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2nd Dec 2022

Cyber-risk from Internet of Things prompts new EU rules

  • It is estimated that every 11 seconds there is a ransomware attack targeting an organisation across the globe (Photo: European Commission)
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Manufacturers selling smart devices connected to the internet in the EU internal market will have to comply with certain cybersecurity standards under a new bill announced by the European Commission on Thursday (15 September).

Firms making digitally-connected items such as security cameras, toys, cars, fridges or even mobile apps, will face fines of up to up to €15m or 2.5 percent of their global turnover if found in breach of the new rules — but which still need the approval of EU countries and MEPs.

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The new rules come amid widespread concern over the increasing number of cyberattacks and data breaches last year when remote work and lockdowns drove up worldwide internet traffic.

With more-and-more connected devices coming onto the market, these new EU requirements aim to minimise the cybersecurity risks that such devices entail.

"As we approach this era of Internet of Things where all of us will be almost permanently interconnected with devices and appliances, this [law] becomes more urgent than ever," said commission vice-president Margaritis Schinas.

New rules could reduce up to €290bn in costs from cyber incidents affecting companies, the EU executive said.

It is estimated that every 11 seconds there is a ransomware attack targeting an organisation across the globe — a dark criminal business with an estimated cost of €20bn in 2021. Overall, cybercrime had a global cost of €5.5 trillion in 2021.

"We need to protect our digital space," EU internal market commissioner Thierry Breton said, warning that an innocuous babysitting camera can be hacked by individuals or be used for espionage by third countries.

"You're supposed to use it to look after your dog or see what your children are up to. But who knows what is then done with that data, who can use it or who can exploit it?," he added.

Under new rules, manufacturers will have to take cybersecurity into account throughout the whole supply chain, listing all cybersecurity risks in order to inform consumers.

Notification inside 24 hours

They will also have to notify the EU cybersecurity agency (ENISA — European Union Agency for Cybersecurity) about any vulnerabilities or attacks within 24 hours once they are spotted, fix the incidents and provide users with security updates at least for five years.

"We try to rebalance the responsibility towards manufacturers who must ensure that they put in the market products that are digitally secure," said Schinas.

The draft law separates products falling under the scope of the legislation into two categories: namely, a group of some 10 percent of critical products considered "high-risk" and a larger group of other products considered low-risk.

Manufacturers of high-risk products, including critical software and industrial operating systems, among a long list of examples, will have to demonstrate to national authorities whether the specified cyber requirements relating to a product have been met. Firms producing low-risks products will be only requested to carry out a self-assessment.

If companies fail to comply with the rules, national authorities would be able to ban or restrict the entrance of such products onto the EU market.

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