Czech Republic Moves to Expand Infrastructure Cybersecurity Law

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By Jan Stojaspal

The Czech Republic’s Parliament June 7 cleared an amendment to the country’s cybersecurity law that would subject hundreds more companies to strict security requirements and regulatory oversight.

Under the present 2015 law, only critical infrastructure companies in the energy, transportation, water management, and banking sectors are obligated to manage cybersecurity risks and to report security incidents to regulators. The amendment expands those sectors to include financial market, digital, health services and chemical industry infrastructures, and adds a broad new category of digital service providers that includes online marketplace services, search engines, and cloud computing services.

The amendment would also hike maximum fines for noncompliance with the law from 100,000 Czech koruna ($4,275) to 5 million Czech koruna ($213,367), and create a National Bureau for Cyber and Information Security to replace the present National Security Authority.

Although complying with the law will be a challenge for many companies, which will also face new costs, they stand to benefit in the long term, Michal Cabela, a cybersecurity leader at PwC Czech Republic, told Bloomberg BNA June 7.

“On one level, it’s additional regulation, additional interference in the day-to-day of a company,” Cabela said. But “the requirements are reasonable. In fact, any company with a self-preservation instinct would be well-served to apply the law, whether or not it actually has to,” he said.

The amendment brings Czech legislation in full compliance with the European Union’s Network and Information Security Directive (NIS Directive).

The Senate voted 51 to 0 with eight abstentions in favor of the bill June 7, Eva Davidova, the Senate’s press secretary, told Bloomberg BNA.

The bill now goes to the president, who typically signs new legislation within a month, and will be officially promulgated soon after, Davidova said. It would take effect on the first day of the month that follows the month of its promulgation.

Compliance Costs

In introducing the legislation, the government estimated the average cost of compliance at 1.5 million koruna ($63,991) per information system. The cost could climb to 24 million koruna (just over $1 million) per regulated entity, on average, if additional costs, such as staffing requirements and operating expenses, are included.

“It is necessary to realize, however, that the total cost depends on the number of information systems in use and their current security level,” a government report introducing the amendment said.

According to Cabela, a few companies may already have most of the required technical and organizational security measures in place to manage risks.

“Companies with an enlightened management that perceives cybersecurity not as something that is a drain on company resources but as a long-term opportunity to enhance competitiveness will implement the requirements quickly,” he said. “Unfortunately, such companies are in a minority. For an average company, the law will mean substantial investments both into technical measures, and administration and personnel.”

Dozens of companies have had to implement compliance measures since the country’s cybersecurity law took effect in 2015, Cabela said. But those numbers are expected to swell to hundreds of companies, mostly digital service providers, once the amendment is implemented, he said.

To contact the reporter on this story: Jan Stojaspal in Prague at correspondents@bna.com

To contact the editor responsible for this story: Donald Aplin at daplin@bna.com

For More Information

The amendment is available, in Czech, at http://src.bna.com/pz7.

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