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Understanding Germany's IT Security Act 2.0
The IT Security Act 2.0, which was passed by the German Bundestag and Bundesrat in spring 2021, came into effect at the end of May 2023.
Due to the increased IT security obligations and higher fines, the numerous changes to the central German IT Security Act, specifically the Law on the Federal Office for Information Security (BSI-Gesetz), are particularly relevant for operators of critical infrastructures already covered by the BSI-Gesetz, as well as for companies in the municipal waste disposal sector, manufacturers of IT products used in critical infrastructures, and companies of special public interest.
The IT Security Act 2.0 and the second KRITIS regulation have far-reaching consequences. While there was previously a transition period for implementing the new requirements, companies must now comply with the requirements of the Federal Act on the Security of Information Technology (BSIG) from the first working day on which they meet the threshold values of the second KRITIS regulation.
This means that from the first day after the IT Security Act 2.0 and the second KRITIS regulation come into effect, potential operators of critical infrastructures must adhere to the requirements of the IT Security Act 2.0. Failure to comply with the requirements can result in significant fines of up to 20 million euros imposed by the Federal Office for Information Security (BSI).
This post will cover the scope and applicability of the Act, exploring the new definitions and audit and security requirements for both critical infrastructure operators and digital service providers. Additionally, we will explore the voluntary IT security label, the reporting requirements and new regime for the administrative fines associated with non-compliance to the new Act.
Additionally, this post aims at providing an overview of the requirements for both critical infrastructure operators and digital service providers so that organizations can be in a better position to understand what aspects they will need to prioritize as part of their security programme should their business be in scope for the new IT Security Act.
Should you require support in determining if this new law applied to you, feel free to engage with one of our experts at Vanta.
Scope and applicability
The IT Security Act 2.0 applies to operators of critical infrastructure (KRITIS-Betreiber), which includes sectors such as energy, information technology, telecommunications, transportation, healthcare, finance, water supply, waste management and more.
Operators are identified based on predefined criteria, such as their significance for the functioning of society and the potential consequences of IT security incidents.
Key terms and definitions
The Act identifies a number of definitions to support an easier application of the requirements including concepts such as information technology, security in information technology, federal communications technology, harmful software, security gaps, certification, protocol data, data traffic, IT products, systems for attack detection, critical infrastructures, digital services, provider of digital services, critical components, and companies in the special public interest.
These definitions aim to provide clarity and common understanding of the terms used within the context of the law. By clearly defining these terms, it helps ensure consistent interpretation and application of the law's provisions. The definitions cover various aspects of information technology, security, infrastructure, and services, providing a comprehensive framework for the implementation and enforcement of the law.
Overall, these definitions play a crucial role in establishing a common language and understanding for all stakeholders involved in the protection of critical infrastructures and the security of information technology. They lay the foundation for effective communication, compliance, and enforcement efforts, helping to safeguard the integrity, availability, and confidentiality of information and IT systems.
Audits and inspections
The BSI is empowered to conduct audits and inspections to verify compliance with the law's requirements. Audits may include reviewing documentation, conducting on-site inspections, and assessing the effectiveness of security measures implemented by operators. Non-compliance with the law can result in penalties, including fines.
Authority of the Federal Office
The Federal Office is responsible for gathering and evaluating information to prevent threats to information technology security. This includes identifying security gaps, malware, successful or attempted attacks, and the methods used. It promptly informs federal authorities about relevant information and facts related to IT security. Overall, Section 4 establishes the Federal Office as a central hub for information sharing and coordination among federal authorities, ensuring a proactive approach to information technology security and facilitating effective response measures.
Other federal authorities are required to inform the Federal Office without delay if they become aware of significant information related to IT security. However, there are exceptions for information that is confidential or protected by constitutional status. The Federal Office has the authority to monitor the security of federal communications technology and can request information, access data processing systems, and examine devices used for federal communications technology.
Additionally, the Federal Office serves as the general registration office for security in information technology. It receives information from third parties about security risks and evaluates this information. The reported information is used to inform the public, federal authorities, operators of critical infrastructures, and companies in the public interest. However, the disclosure of reported information may be limited if it contains trade secrets or business secrets.
Section 7a of the Act establishes the authority of the Federal Office to examine the security of information technology products and systems. The Federal Office can request manufacturers to provide necessary information for the examination, including technical details. The obtained information is promptly shared with relevant supervisory authorities, and the findings may be shared and published if necessary for fulfilling the Federal Office's tasks. Non-compliance by manufacturers with information requests can result in public disclosure of the non-compliance, including the manufacturer's name and details of the affected product or system. However, manufacturers are given an opportunity to comment before any disclosure occurs. This section ensures that information technology products and systems undergo rigorous security examinations, promotes information sharing, and holds manufacturers accountable for complying with security requirements.
In summary, Section 7a grants the Federal Office the power to examine the security of information technology products and systems. It requires manufacturers to provide necessary information for the examination and mandates the prompt sharing of findings with relevant authorities. The section also establishes the possibility of public disclosure in cases of non-compliance by manufacturers. By enforcing stringent security examinations and promoting transparency, this section contributes to enhancing the overall security of information technology systems.
Requirements for operators of critical infrastructures
Under the legislation, operators of critical infrastructures are required to implement appropriate measures to protect the security of their information technology systems. These measures should prevent disruptions and ensure the availability, integrity, authenticity, and confidentiality of the systems.
Operators must use systems for attack detection and develop incident response plans. They can propose industry-specific security standards, which will be assessed by the Federal Office. Compliance with the requirements must be demonstrated every two years through security audits, reviews, or certifications. The Federal Office has the authority to review compliance and may involve independent third parties. Operators must provide access and support during these reviews. The Federal Office can define requirements for security audits and certifications in consultation with industry representatives. Additionally, The operators must ensure that they can be reached at any time via the contact point named or specified by the Federal Office
The operators of critical infrastructures shall appropriately prove compliance with the requirements at least every two years. This evidence may be provided by means of security audits, reviews or certifications. The operators shall provide the Federal Office with the results of the audits, reviews or certifications performed including any security deficiencies identified. The Federal Office may request the provision of the documentation on which the assessment was based. In the event of security deficiencies, the Federal Office may request remedy of the security deficiencies.
Special requirements for providers of digital services
Section 8c of the legislation introduces special requirements for providers of digital services. These providers are obligated to implement suitable technical and organizational measures to manage risks to the security of their network and information systems used for providing services within the European Union. These measures aim to prevent or minimize the effects of security incidents. The detailed requirements for these measures are defined by implementing acts of the Commission.
Providers of digital services must immediately report any security incidents that materially affect the provision of their services within the European Union to the Federal Office. The determination of material effect and the content of the reports are specified by implementing acts of the Commission. If the provider lacks sufficient access to the necessary information to evaluate the impact of the incident, the reporting obligation does not apply. In cases where the reported security incidents affect another EU Member State, the Federal Office informs the competent authority of that Member State.
If there are indications that a provider of digital services is not meeting the requirements, the Federal Office can request certain measures from the provider. These measures may include transferring information for security evaluation, providing evidence of security measures taken, and rectifying any non-compliance. The Federal Office cooperates with the competent authority of another EU Member State if the provider is based there, in fulfilling these tasks and requesting measures if necessary.
Security in information technology in companies in the special public interest
This section of the IT Security law imposes obligations on companies in the special public interest regarding IT security. Here are the key points:
- Companies must submit a self-declaration on IT security to the Federal Office, providing information about certifications, security audits, or protection measures implemented in the last two years.
- The Federal Office can provide guidance on organizational and technical precautions based on the self-declaration.
- Companies have specific deadlines for submitting self-declarations based on their classification.
- Companies must register with the Federal Office and provide contact information.
- Optional registration is available for companies not falling under the first two categories.
- Companies must promptly report disruptions that affect the availability, integrity, authenticity, and confidentiality of their IT systems.
- By November 1, 2021, companies falling under a different category must report disruptions as per the Major Incidents Ordinance.
- The Federal Office can verify a company's status by requesting information on domestic added value or confirmation from an auditing firm.
- These provisions ensure that companies in the special public interest comply with IT security requirements through self-declarations, reporting of disruptions, and registration with the Federal Office.
Critical components prohibitions
Under Section 9b of the legislation, the use of critical components in critical infrastructures is subject to certain prohibitions and requirements. Here are the key points:
- Notification Requirement: Operators of critical infrastructures must notify the Federal Ministry of the Interior, Building and Community in advance about the planned deployment of a critical component, specifying the component and its intended use. This requirement does not apply if the operator has already reported the use of another critical component of the same type and use that has not been prohibited.
- Prohibition and Orders: The Ministry, in consultation with relevant departments and the Federal Foreign Office, has the authority to prohibit the deployment of a critical component or issue orders to the operator if the deployment could compromise public order or security in Germany. Factors considered include the manufacturer's control by a foreign government, involvement in activities impacting security, and alignment with security policy goals.
- Guarantee Declaration: Critical components can only be used if the manufacturer provides a guarantee declaration to the operator. This declaration demonstrates that the component does not have features that could be exploited for malicious purposes. The Federal Ministry, in agreement with relevant departments and the Federal Foreign Office, sets the minimum requirements for the guarantee declaration.
- Prohibition of Continued Use: If indications of manufacturer untrustworthiness arise, such as violations of obligations or technical risks, the Ministry can prohibit the continued use of the critical component or issue orders to the operator. In severe cases, a prohibition may be issued.
- Impact on Other Components: If the further use of a critical component is prohibited, the Ministry can also prohibit the planned use of other components of the same type and manufacturer, as well as the continued use of existing components, with a reasonable compliance period provided.
Voluntary IT security label
The legislation introduces a voluntary IT security label to inform consumers about product security. The label consists of a manufacturer's declaration and security information provided by the Federal Office. Manufacturers must meet specific IT security requirements and obtain approval. The label is attached to the product or published online, directing consumers to access relevant information. The Federal Office ensures compliance and can take action if discrepancies or security gaps are identified.
Section 13 of the legislation outlines reporting obligations of the Federal Office. The office must inform the Federal Ministry of the Interior about its activities, which are used to inform the public about IT security risks through an annual report.
The Federal Office also shares information with the Commission regarding critical infrastructure operators, sectors, and services, while ensuring confidentiality. Consultations are initiated with other EU Member States regarding critical services in shared sectors.
Additionally, the Federal Office submits a summary report to the cooperation group on reported security incidents, measures taken, and anonymized data. Operators are obligated to report significant IT security incidents to the BSI. The law specifies the types of incidents that need to be reported, including incidents that could have a significant impact on critical infrastructure or public safety. Reporting timelines and procedures are defined to ensure prompt communication and response to incidents.
Fines for administrative offenses
Section 14 of the legislation outlines regulations on fines for administrative offenses. It specifies various actions that are considered offenses, including failure to comply with precautionary measures, violation of enforceable orders, failure to provide required information or reports, and non-compliance with registration or documentation requirements.
The fines for these offenses range from up to EUR 50,000 to up to EUR 2 million, depending on the specific violation and intentionality. Negligent acts are also considered offenses. Violations related to ENISA and cybersecurity certification can result in fines of up to EUR 1 million or up to EUR 2 million, depending on the offense.
Determine whether the GDPR applies to you and if so, if you are a processor or controller (or both)
Do you sell goods or service in the EU or UK?
Do you sell goods or services to EU businesses, consumers, or both?
Do you have employees in the EU or UK?
Do persons from the EU or UK visit your website?
Do you monitor the behavior of persons within the EU?
Create a Data Map by taking the following actions
Identify and document every system (i.e. database, application, or vendor) which stores or processes EU or UK based personally identifiable information (PII)
Document the retention periods for PII in each system
Determine whether you collect, store, or process “special categories” of data
Determine whether your Data Map meets the requirements for Records of Processing Activities (Art. 30)
Determine whether your Data Map includes the following information about processing activities carried out by vendors on your behalf
Determine your grounds for processing data
For each category of data and system/application have you determined the lawful basis for processing based on one of the following conditions?
Take inventory of current customer and vendor contracts to confirm new GDPR-required flow-down provisions are included
Review all customer contracts to determine that they have appropriate contract language (i.e. Data Protection Addendums with Standard Contractual Clauses)
Review all in-scope vendor contracts to determine that they have appropriate contract language (i.e. Data Protection Addendums with Standard Contractual Clauses)
Have you performed a risk assessment on vendors who are processing your PII?
Determine if you need to do a Data Protection Impact Assessment
Is your data processing taking into account the nature, scope, context, and purposes of the processing, likely to result in a high risk to the rights and freedoms of natural persons?
Review product and service design (including your website or app) to ensure privacy notice links, marketing consents, and other requirements are integrated
Does the notice to the data subject include the following items?
Does the notice also include the following items?
Do you have a mechanism for persons to change or withdraw consent?
Update internal privacy policies to comply with notification obligations
Update internal privacy notices for EU employees
Determine if you need to appoint a Data Protection Officer, and appoint one if needed
Have you determined whether or not you must designate a Data Protection Officer (DPO) based on one of the following conditions (Art. 37)?
If you export data from the EU, consider if you need a compliance mechanism to cover the data transfer, such as model clauses
If you transfer, store, or process data outside the EU or UK, have you identified your legal basis for the data transfer (note: most likely covered by the Standard Contractual Clauses)
Have you performed and documented a Transfer Impact Assessment (TIA)?
Confirm you are complying with other data subject rights (i.e. aside from notification)
Do you have a defined process for timely response to Data Subject Access Requests (DSAR) (i.e. requests for information, modification or deletion of PII)?
Are you able to provide the subject information in a concise, transparent, intelligible and easily accessible form, using clear and plain language?
Do you have a process for correcting or deleting data when requested?
Do you have an internal policy regarding a Compelled Disclosure from Law Enforcement?
Determine if you need to appoint an EU-based representative, and appoint one if needed
Have you appointed an EU Representative or determined that an EU Representative is not needed based on one of the following conditions?
If operating in more than one EU state, identify a lead Data Protection Authority (DPA)
Do you operate in more than one EU state?
If so, have you designated the Supervisory Authority of the main establishment to act as your Lead Supervisory Authority?
Implement Employee Trainings to Demonstrate Compliance with GDPR Principles and Data Subject Rights
Have you provided appropriate Security Awareness and Privacy training to your staff?
Update internal procedures and policies to ensure you can comply with data breach response requirements
Have you created and implemented an Incident Response Plan which included procedures for reporting a breach to EU and UK Data Subjects as well as appropriate Data Authorities?
Do breach reporting policies comply with all prescribed timelines and include all recipients i.e. authorities, controllers, and data subjects?
Implement appropriate technical and organizational measures to ensure a level of security appropriate to the risk
Have you implemented encryption of PII at rest and in transit?
Have you implemented pseudonymization?
Have you implemented appropriate physical security controls?
Have you implemented information security policies and procedures?
Can you access EU or UK PII data in the clear?
Do your technical and organizational measure ensure that, by default, only personal data which are necessary for each specific purpose of the processing are processed?
Develop a roadmap for successful implementation of an ISMS and ISO 27001 certification
Implement Plan, Do, Check, Act (PDCA) process to recognize challenges and identify gaps for remediation
Consider ISO 27001 certification costs relative to org size and number of employees
Clearly define scope of work to plan certification time to completion
Select an ISO 27001 auditor
Set the scope of your organization’s ISMS
Decide which business areas are covered by the ISMS and which are out of scope
Consider additional security controls for business processes that are required to pass ISMS-protected information across the trust boundary
Inform stakeholders regarding scope of the ISMS
Establish an ISMS governing body
Build a governance team with management oversight
Incorporate key members of top management, e.g. senior leadership and executive management with responsibility for strategy and resource allocation
Conduct an inventory of information assets
Consider all assets where information is stored, processed, and accessible
- Record information assets: data and people
- Record physical assets: laptops, servers, and physical building locations
- Record intangible assets: intellectual property, brand, and reputation
Assign to each asset a classification and owner responsible for ensuring the asset is appropriately inventoried, classified, protected, and handled
Execute a risk assessment
Establish and document a risk-management framework to ensure consistency
Identify scenarios in which information, systems, or services could be compromised
Determine likelihood or frequency with which these scenarios could occur
Evaluate potential impact of each scenario on confidentiality, integrity, or availability of information, systems, and services
Rank risk scenarios based on overall risk to the organization’s objectives
Develop a risk register
Record and manage your organization’s risks
Summarize each identified risk
Indicate the impact and likelihood of each risk
Document a risk treatment plan
Design a response for each risk (Risk Treatment)
Assign an accountable owner to each identified risk
Assign risk mitigation activity owners
Establish target dates for completion of risk treatment activities
Complete the Statement of Applicability worksheet
Review 114 controls of Annex A of ISO 27001 standard
Select controls to address identified risks
Complete the Statement of Applicability listing all Annex A controls, justifying inclusion or exclusion of each control in the ISMS implementation
Continuously assess and manage risk
Build a framework for establishing, implementing, maintaining, and continually improving the ISMS
Include information or references to supporting documentation regarding:
- Information Security Objectives
- Leadership and Commitment
- Roles, Responsibilities, and Authorities
- Approach to Assessing and Treating Risk
- Control of Documented Information
- Internal Audit
- Management Review
- Corrective Action and Continual Improvement
- Policy Violations
Assemble required documents and records
Review ISO 27001 Required Documents and Records list
Customize policy templates with organization-specific policies, process, and language
Establish employee training and awareness programs
Conduct regular trainings to ensure awareness of new policies and procedures
Define expectations for personnel regarding their role in ISMS maintenance
Train personnel on common threats facing your organization and how to respond
Establish disciplinary or sanctions policies or processes for personnel found out of compliance with information security requirements
Perform an internal audit
Allocate internal resources with necessary competencies who are independent of ISMS development and maintenance, or engage an independent third party
Verify conformance with requirements from Annex A deemed applicable in your ISMS's Statement of Applicability
Share internal audit results, including nonconformities, with the ISMS governing body and senior management
Address identified issues before proceeding with the external audit
Undergo external audit of ISMS to obtain ISO 27001 certification
Engage an independent ISO 27001 auditor
Conduct Stage 1 Audit consisting of an extensive documentation review; obtain feedback regarding readiness to move to Stage 2 Audit
Conduct Stage 2 Audit consisting of tests performed on the ISMS to ensure proper design, implementation, and ongoing functionality; evaluate fairness, suitability, and effective implementation and operation of controls
Address any nonconformities
Ensure that all requirements of the ISO 27001 standard are being addressed
Ensure org is following processes that it has specified and documented
Ensure org is upholding contractual requirements with third parties
Address specific nonconformities identified by the ISO 27001 auditor
Receive auditor’s formal validation following resolution of nonconformities
Conduct regular management reviews
Plan reviews at least once per year; consider a quarterly review cycle
Ensure the ISMS and its objectives continue to remain appropriate and effective
Ensure that senior management remains informed
Ensure adjustments to address risks or deficiencies can be promptly implemented
Calendar ISO 27001 audit schedule and surveillance audit schedules
Perform a full ISO 27001 audit once every three years
Prepare to perform surveillance audits in the second and third years of the Certification Cycle
Consider streamlining ISO 27001 certification with automation
Transform manual data collection and observation processes into automated and continuous system monitoring
Identify and close any gaps in ISMS implementation in a timely manner
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Determine which annual audits and assessments are required for your company
Perform a readiness assessment and evaluate your security against HIPAA requirements
Review the U.S. Dept of Health and Human Services Office for Civil Rights Audit Protocol
Conduct required HIPAA compliance audits and assessments
Perform and document ongoing technical and non-technical evaluations, internally or in partnership with a third-party security and compliance team like Vanta
Document your plans and put them into action
Document every step of building, implementing, and assessing your compliance program
Vanta’s automated compliance reporting can streamline planning and documentation
Appoint a security and compliance point person in your company
Designate an employee as your HIPAA Compliance Officer
Schedule annual HIPAA training for all employees
Distribute HIPAA policies and procedures and ensure staff read and attest to their review
Document employee trainings and other compliance activities
Thoroughly document employee training processes, activities, and attestations
Establish and communicate clear breach report processes
to all employees
Ensure that staff understand what constitutes a HIPAA breach, and how to report a breach
Implement systems to track security incidents, and to document and report all breaches
Institute an annual review process
Annually assess compliance activities against theHIPAA Rules and updates to HIPAA
Continuously assess and manage risk
Build a year-round risk management program and integrate continuous monitoring
Understand the ins and outs of HIPAA compliance— and the costs of noncompliance
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