Effective cybersecurity is about both implementing robust defenses and ensuring compliance with complex regulations. Between firewalls, endpoint detection, and continuous authentication solutions, organizations must also align with various international compliance standards. The tricky part is these standards can go beyond borders.
The NIS2 Directive (Network and Information Security Directive 2), a sweeping piece of EU legislation, might seem like it’s only relevant to companies headquartered in the European Union. However, its regulations can also apply to US businesses, especially those working with European partners or offering essential services.
What is NIS2 compliance, and why does it matter?
The NIS2 Directive is the EU’s latest push to revolutionize cybersecurity practices, aimed at fortifying both public and private sectors against the ever-growing tide of cyberthreats. Building on the foundation set by its predecessor, the original NIS Directive, NIS2 raises the bar by offering a more comprehensive approach, expanded sector coverage, and stricter expectations for cyber resilience.
At its core, NIS2 compliance strives to:
- Strengthen the cybersecurity posture of critical industries
- Promote consistent cybersecurity risk management measures across the EU
- Improve incident response readiness and incident management strategies
- Increase cross-border cooperation between EU member states during cyber incidents
What’s required to be NIS2-compliant?
Meeting NIS2 compliance involves implementing appropriate security measures across your digital infrastructure and operations. Below is a breakdown of key requirements:
Risk assessment
Organizations must regularly evaluate their exposure to cyberthreats, considering both internal and external vulnerabilities. These risk management activities should be proactive and documented, serving as the foundation for all other security planning.
Access control
Organizations must apply strict access control policies that limit user permissions to only what’s necessary for their roles. It also includes maintaining audit trails and preventing unauthorized access to critical network and information systems.
Multifactor authentication
Organizations must implement multifactor authentication for systems containing sensitive data or critical infrastructure. This adds a necessary layer of identity verification beyond basic passwords, significantly lowering the chances of security breaches.
Vulnerability management
Organizations must implement comprehensive vulnerability management by regularly scanning their systems for weaknesses. This entails promptly assessing and prioritizing identified vulnerabilities based on potential impact, applying timely patches or remediation measures, and maintaining an accurate and up-to-date inventory of all assets to effectively minimize cyber risks.
Incident response
Every business must establish a designated incident response team and have a well-defined process for reporting, investigating, and mitigating any potential breaches. Additionally, organizations should conduct regular drills to test their response capabilities.
Incident reporting obligations
It’s crucial for businesses to report any significant cybersecurity incidents to the Computer Security Incident Response Team (CSIRT) or any competent authority designated by your member state or the one you are working with within the first 72 hours upon discovery. Follow-up reports detailing the incident’s impact and response efforts are also required, depending on the national law of the affected EU member state.
Business continuity
Organizations must create and maintain strategies to keep critical operations running during and after a cyber incident. These strategies must take into account failover systems and recovery time objectives aligned with operational priorities.
Supply chain security
Evaluating and managing the cybersecurity practices of third-party service providers is essential. It involves ensuring compliance, clearly outlining shared responsibilities, and addressing potential cyber risks within interconnected supply chains.
Security monitoring
Proper security monitoring requires real-time system and network tracking, supported by logging, threat detection tools, and centralized visibility to quickly identify and respond to potential breaches or anomalies.
Cybersecurity training
Effective cybersecurity training involves regular sessions on phishing detection, strong password practices, social engineering tactics, and safeguarding sensitive data. In conducting training sessions, use real-world examples, interactive exercises, and updated content to keep employees vigilant to all threats.
Data protection and encryption
Organizations must apply encryption and other data protection methods to safeguard information in transit and at rest. This minimizes the risk of data exposure during breaches or unauthorized access.
Audits, governance, and accountability
Organizations must maintain clear oversight of their cybersecurity obligations, including internal audits, documented security policies, and clear delegation of responsibilities to senior management. This fosters long-term corporate accountability and prepares the organization for external assessments.
Who is subject to NIS2?
NIS2 broadens its reach to include a wide variety of public and private entities throughout the EU. These are divided into two categories:
- Essential entities: Organizations in energy, transport, banking and financial market infrastructure, healthcare, water, digital infrastructure, public administration, space systems
- Important entities: Postal and courier services, chemicals, food and manufacturing, scientific research, digital service providers (including cloud platforms, online marketplaces, and search engines)
Any US business supplying services or technology to these essential and important entities — directly or through the supply chain — may be affected. The expanded scope means compliance may be necessary even if a business has no direct EU presence.
What are the penalties for noncompliance?
Noncompliance with NIS2 requirements can result in serious financial and operational consequences.
Financial penalties
Essential entities may face fines up to €10 million ($11.7 million, as of July 2025) or 2% of global annual turnover, whichever is higher. For important entities, the maximum is €7 million ($8.2 million) or 1.4% of turnover. These penalties reflect the EU’s push for stronger risk management measures and greater accountability from organizations that provide critical infrastructure or support digital services.
Nonfinancial sanctions
Beyond financial penalties, organizations may be subject to mandatory audits, required disclosure of breaches to customers, or temporary bans on business activities. Authorities can also issue binding instructions requiring specific security measures or improvements to the entity’s cybersecurity measures.
Personal liability for management
Executives and senior management may be held personally accountable for repeated or egregious cybersecurity failures. Penalties could include public breach disclosures, temporary bans from executive roles, or direct legal consequences, all of which can affect the organization’s reputation. Such punishments also raise the stakes for leadership, placing a clear expectation on board-level involvement in cybersecurity risk management.
What does this mean for US businesses?
Although NIS2 is legislated by the EU, its reach extends to US businesses that interact with EU-based partners, clients, or platforms. Companies providing essential services or digital infrastructure to EU organizations may be required to comply with NIS2 either contractually or by extension through supply chain security agreements.
The upside is many NIS2 compliance requirements already align with existing US regulations such as HIPAA, PCI DSS, and ISO 27001. Businesses that already take cybersecurity compliance seriously are likely ahead of the curve.
What should US businesses do?
To align with NIS2 and strengthen their cybersecurity posture, US businesses can follow these actionable steps:
- Conduct regular risk assessments and document findings.
- Review and enhance access control and multi factor authentication methods.
- Establish and test incident response and business continuity plans.
- Implement proactive vulnerability management processes.
- Deliver ongoing cybersecurity training to employees.
- Evaluate third-party vendors for supply chain cybersecurity risks.
- Document governance structures and track compliance through audits.
Let’s simplify compliance together
NIS2 regulations may feel overwhelming, but with the right strategy, they can provide an easy framework to secure your business. Dynamic Solutions Group helps you meet stringent security requirements and reduce exposure to cyber incidents with expert support and tailored solutions.
Reach out today to build smarter, stronger cybersecurity risk management measures that protect your business and keep you globally competitive.
