical sectors
Basel III
Global framework for bank capital, leverage, liquidity standards.
Quick Verdict
NIS2 mandates cybersecurity resilience for EU critical sectors, while Basel III enforces capital and liquidity standards for global banks. NIS2 drives incident reporting and risk management; Basel III ensures financial stability. Organizations adopt them for regulatory compliance and operational resilience.
NIS2
Directive (EU) 2022/2555 (NIS2)
Key Features
- Broadens scope with size-cap rule for medium/large entities
- Mandates strict 24/72-hour incident reporting timelines
- Enforces direct senior management accountability
- Requires comprehensive supply chain risk management
- Imposes fines up to 2% global annual turnover
Basel III
Basel III: international regulatory framework for banks
Key Features
- Strengthened CET1 capital ratios and buffers
- Non-risk-based 3% leverage ratio backstop
- Liquidity Coverage Ratio for 30-day stress
- Net Stable Funding Ratio for funding stability
- Output floor and RWA disclosure enhancements
Detailed Analysis
A comprehensive look at the specific requirements, scope, and impact of each standard.
NIS2 Details
What It Is
NIS2, officially Directive (EU) 2022/2555, is an EU regulation expanding the original NIS Directive to achieve a high common cybersecurity level across member states. It targets essential and important entities in broadened sectors like energy, transport, and digital infrastructure using a size-cap rule for medium/large organizations. Its risk-based approach emphasizes resilience against modern threats via continuous measures.
Key Components
NIS2 pillars include risk management (assessments, supply chain security, access controls, encryption), incident reporting (24-hour early warning, 72-hour notification, one-month final report), business continuity planning, and corporate accountability holding senior management responsible. It promotes harmonized supervision by national CSIRTs and authorities, incorporating standards like ISO 27001 and NIST CSF.
Why Organizations Use It
Mandatory for covered entities to avoid fines up to €10M or 2% global turnover. Drives resilience, regulatory compliance, stakeholder trust, and competitive edge through proactive cybersecurity, reducing breach risks in interconnected sectors.
Implementation Overview
Involves gap analysis, risk registers, training, supplier audits, and evidence-based assurance for spot checks. Applies to EU entities with 50+ employees or €10M+ turnover in specified sectors. Member states transposed by October 2024; requires ongoing adaptation.
Basel III Details
What It Is
Basel III is the international regulatory framework by the Basel Committee on Banking Supervision (BCBS), developed post-2008 financial crisis. This prudential standard strengthens banks' resilience by improving capital quality and quantity, constraining leverage, and mandating liquidity buffers. It uses a multi-metric, risk-based approach with non-risk-based backstops to address model risks and enhance comparability.
Key Components
- **Pillar 1Minimum ratios (CET1 4.5%, Tier 1 6%, Total Capital 8% of RWA), buffers (2.5% conservation, countercyclical, G-SIB), leverage ratio (3%), LCR/NSFR (100%).
- **Pillar 2Supervisory review (ICAAP, stress testing).
- **Pillar 3Granular disclosures (RWA templates, leverage exposures). Built on Basel II; compliance via national implementation, no certification.
Why Organizations Use It
- Mandatory via jurisdictional laws for banks.
- Builds resilience, constrains systemic leverage, improves liquidity.
- Enhances transparency, market discipline, funding costs.
- Strategic benefits: optimized balance sheets, reduced arbitrage.
Implementation Overview
Phased enterprise transformation: governance, data systems, models, training. Targets internationally active banks globally; involves reporting, supervisory oversight.
Key Differences
| Aspect | NIS2 | Basel III |
|---|---|---|
| Scope | Cybersecurity risk management, incident reporting, supply chain security | Bank capital, leverage ratio, liquidity standards (LCR/NSFR) |
| Industry | Essential/important entities in EU sectors (energy, transport, digital) | Internationally active banks globally |
| Nature | Mandatory EU directive, national transposition | Global prudential standards, national implementation |
| Testing | Incident reporting, risk assessments, spot checks | Stress testing, ICAAP, supervisory review (Pillar 2) |
| Penalties | Up to 2% global turnover or €10M fines | Capital add-ons, restrictions, supervisory enforcement |
Scope
Industry
Nature
Testing
Penalties
Frequently Asked Questions
Common questions about NIS2 and Basel III
NIS2 FAQ
Basel III FAQ
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