SES Secure’s Head of Escrow & Continuity, Mark Ryan, recently collaborated on article with our partner, the Society for Computers & Law (SCL). SCL are the UK’s leading educational charity for the tech law community. Together, we work collaboratively to equip technology professionals, academics, students, and the wider public with education and guidance on how IT continues to shape law and legal practice.
The article on which we collaborated explores the significance of the UK’s proposed Cyber Security & Resilience (Network and Information Systems) Bill which represents a major update to the NIS Regulations. It breaks down the alignment of Software Escrow (also known as Source Code Escrow) with the Bill’s objectives, the legal and operational implications for organisations, and practical guidance on how to navigate the Bill. Read the article here.
In this blog, we’ll be highlighting the main takeaway points from the article.
Overview of the CSR (Cyber Security & Resilience) Bill
The CSR Bill’s key features include:
- Major expansion of regulatory scope: The Bill now covers MSPs, data centres, and other critical tech suppliers, with the ability to designate “critical suppliers.”
- Stricter incident‑reporting duties: Faster reporting timelines (24‑hour initial notice, 72‑hour full report) to give regulators early visibility into supply‑chain cyber incidents.
- Future‑proofing powers: Government can update requirements quickly through secondary legislation.
- Explicit supply‑chain risk obligations: Regulated entities must actively manage cyber risk in third‑party relationships.
Why Software Escrow Matters Under the CSR Bill
Given the scale of the changes enforced by the Bill, Software Escrow takes on renewed importance. The following points outline how Escrow arrangements directly support and reinforce the Bill’s objectives.
- Strengthens operational resilience by ensuring access to source code if a vendor fails or stops supporting a product.
- Supports supply‑chain risk management through clear contractual release conditions and continuity planning.
- Enhances regulatory compliance by providing verifiable evidence of continuity arrangements.
- Creates competitive advantage for vendors who offer Source Code Escrow as part of their resilience posture.
- Provides long‑term flexibility as regulations evolve, ensuring access to legacy code for adaptation or migration.
Risks, Challenges & Considerations
Although Software Escrow offers clear benefits within the updated regulatory landscape, there are still a number of challenges and trade‑offs to closely consider.
- Cost and operational overhead for maintaining deposits and verification.
- Credibility of Escrow agents becomes critical for trust and reliability.
- Complexity of defining release conditions - conditions that are too broad or too narrow creates risk.
- Quality and completeness of deposits must be ensured through regular updates and verification.
- IP and licensing concerns require careful negotiation.
- Regulatory uncertainty may require future alignment once secondary legislation is issued.
Recommendations
For Regulated Entities
- Audit critical software dependencies to identify where Software Escrow is needed.
- Embed Escrow clauses in contracts with clear triggers and IP rights.
- Use experienced Escrow providers with validation, secure storage, and ISO accreditation.
- Test release scenarios to ensure real‑world usability.
- Engage with regulators to align practices with evolving expectations.
For Regulators
- Issue guidance on Escrow best practice to support consistent implementation.
- Promote Escrow as a resilience tool in supervisory frameworks.
- Support smaller vendors with templates or incentives.
- Evaluate Escrow effectiveness in post‑implementation reviews.
For Software Escrow Providers
- Tailor services to regulated sectors with sector‑specific templates and verification.
- Educate stakeholders on how Escrow supports compliance.
- Collaborate with industry bodies to shape future standards.
To learn more, head over to the original article.
To arrange a call with Mark, please don’t hesitate to get in touch.