Commission Delegated Regulation (EU) 2024/1772 of 13 March 2024 supplementing Regulation (EU) 2022/2554 of the European Parliament and of the Council with regard to regulatory technical standards specifying the criteria for the classification of ICT-related incidents and cyber threats, setting out materiality thresholds and specifying the details of reports of major incidents

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Regulation (EU) 2022/2554 of the European Parliament and of the Council of 14 December 2022 on digital operational resilience for the financial sector and amending Regulations (EC) No 1060/2009, (EU) No 648/2012, (EU) No 600/2014, (EU) No 909/2014 and (EU) 2016/1011 (1), and in particular Article 18(4), third subparagraph, thereof,

Whereas:

(1) Regulation (EU) 2022/2554 aims to harmonise and streamline reporting requirements for ICT-related incidents and for operational or security payment-related incidents concerning credit institutions, payment institutions, account information service providers, and electronic money institutions (‘incidents’). Considering that the reporting requirements cover 20 different types of financial entities, the classification criteria and the materiality thresholds for determining major incidents and significant cyber threats should be specified in a simple, harmonised and consistent way that takes into account the specificities of the services and activities of all relevant financial entities.

(2) In order to ensure proportionality, the classification criteria and the materiality thresholds should reflect the size and overall risk profile, and the nature, scale and complexity of the services of all financial entities. Moreover, the criteria and materiality thresholds should be designed in such a way that they apply consistently to all financial entities, irrespective of their size and risk profile, and do not pose unproportional reporting burden to smaller financial entities. However, in order to address situations where a significant number of clients are affected by an incident which as such does not exceed the applicable threshold, an absolute threshold mainly targeted at larger financial entities should be set out.

(3) In relation to incident reporting frameworks, which have existed prior to the entry into force of Regulation (EU) 2022/2554, continuity for financial entities should be ensured. Therefore, the classification criteria and materiality thresholds should be aligned with and inspired by the EBA Guidelines on major incident reporting under Directive (EU) 2015/2366 of the European Parliament and of the Council (2), the Guidelines on periodic information and notification of material changes to be submitted to ESMA by Trade Repositories, the ECB/SSM Cyber Incident Reporting Framework and other relevant guidance. The classification criteria and thresholds should also be suitable for the financial entities that have not been subject to incident reporting requirements prior to Regulation (EU) 2022/2554.

(4) With regard to the classification criterion ‘amount and number of transactions affected’, the notion of transactions is broad and covers different activities and services across the sectorial acts applicable to financial entities. For the purposes of that classification criterion, payment transactions and all forms of exchange of financial instruments, crypto-assets, commodities, or any other assets, also in form of margin, collateral or pledge, both against cash and against any other asset, should be covered. All transactions that involve assets whose value can be expressed in a monetary amount should be considered for classification purposes.

(5) The classification criteria should ensure that all relevant types of major incidents are captured. Cyber attacks related to intrusion into network or information systems may not necessarily be captured by many classification criteria. However, they are important since any intrusion in network and information systems may harm the financial entity. Accordingly, the classification criteria ‘critical services affected’ and ‘data losses’ should be specified in such a way as to capture these types of major incidents, in particular unauthorised intrusions which, even if the impacts are not immediately known, may lead to serious consequences, in particular data breaches and data leakages.

(6) Since credit institutions are subject both to the framework for classification of incidents under Article 18 of Regulation (EU) 2022/2554 and to the operational risk framework under Commission Delegated Regulation (EU) 2018/959 (3), the approach for assessing the economic impact of an incident based on the calculation of costs and losses should, to the greatest possible extent, be consistent across both frameworks to avoid introducing incompatible or contradicting requirements.

(7) The criterion in relation to the geographical spread of an incident set out in Article 18(1), point (c), of Regulation (EU) 2022/2554 should focus on the cross-border impact of the incident, since the impact of an incident on the activities of a financial entity within a single jurisdiction will be captured by the other criteria set out in that Article.

(8) Given that the classification criteria are interdependent and linked to each other, the approach for identifying major incidents which are to be reported in accordance with Article 19(1) of Regulation (EU) 2022/2554 should be based on a combination of criteria, where some criteria that are closely related to the definitions of an ICT-related incident and a major ICT-related incident set out in Article 3(8) and (10) of Regulation (EU) 2022/2554 should have more prominence in the classification of major incidents than other criteria.

(9) With a view to ensure that the reports on and notifications of major incidents received by competent authorities under Article 19(1) of Regulation (EU) 2022/2554 serve both for supervisory purposes and for the prevention of contagion across the financial sector, the materiality thresholds should make it possible to capture major incidents, by focusing, inter alia, on the impact on entity specific critical services, the specific absolute and relative thresholds of clients or financial counterparts, transactions that indicate a material impact on the financial entity, and the significance of the impact in other Member States.

(10) Incidents that affect ICT services or network and information systems that support critical or important functions, or financial services requiring authorisation or malicious unauthorised access to network and information systems that support critical or important functions, should be considered as incidents affecting critical services of the financial entities. Malicious, unauthorised access to network and information systems that support critical or important functions of financial entities poses serious risks to the financial entity and, as they may affect other financial entities, should always be considered as major incidents which are to be reported.

(11) Recurring incidents that are linked through a similar apparent root cause, which individually are not major incidents, can indicate significant deficiencies and weaknesses in the financial entity’s incident and risk management procedures. Therefore, recurring incidents should be considered as major collectively where they occur repeatedly over a certain period of time.

(12) Considering that cyber threats can have a negative impact on the financial entity and sector, the significant cyber threats which financial entities may submit should indicate the probability of materialisation and the criticality of the potential impact. Accordingly, to ensure a clear and consistent assessment of the significance of cyber threats, the classification of a cyber threat as significant should be dependent on the likelihood that the classification criteria for major incidents and their threshold would be met if the threat had materialised, on the type of cyber threat and on the information available to the financial entity.

(13) Considering that competent authorities in other Member States are to be notified of incidents that impact financial entities and customers in their jurisdiction, the assessment of the impact in another jurisdiction in accordance with Article 19(7) of Regulation (EU) 2022/2554 should be based on the root cause of the incident, on potential contagion through third-party providers and on financial market infrastructures, as well as on the impact of the incident on significant groups of clients or financial counterparts.

(14) The reporting and notification processes referred to in Article 19(6) and (7) of Regulation (EU) 2022/2554 should allow the respective recipients to assess the impact of the incidents. Therefore, the transmitted information should cover all details contained in the incident reports submitted by the financial entity to the competent authority.

(15) Where an incident constitutes a personal data breach according to Regulation (EU) 2016/679 of the European Parliament and of the Council (4) and Directive 2002/58/EC of the European Parliament and of the Council (5), this Regulation should not affect the recording and notification obligations for personal data breaches set out in those Union laws. The competent authorities should cooperate and exchange information about all relevant matters with the authorities referred to in Regulation (EU) 2016/679 and Directive 2002/58/EC.

(16) This Regulation is based on the draft regulatory technical standards submitted to the Commission by the European Supervisory Authorities, in consultation with the European Union Agency for Cybersecurity (ENISA) and the European Central bank (ECB).

(17) The Joint Committee of the European Supervisory Authorities referred to in Article 54 of Regulation (EU) No 1093/2010 of the European Parliament and of the Council (6), in Article 54 of Regulation (EU) No 1094/2010 of the European Parliament and of the Council (7) and in Article 54 of Regulation (EU) No 1095/2010 of the European Parliament and of the Council (8) has conducted open public consultations on the draft regulatory technical standards on which this Regulation is based, analysed the potential costs and benefits of the proposed standards and requested advice of the Banking Stakeholder Group established in accordance with Article 37 of Regulation (EU) No 1093/2010, the Insurance and Reinsurance Stakeholder Group and the Occupational Pensions Stakeholder Group established in accordance with Article 37 of Regulation (EU) No 1094/2010, and the Securities and Markets Stakeholder Group established in accordance with Article 37 of Regulation (EU) No 1095/2010,

(18) The European Data Protection Supervisor was consulted in accordance with Article 42(1) of Regulation (EU) 2018/1725 of the European Parliament and of the Council (9) and delivered an opinion on 24 January 2024,

HAS ADOPTED THIS REGULATION:

CHAPTER I

CLASSIFICATION CRITERIA

Article 1

Clients, financial counterparts and transactions

Article 2

Reputational impact

(a) the incident has been reflected in the media;

(b) the incident has resulted in repetitive complaints from different clients or financial counterparts on client-facing services or critical business relationships;

(c) the financial entity will not be able to or is likely not to be able to meet regulatory requirements as a result of the incident;

(d) the financial entity will or is likely to lose clients or financial counterparts with a material impact on its business as a result of the incident.

Article 3

Duration and service downtime

Where financial entities are unable to determine the moment when the incident occurred, they shall measure the duration of the incident from the moment it was detected. Where financial entities become aware that the incident occurred prior to its detection, they shall measure the duration from the moment the incident is recorded in network or system logs or other data sources.

Where financial entities do not yet know when the incident will be resolved or are unable to verify records in logs or other data sources, they shall apply estimates.

Where financial entities are unable to determine the moment when the service downtime started, they shall measure the service downtime from the moment it was detected.

Article 4

Geographical spread

For the purpose of determining the geographical spread with regard to the areas affected by the incident as referred to in Article 18(1), point (c), of Regulation (EU) 2022/2554, financial entities shall assess whether the incident has or had an impact in other Member States, and in particular the significance of the impact in relation to any of the following:

(a) clients and financial counterparts in other Member States;

(b) branches or other financial entities within the group carrying out activities in other Member States;

(c) financial market infrastructures or third-party providers, which may affect financial entities in other Member States to which they provide services, to the extent such information is available.

Article 5

Data losses

For the purpose of determining the data losses that the incident entails as referred to in Article 18(1), point (d), of Regulation (EU) 2022/2554, financial entities shall take into account the following:

(a) in relation to the availability of data, whether the incident has rendered the data on demand by the financial entity, its clients or its counterparts temporarily or permanently inaccessible or unusable;

(b) in relation to the authenticity of data, whether the incident has compromised the trustworthiness of the source of data;

(c) in relation to the integrity of data, whether the incident has resulted in non-authorised modification of data that has rendered it inaccurate or incomplete;

(d) in relation to the confidentiality of data, whether the incident has resulted in data having been accessed by or disclosed to an unauthorised party or system.

Article 6

Criticality of services affected

For the purpose of determining the criticality of the services affected as referred to in Article 18(1), point (e), of Regulation (EU) 2022/2554, financial entities shall assess whether the incident:

(a) affects or has affected ICT services or network and information systems that support critical or important functions of the financial entity;

(b) affects or has affected financial services provided by the financial entity that require authorisation, registration or that are supervised by competent authorities;

(c) constitutes or has constituted a successful, malicious and unauthorised access to the network and information systems of the financial entity.

Article 7

Economic impact

(a) expropriated funds or financial assets for which they are liable, including assets lost to theft;