UK: Data Breaches – How To Effectively Avoid Them And Manage Them If They Happen

The risk that often fails to make the list of operational business risks is, arguably, one of the most significant – and that's the risk of a data or privacy breach. As methods of conducting business evolve, and with constantly changing technology platforms for sales and promotion; new media for brand awareness; and new audiences and markets, the risk of a data breach has rapidly increased in severity and exposure. With the extent and nature of the type of information being exchanged between customers and businesses expanding now more than ever before, the time for business to address this risk is now.

Recent awareness

High profile data breaches are the subject of daily chatter. The list of breaches hitting the US market gets longer and longer: Anthem; Target; Home Depot; Neiman Marcus, to name but a few. The financial costs arising from those breaches are very significant, with estimates stretching into the hundreds of millions of dollars.

Proper insurance cover helps manage the financial impact of a data breach. But with reports of businesses being slow to recognise the risk of a breach, and a slow uptake in the market for cyber risk insurance cover in the Asia Pacific region, the likelihood is that many Australian businesses may be left exposed to very significant losses.

2014 saw an increased focus on how Australian businesses handle personal information, and the security of the systems holding that information. Most recently, the Privacy Commissioner has indicated that the responsibility for privacy governance goes all the way to the top – with the CEO, the Executive, the board and the management of any organisation being ultimately responsible for promoting privacy as an asset to be respected, managed and protected.

ASIC, our corporate regulator, is also alive to these issues and has just issued a report highlighting the importance of cyber resilience to ASIC's regulated population.

While the Australian market has not yet experienced a significant data breach, it appears almost inevitable that there will be a significant breach in the future. Experts estimated in 2014 that the average cost of a data breach for Australian organisations is more than AUD 2.8 million per year and rising.

So, are you prepared?

In this article, we consider what you can do to prepare for a data breach and the key steps you need to consider to prepare your business.

Consider and prepare

The type and severity of breaches vary enormously from business to business, dependent on the industry, the method of trading, the organisational structure, etc.

Some breaches are innocent: an employee loses an un-encrypted work phone; a laptop containing personal information is left in the bar at after-work drinks; a confidential email is sent to the wrong recipient. Others are more sinister: an unlocked filing cabinet of medical files is stolen; a malware bug invades your system and destroys or copies files containing personal information; a hacker breaks into your system and steals all personal information held on your files, choosing to sell it to the highest bidder on an anonymous hacker forum.

Knowing and understanding the information your business holds is key to preparing for a breach – what information do you hold and what are the security risks to that information and the consequences of a breach of that security? Some information is more likely to cause harm if it is compromised – eg medical records or financial account details – and this requires additional, more secure protection.

Identifying the key areas in your business that could be susceptible to a data breach is the next key step in preparing. What protections are in place to ensure the security of information at each stage of its transition into, through and out of your business?

Consideration needs to be given to the platforms upon which your business operates – is it online; is it direct with the customer or through intermediaries; is it domestic or also offshore? Where is the information stored? Where are the servers based and what protection is afforded to them? How is the server protected? Who manages the security system? Where could there be weaknesses in the information chain?

Once you've completed the initial risk assessment and identified the vulnerable areas of your business, you can devise and implement protections tailored to those risks and suitable for your organisation. These protections should be pro-active as well as re-active.

Key steps to prevent a data breach

  • Reviewing the systems and policies for handling information in place at your business – how can they be bolstered and improved to reduce the risk to information security?
  • Considering IT systems usage policies – how is access provided, who can grant access and who controls access levels? Are files encrypted? Who monitors access and copying?
  • Assigning responsibility for information security – who is the most appropriate person in your business to manage data breaches?
  • Reviewing training and awareness – are employees and executives trained on an ongoing basis in the content and purpose of your security protocols? Who monitors awareness and execution?
  • Developing a breach response plan – what needs to be done in the event of a breach, and who does what and when, in a breach scenario? We discuss this key step further below.

By putting suitable arrangements in place prior to a breach, you limit your business' exposure to the risk of a breach in the first place, and enhance its ability to respond in a timely and coordinated manner if a breach does occur. However, it's not possible to eliminate entirely. Therefore, you must prepare and plan for the event of a breach.

React quickly

If your systems are compromised, time will be of the essence. A well formulated and executed breach response plan will, if executed effectively, save your business time; mitigate risk of contagion; and, in the long run, reduce the costs, the reputational damage and overall harm to your business caused by the breach.

Some insurers in the market offer products complete with breach response plans and response teams provided as part of the package. A critical gap exists in the risk and security framework of those businesses that do not have specific data breach cover, or a formalised response plan in place.

Key to formulating an effective plan is an awareness of your business and the vulnerable areas that may be susceptible to a breach. Each breach differs and will need to be handled on a case by case basis.

Some key factors to consider in developing a plan

  • What different types of breaches are likely and how must the business react in each case – what level of lock-down is required to contain a breach? This will depend on a number of factors including: what information has been compromised; the nature/cause of the breach; the systems involved; and the potential for harm to be caused. Often, businesses hold different types of information, each requiring different protection levels – eg personal/sensitive/medical/financial information. Each situation is different but all possible scenarios should be considered and the necessary immediate responses clearly mapped out.
  • Who within the business needs to react in the event of a breach – who are the key figures in your business that must be represented and involved in the response? A typical breach response team will involve specialists in each of IT, risk management, legal and compliance, finance, HR and, (often overlooked) customer relations. It's essential that representatives from each of the relevant aspects of the business are aware of their role in the event of a breach. For example, who has authority to lock IT systems down? Who allocates tasks and leads the investigation?
  • Which external advisors need to be on call – who are the most appropriate advisors for a breach affecting your business? Typical advisors in the event of a breach include forensic teams, lawyers, PR agencies and IT security experts – each of which play important advisory roles. You should consider a range of advisors and come up with alternatives, where necessary to suit a particular type of breach. Experience of dealing with breaches is key to handling them in an appropriate and effective manner.
  • What notifications are necessary – do you need to notify customers, law enforcement authorities, regulators, business partners, third party service providers, etc? Who must be notified and how notification should be made will entirely depend on the breach, and the level of information that has been compromised. While we have yet to see mandatory notification requirements in Australia, the Privacy Commissioner's view is that if there's a real risk of serious harm as a result of a data breach, the affected individuals and the OAIC should be notified. So, consideration will need to be given to the different possible scenarios and whether notification may be necessary (and, if so, what type of notification is warranted). Consideration should also be given to whether you have complete and up to date customer contact details to enable a notification.
  • How does the plan evolve – who is tasked with updating the plan to reflect changes to your business? Is the plan tested on an ongoing basis? What are the post-breach procedures – who reviews the plan after it is used, having regard to any shortfalls that were identified as a result of a breach? Are staff aware of and trained in the plan? Like any policy, a breach response plan should remain live and be reviewed and tested on regular basis to ensure it is fully effective at the time of a breach.

By laying down suitable and secure foundations now, before a data breach occurs, you can better manage the risk of a breach and significantly reduce the losses and reputational damage that a breach may cause. Conversely, a poorly managed, slow, unplanned and/or disorganised breach response has the potential to cause significantly increased losses and damage to your business.

The failure to effectively execute the remedial steps can do more harm than the breach itself. Therefore, a carefully planned breach response strategy should be an integral plank of your risk management and security framework. The need to be alive to the risks facing your business from data breaches has never been more important.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
John Gallagher
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.