Executive Summary

The government of the United Kingdom is pushing forward with the new Cyber Security and Resilience Bill, a significant piece of legislation designed to modernize the country's cybersecurity framework. The bill's most impactful provision is the introduction of direct regulatory oversight for Managed Service Providers (MSPs). Recognizing that MSPs represent a critical and attractive target for supply-chain attacks due to their privileged access to countless client networks, the proposed law aims to hold them to a higher security standard. The UK government has pointed to the recent disruptive ransomware attack on Synnovis, an MSP for the National Health Service (NHS), as a prime example of the kind of systemic risk the bill is intended to mitigate.

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Regulatory Details

The bill aims to amend the UK's existing Network and Information Systems (NIS) Regulations from 2018. Under the proposed changes, the government would gain the power to formally designate MSPs as a category of regulated entities. Once designated, these MSPs would be subject to a set of security duties, which are expected to include:

• Security Risk Management: Implementing appropriate and proportional technical and organizational measures to manage the security risks to their own networks and the services they provide.
• Incident Reporting: A legal requirement to report significant cybersecurity incidents to the relevant regulator, likely the Information Commissioner's Office (ICO).
• Supply Chain Security: Taking steps to ensure the security of their own supply chains, recognizing that MSPs themselves rely on other vendors.

The new framework is intended to be more proactive and give regulators greater visibility and enforcement powers over a critical part of the digital economy. It aligns the UK more closely with the principles of the EU's updated NIS2 Directive, which also includes broader supply-chain security requirements.

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Affected Organizations

The primary group affected will be Managed Service Providers operating in the UK. This is a broad category that can include:

• Managed IT service providers
• Managed Security Service Providers (MSSPs)
• Cloud service providers
• Digital service providers

Essentially, any organization that provides outsourced digital services and has privileged access to customer IT systems could fall under the scope of this regulation. The bill will likely include thresholds based on size or criticality to focus on the most significant providers.

Thousands of businesses across all sectors in the UK that use MSPs will be indirectly affected, as they will benefit from the higher security baseline mandated for their providers.

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Compliance Requirements

While the exact details will be defined in secondary legislation, MSPs will likely be required to:

1. Establish a formal Information Security Management System (ISMS), potentially aligned with standards like ISO 27001 or Cyber Essentials Plus.
2. Conduct regular risk assessments of their services and infrastructure.
3. Develop and test an incident response plan that includes clear communication protocols with clients.
4. Implement robust access control measures, including MFA and privileged access management (PAM), for all client environments.
5. Ensure secure configurations for all managed infrastructure.
6. Provide evidence of compliance to regulators upon request.

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Impact Assessment

For MSPs, the bill will introduce new compliance costs and operational overhead. They will need to invest in security personnel, tools, and processes to meet the regulatory requirements. However, this can also be a competitive differentiator, allowing security-conscious MSPs to demonstrate their maturity to potential clients.

For the UK as a whole, the bill aims to reduce systemic risk. By hardening the security of MSPs, the government hopes to prevent incidents where the compromise of a single provider leads to a cascade of breaches across hundreds or thousands of their clients. This is a direct response to the growing trend of threat actors targeting the software and services supply chain as a highly efficient attack vector.

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Enforcement & Penalties

The bill will grant regulators, such as the ICO, the power to investigate incidents and audit MSPs for compliance. Non-compliance could result in significant financial penalties, similar to those under the current NIS Regulations and GDPR. The exact penalty structure has not yet been finalized but is expected to be substantial enough to ensure compliance.

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Compliance Guidance

MSPs in the UK should begin preparing now, even before the bill is passed.

• Conduct a Gap Analysis: Assess your current security posture against established frameworks like the NIST Cybersecurity Framework or ISO 27001.
• Prioritize Foundational Controls: Focus on implementing essential security hygiene, including robust patch management, network segmentation, MFA, and privileged access management.
• Review Client Contracts: Ensure that contracts and Service Level Agreements (SLAs) clearly define security responsibilities and incident reporting timelines.
• Invest in Security: Begin budgeting for the necessary security tools and expertise to meet the anticipated regulatory burden.