Canada: Cyber Liability Series: How To Respond To A Breach Of Data Security

Last Updated: July 5 2016
Article by Laura Emmett

Despite being proactive and implementing security measures to ensure that your employees are trained and that effective security practices are in place, your organization's cyber security has been breached. Now what? Although, this may seem like the worst case scenario, there are still things your company can do to mitigate losses and protect the company from exposure to further liability.

Step 1: Uncover and contain the cause of the breach

Your first step in reacting to a breach is to determine what caused the breach in the first place. It is important to establish the cause so that you can rectify the issue and not let it happen again. There is no sense is taking steps to minimize the effect of the breach but not address the underlying cause that created the issue in the first place. Once you have addressed how the breach occurred, you can implement an action plan to deal with preventing it from happening again.

Step 2: Obtain legal support and contact insurer

Once you've established the source of the breach, and contained the breach, it is crucial that you contact your legal representative to ensure that your company's response to the breach meets all legal requirements. At this stage, it is crucial to determine whether your response needs to include contacting local law enforcement, or complying with notification requirements. In some instances, where these steps aren't taken, the organization could be held liable for the damage resulting from the security breach. Therefore, it is imperative to obtain legal advice immediately. At this stage, it is also extremely important that you contact your insurer to notify them of the breach. As per your policy, there may be steps that you are required to take, and you may be afforded legal representation under your policy.

To be proactive, prior to a breach occurring, a company should have a legal response team retained in helping to draft an incident response plan. This plan provides guidance on what steps need to be taken immediately after detecting a breach. Additionally, an organization should have the legal team retained so that if there is a breach, they can spring into action immediately. Finally, a company should review their insurance policy to confirm whether they are adequately protected against potential breaches of information security, and whether they need to obtain enhanced insurance.

Step 3: Provide notice

Once you've established the source of the breach and ensured that you have legal representation, it is important that the company notify employees and customers immediately. Employees need to be made aware of the issue, especially if they are working on the frontline and interact with customers. They also need to be knowledgeable of the issue so that they can inform customers appropriately.

Although it is not "news" organizations wish to share with customers as they will likely be upset, it is of upmost importance that you inform the customers so that they can take steps to protect themselves. Currently under section 12(2) of the Personal Health Information Protection Act,1 a health information custodian that has custody or control of personal health information must notify the individual at the first reasonable opportunity if the information is stolen, lost or accessed by unauthorized persons. Although there is not currently any notice requirement under the Personal Information Protection and Electronic Documents Act, proposed amendments to the Act, include provisions outlining the requirement of providing notice to the affected individual as well as outlining what the notice must include. Therefore, it is important that businesses get into the practice of providing notice, as it is likely only a matter of time before notice requirements will apply to all breaches of information, not just personal health information.

Often, the data that is obtained when a breach occurs is personal information (such as social insurance numbers or payment information) which can expose customers to identity fraud. Effective communication with clients needs to occur immediately so that customers are aware of what information has been exposed and what steps they should take to protect themselves. This is likely best achieved through a letter sent to each customer outlining the steps that the organization is taking to rectify the issues, and what they can do to protect their sensitive information.

Your incident response plan should include precedents of letters to send to your customers and employees in the event of a breach of security. This will save significant time in the event of a breach and will increase your chances of customer retention with prompt notice being provided.

Step 4: Stay in contact

Once customers have been informed, it is important that you ensure that they have a way to get a hold of company representatives, so that they may ask questions. This is extremely important as customers will likely have several concerns regarding the breach of security. By keeping open communication and responding to questions in a timely manner, an organization is more likely to maintain their business by demonstrating that customers' concerns are of upmost importance. Potential ways to respond to questions would be to set up a telephone hotline or to establish an e-mail account dedicated to addressing the breach. This contact information should be provided in the initial letter sent out to the customers, so that they are aware of how and who to speak to about their concerns. The importance of this aspect of the process is reinforced through the Principles Set out in the National Standard of Canada Entitled Model Code for the Protection of Personal Information.2 As per the Accountability principle, organizations are to implement policies and practices to receive and respond to complaints and inquiries.

Step 5: Re-examine and recover

After you have contained the breach, notified the employees and customers, and handled all of their questions and concerns, it is important that you re-examine the current security measures to determine what actions can be taken to prevent a similar attack in the future. Your company should return to normal operation as soon as it is safely possible to do so. This is imperative so that the organization minimizes losses, and retains customers' confidence in the company's capability to perform.

It is important to remember that there is not a most important step to take when a data breach occurs. All of the steps that an organization takes after the breach are important in resolving the issue, maintaining customers' trust and minimizing civil exposure. A company should ensure that they have an updated incident response plan in place at all times, so that if a breach does occur, there is already an agreed upon procedure to follow. The plan should outline who is to make the decisions when a breach occurs, and should already have precedents of notice letters to send to employees, customers, and third party businesses affected by a potential breach.

The response plan should be regularly updated as major changes within the company occur (such as mergers and acquisitions or upon persons named in the plan resigning or retiring). An effective incident response plan will allow your company to promptly respond to a breach of security, increasing the likelihood that you will be able to preserve your relationships with customers as well as your overall reputation.


1. 2004, SO 2004, c 3.

2. Personal Information Protection and Electronic Documents Act, SC 2000, c. 5, Sched 1.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Laura Emmett
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