Managed Service Providers and the Cyber Security and Resilience Bill: Compliance, Best Practices, and Due Diligence

Abstract

The integration of Managed Service Providers (MSPs) into the UK’s Cyber Security and Resilience Bill marks a pivotal shift in the regulatory landscape, acknowledging the critical role MSPs play in managing IT infrastructure and the associated cybersecurity risks. This research paper delves into the implications of the Bill for MSPs, outlining specific compliance requirements, best practices for enhancing cybersecurity posture, and essential due diligence processes organizations must undertake when engaging MSPs to safeguard their critical assets and data.

Many thanks to our sponsor Esdebe who helped us prepare this research report.

1. Introduction

The UK’s Cyber Security and Resilience Bill, introduced to Parliament in November 2025, represents a comprehensive overhaul of the nation’s cybersecurity framework. A notable aspect of this legislation is the inclusion of Managed Service Providers (MSPs) within its regulatory scope. MSPs, entities that deliver outsourced IT services such as network management, data storage, and cybersecurity solutions, have become integral to the operational fabric of numerous organizations. Their deep access to client systems and data necessitates stringent security measures to prevent potential breaches that could have cascading effects across interconnected networks.

Many thanks to our sponsor Esdebe who helped us prepare this research report.

2. The Cyber Security and Resilience Bill: An Overview

The Cyber Security and Resilience Bill aims to bolster the UK’s defenses against cyber threats by imposing mandatory cybersecurity and resilience obligations on a broad spectrum of organizations, including MSPs. Key provisions of the Bill include:

• Expanded Regulatory Scope: MSPs are now classified as Relevant Managed Service Providers (RMSPs), bringing them under the purview of the Network and Information Systems (NIS) Regulations. This inclusion mandates MSPs to adhere to specific security duties, risk management protocols, and incident reporting requirements.

• Mandatory Incident Reporting: RMSPs are required to report significant cybersecurity incidents within 24 hours of detection, followed by a detailed report within 72 hours. This rapid reporting framework is designed to facilitate swift responses and mitigate potential impacts on critical services.

• Enhanced Regulatory Oversight: The Bill grants regulators the authority to conduct proactive audits, investigations, and impose substantial financial penalties for non-compliance. Penalties can reach up to £17 million or 4% of global turnover for serious failures, with daily fines for ongoing non-compliance.

Many thanks to our sponsor Esdebe who helped us prepare this research report.

3. Compliance Requirements for Managed Service Providers

MSPs must navigate a complex landscape of compliance obligations under the Cyber Security and Resilience Bill. Key requirements include:

3.1 Security Duties

RMSPs are mandated to identify and implement appropriate and proportionate measures to manage risks to the security of network and information systems essential for providing managed services. This involves:

• Risk Assessment: Conducting comprehensive evaluations to identify potential vulnerabilities within their systems and services.

• Security Measures: Implementing controls such as encryption, access management, and intrusion detection systems to mitigate identified risks.

• Continuous Monitoring: Establishing mechanisms for ongoing surveillance of systems to detect and respond to security incidents promptly.

3.2 Incident Reporting

The Bill stipulates a two-tiered incident reporting process:

• Initial Notification: RMSPs must inform the relevant authority within 24 hours of becoming aware of a significant incident affecting the security of their network and information systems.

• Detailed Report: A comprehensive report detailing the nature, impact, and response to the incident must be submitted within 72 hours of the initial notification.

This framework ensures timely dissemination of critical information, enabling coordinated responses to mitigate the effects of cyber incidents.

3.3 Regulatory Oversight and Enforcement

Regulators are empowered to:

• Conduct Audits and Investigations: Assess compliance with the Bill’s provisions through regular audits and investigations.

• Impose Penalties: Enforce financial penalties for non-compliance, with amounts varying based on the severity of the contravention.

• Issue Enforcement Notices: Direct RMSPs to take corrective actions to address identified deficiencies in their cybersecurity practices.

Many thanks to our sponsor Esdebe who helped us prepare this research report.

4. Best Practices for Strengthening Cybersecurity Posture

To align with the Bill’s requirements and enhance their cybersecurity resilience, MSPs should adopt the following best practices:

4.1 Establish a Robust Cybersecurity Framework

Develop and maintain a comprehensive cybersecurity strategy that encompasses:

• Governance Structures: Define roles and responsibilities for cybersecurity within the organization.

• Risk Management Processes: Implement procedures for identifying, assessing, and mitigating cybersecurity risks.

• Incident Response Plans: Create and regularly update plans to address potential security incidents effectively.

4.2 Implement Technical Controls

Deploy technical measures to safeguard systems and data, including:

• Encryption: Protect sensitive information both at rest and in transit.

• Access Controls: Enforce strict authentication mechanisms to ensure only authorized personnel access critical systems.

• Network Segmentation: Divide networks into segments to limit the lateral movement of potential threats.

4.3 Conduct Regular Security Assessments

Perform periodic evaluations such as:

• Vulnerability Scanning: Identify and address potential security weaknesses.

• Penetration Testing: Simulate cyberattacks to assess the effectiveness of security measures.

• Compliance Audits: Ensure adherence to relevant cybersecurity standards and regulations.

4.4 Foster a Security-Aware Culture

Promote cybersecurity awareness among employees by:

• Training Programs: Educate staff on security best practices and threat recognition.

• Phishing Simulations: Conduct exercises to enhance the ability to identify and respond to phishing attempts.

• Incident Reporting Mechanisms: Encourage prompt reporting of suspicious activities to facilitate timely responses.

Many thanks to our sponsor Esdebe who helped us prepare this research report.

5. Due Diligence Processes for Engaging Managed Service Providers

Organizations must undertake thorough due diligence when selecting and managing MSPs to ensure the protection of their critical assets and data. Essential steps include:

5.1 Vendor Assessment

Evaluate potential MSPs based on:

• Security Certifications: Verify credentials such as ISO 27001 or SOC 2 compliance.

• Incident History: Review past incidents to assess the provider’s response and recovery capabilities.

• Security Policies: Examine the robustness of the provider’s security policies and procedures.

5.2 Contractual Agreements

Establish clear contracts that outline:

• Security Obligations: Define specific security measures and responsibilities.

• Incident Response Protocols: Agree on procedures for reporting and managing security incidents.

• Audit Rights: Secure the right to conduct audits to assess compliance with agreed-upon security standards.

5.3 Continuous Monitoring

Implement ongoing oversight by:

• Regular Audits: Schedule periodic reviews to ensure adherence to security requirements.

• Performance Metrics: Monitor key performance indicators related to security and service delivery.

• Feedback Mechanisms: Establish channels for reporting and addressing security concerns promptly.

Many thanks to our sponsor Esdebe who helped us prepare this research report.

6. Conclusion

The inclusion of Managed Service Providers within the Cyber Security and Resilience Bill underscores the critical role these entities play in the UK’s cybersecurity landscape. By understanding and adhering to the Bill’s compliance requirements, implementing best practices to strengthen their cybersecurity posture, and conducting diligent assessments when engaging MSPs, organizations can significantly enhance their resilience against cyber threats. Proactive measures and a collaborative approach to cybersecurity are essential in safeguarding critical assets and maintaining trust in the digital ecosystem.

Many thanks to our sponsor Esdebe who helped us prepare this research report.

References

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• Cyber Security and Resilience (network and information systems) Bill issued by UK government | Clifford Chance. (n.d.). Retrieved from (cliffordchance.com)

• Cyber Security and Resilience (Network and Information Systems) Bill introduced to Parliament | Mayer Brown. (n.d.). Retrieved from (mayerbrown.com)

• The Cyber Security and Resilience Bill: A Strategic Guide for Practical Action | Secure Step Forward. (n.d.). Retrieved from (marketing.securestepforward.com)