ICT incident classification

Preamble (Recitals 1 – 18)

Recitals

Chapter I (Articles 1 – 7)

Classification criteria

Article 1

Clients, financial counterparts and transactions

Article 2

Reputational impact

Article 3

Duration and service downtime

Article 4

Geographical spread

Article 5

Data losses

Article 6

Criticality of services affected

Article 7

Economic impact

Chapter II (Articles 8 – 9)

Major incidents and materiality thresholds

Article 8

Major incidents

Article 9

Materiality thresholds for determining major incidents

Chapter III (Article 10)

Significant cyber threats

Article 10

High materiality thresholds for determining significant cyber threats

Chapter IV (Articles 11 – 12)

Relevance of major incidents to competent authorities in other Member States and details of reports to be shared with other competent authorities

Article 11

Relevance of major incidents to competent authorities in other Member States

Article 12

Details of major incidents to be shared with other competent authorities

Chapter V (Article 13)

Final provisions

Article 13

Entry into force

IIC Recitals

Recital 1

Regulation (EU) 2022/2554 aims to harmonise and streamline reporting requirements for ICT-related incidentsmeans a single event or a series of linked events unplanned by the financial entity that compromises the security of the network and information systems, and have an adverse impact on the availability, authenticity, integrity or confidentiality of data, or on the services provided by the financial entity; and for operational or security payment-related incidentsmeans a single event or a series of linked events unplanned by the financial entities referred to in Article 2(1), points (a) to (d), whether ICT-related or not, that has an adverse impact on the availability, authenticity, integrity or confidentiality of payment-related data, or on the payment-related services provided by the financial entity; concerning credit institutionsmeans a credit institution as defined in Article 4(1), point (1), of Regulation (EU) No 575/2013 of the European Parliament and of the Council (32);, payment institutionsmeans a payment institution as defined in Article 4, point (4), of Directive (EU) 2015/2366;, account information service providersmeans an account information service provider as referred to in Article 33(1) of Directive (EU) 2015/2366;, and electronic money institutionsmeans an electronic money institution as defined in Article 2, point (1), of Directive 2009/110/EC of the European Parliament and of the Council; (‘incidents’). Considering that the reporting requirements cover 20 different types of financial entitiesas defined in Article 2, points (a) to (t), the classification criteria and the materiality thresholds for determining major incidents and significant cyber threatsmeans a cyber threat the technical characteristics of which indicate that it could have the potential to result in a major ICT-related incident or a major operational or security payment-related incident; 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 entitiesas defined in Article 2, points (a) to (t).

Recital 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 entitiesas defined in Article 2, points (a) to (t). Moreover, the criteria and materiality thresholds should be designed in such a way that they apply consistently to all financial entitiesas defined in Article 2, points (a) to (t), irrespective of their size and risk profile, and do not pose unproportional reporting burden to smaller financial entitiesas defined in Article 2, points (a) to (t). 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 entitiesas defined in Article 2, points (a) to (t) should be set out.

Recital 3

In relation to incident reporting frameworks, which have existed prior to the entry into force of Regulation (EU) 2022/2554, continuity for financial entitiesas defined in Article 2, points (a) to (t) 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)Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC (OJ L 337, 23.12.2015, p. 35, ELI: http://data.europa.eu/eli/dir/2015/2366/oj)., the Guidelines on periodic information and notification of material changes to be submitted to ESMA by Trade Repositoriesmeans a trade repository as defined in Article 2, point (2), of Regulation (EU) No 648/2012;, the ECB/SSM Cyber Incident Reporting Framework and other relevant guidance. The classification criteria and thresholds should also be suitable for the financial entitiesas defined in Article 2, points (a) to (t) that have not been subject to incident reporting requirements prior to Regulation (EU) 2022/2554.

Recital 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 entitiesas defined in Article 2, points (a) to (t). 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.

Recital 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 systemsmeans a network and information system as defined in Article 6, point 1, of Directive (EU) 2022/2555; 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.

Recital 6

Since credit institutionsmeans a credit institution as defined in Article 4(1), point (1), of Regulation (EU) No 575/2013 of the European Parliament and of the Council (32); 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)Commission Delegated Regulation (EU) 2018/959 of 14 March 2018 supplementing Regulation (EU) No 575/2013 of the European Parliament and of the Council with regard to regulatory technical standards of the specification of the assessment methodology under which competent authorities permit institutions to use Advanced Measurement Approaches for operational risk (OJ L 169, 6.7.2018, p. 1, ELI: http://data.europa.eu/eli/reg_del/2018/959/oj)., 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.

Recital 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.

Recital 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 incidentmeans a single event or a series of linked events unplanned by the financial entity that compromises the security of the network and information systems, and have an adverse impact on the availability, authenticity, integrity or confidentiality of data, or on the services provided by the financial entity; and a major ICT-related incidentmeans an ICT-related incident that has a high adverse impact on the network and information systems that support critical or important functions of the financial entity; 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.

Recital 9

With a view to ensure that the reports on and notifications of major incidents received by competent authoritiesas defined in Article 46 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.

Recital 10

Incidents that affect ICT servicesmeans digital and data services provided through ICT systems to one or more internal or external users on an ongoing basis, including hardware as a service and hardware services which includes the provision of technical support via software or firmware updates by the hardware provider, excluding traditional analogue telephone services; or network and information systemsmeans a network and information system as defined in Article 6, point 1, of Directive (EU) 2022/2555; that support critical or important functionsmeans a function, the disruption of which would materially impair the financial performance of a financial entity, or the soundness or continuity of its services and activities, or the discontinued, defective or failed performance of that function would materially impair the continuing compliance of a financial entity with the conditions and obligations of its authorisation, or with its other obligations under applicable financial services law;, or financial services requiring authorisation or malicious unauthorised access to network and information systemsmeans a network and information system as defined in Article 6, point 1, of Directive (EU) 2022/2555; that support critical or important functionsmeans a function, the disruption of which would materially impair the financial performance of a financial entity, or the soundness or continuity of its services and activities, or the discontinued, defective or failed performance of that function would materially impair the continuing compliance of a financial entity with the conditions and obligations of its authorisation, or with its other obligations under applicable financial services law;, should be considered as incidents affecting critical services of the financial entitiesas defined in Article 2, points (a) to (t). Malicious, unauthorised access to network and information systemsmeans a network and information system as defined in Article 6, point 1, of Directive (EU) 2022/2555; that support critical or important functionsmeans a function, the disruption of which would materially impair the financial performance of a financial entity, or the soundness or continuity of its services and activities, or the discontinued, defective or failed performance of that function would materially impair the continuing compliance of a financial entity with the conditions and obligations of its authorisation, or with its other obligations under applicable financial services law; of financial entitiesas defined in Article 2, points (a) to (t) poses serious risks to the financial entity and, as they may affect other financial entitiesas defined in Article 2, points (a) to (t), should always be considered as major incidents which are to be reported.

Recital 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.

Recital 12

Considering that cyber threatsmeans ‘cyber threat’ as defined in Article 2, point (8), of Regulation (EU) 2019/881; can have a negative impact on the financial entity and sector, the significant cyber threatsmeans a cyber threat the technical characteristics of which indicate that it could have the potential to result in a major ICT-related incident or a major operational or security payment-related incident; which financial entitiesas defined in Article 2, points (a) to (t) 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 threatsmeans ‘cyber threat’ as defined in Article 2, point (8), of Regulation (EU) 2019/881;, the classification of a cyber threatmeans ‘cyber threat’ as defined in Article 2, point (8), of Regulation (EU) 2019/881; 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 threatmeans ‘cyber threat’ as defined in Article 2, point (8), of Regulation (EU) 2019/881; and on the information available to the financial entity.

Recital 13

Considering that competent authoritiesas defined in Article 46 in other Member States are to be notified of incidents that impact financial entitiesas defined in Article 2, points (a) to (t) 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 groupsmeans a group as defined in Article 2, point (11), of Directive 2013/34/EU; of clients or financial counterparts.

Recital 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 authorityas defined in Article 46.

Recital 15

Where an incident constitutes a personal data breach according to Regulation (EU) 2016/679 of the European Parliament and of the Council (4)Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) (OJ L 119, 4.5.2016, p. 1, ELI: http://data.europa.eu/eli/reg/2016/679/oj). and Directive 2002/58/EC of the European Parliament and of the Council (5)Directive 2002/58/EC of the European Parliament and of the Council of 12 July 2002 concerning the processing of personal data and the protection of privacy in the electronic communications sector (Directive on privacy and electronic communications) (OJ L 201, 31.7.2002, p. 37, ELI: http://data.europa.eu/eli/dir/2002/58/oj)., this Regulation should not affect the recording and notification obligations for personal data breaches set out in those Union laws. The competent authoritiesas defined in Article 46 should cooperate and exchange information about all relevant matters with the authorities referred to in Regulation (EU) 2016/679 and Directive 2002/58/EC.

Recital 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).

Recital 17

The Joint Committeemeans the committee referred to in Article 54 of Regulations (EU) No 1093/2010, (EU) No 1094/2010 and (EU) No 1095/2010; 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)Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/78/EC (OJ L 331, 15.12.2010, p. 12, ELI: http://data.europa.eu/eli/reg/2010/1093/oj)., in Article 54 of Regulation (EU) No 1094/2010 of the European Parliament and of the Council (7)Regulation (EU) No 1094/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/79/EC (OJ L 331, 15.12.2010, p. 48, ELI: http://data.europa.eu/eli/reg/2010/1094/oj). and in Article 54 of Regulation (EU) No 1095/2010 of the European Parliament and of the Council (8)Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC (OJ L 331, 15.12.2010, p. 84, ELI: http://data.europa.eu/eli/reg/2010/1095/oj). 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 Groupmeans a group as defined in Article 2, point (11), of Directive 2013/34/EU; established in accordance with Article 37 of Regulation (EU) No 1093/2010, the Insurance and Reinsurance Stakeholder Groupmeans a group as defined in Article 2, point (11), of Directive 2013/34/EU; and the Occupational Pensions Stakeholder Groupmeans a group as defined in Article 2, point (11), of Directive 2013/34/EU; established in accordance with Article 37 of Regulation (EU) No 1094/2010, and the Securities and Markets Stakeholder Groupmeans a group as defined in Article 2, point (11), of Directive 2013/34/EU; established in accordance with Article 37 of Regulation (EU) No 1095/2010,

Recital 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)Regulation (EU) 2018/1725 of the European Parliament and of the Council of 23 October 2018 on the protection of natural persons with regard to the processing of personal data by the Union institutions, bodies, offices and agencies and on the free movement of such data, and repealing Regulation (EC) No 45/2001 and Decision No 1247/2002/EC (OJ L 295, 21.11.2018, p. 39, ELI: http://data.europa.eu/eli/reg/2018/1725/oj). and delivered an opinion on 24 January 2024,