Focussing on Financial Services (one of the top three sectors to suffer customer defections after a breach) we asked executive and non-executive board members to reflect on the issue. Their input confirms cyber security is top of the board agenda for data-centric businesses.
Accumulating evidence suggests:
- The cost of data breaches is on the rise
- The biggest loss to organizations remains the erosion of business
- Boards and CEO’s are increasingly held responsible for data breaches – and penalized accordingly
- Well-resourced governments are increasingly suspected of targeting companies or influencing the affairs of other states
- Companies are switching on to cyber security, investing in speeding up detection of data breaches and their escalation to top management
- There is a direct correlation between data governance and the cost of breaches
- The Internet of Things and machine learning offer exciting new ways to protect systems and detect attacks. However they may also make attacks more efficient – and allow new types of attack.
For companies looking to extract value from advanced analytics, machine learning and sharing with third parties, digital information has become a major strategic asset. Burgeoning volumes are now being amassed, much containing proprietary and highly sensitive data. Employee records, banking transactions and trade data are just some examples.
Every Asset Has its Price
Growing concern for customer privacy is restricting access to sensitive information and proving a barrier to innovation. Incoming GDPR regulation which calls for ‘privacy by design’ will put further compliance pressure on firms. The era of the Data Protection Officer (DPO) is upon us, and one of his or her key functions is to ensure customer privacy.
Moreover, beyond their toxic effect on customers (arguably a societal responsibility issue), the fallout of data breaches can inflict serious damage on the people at the helm of organizations, with repercussions far beyond the ICT function.
An Insider’s Guide to Data Security
Breaches are most often caused by insider action – accidental or malicious. At the same time, a new market has emerged for personal and sensitive data, incentivising criminals to buy cyber-attacks against companies. In the Full Article we give strategists a technical apéritif to some of the key measures to counter the problem.
Whilst cyber security measures protect data from unauthorized access, privacy engineering tools can protect sensitive data when it is accessed. Indeed, security and privacy engineering should be thought of as complementary fields which together deliver data protection.
Privacy engineering incorporates a range of techniques which make sensitive data less vulnerable to exploitation. It allows data controllers to select an acceptable level of privacy risk, taking into account the trustworthiness of the stakeholders and environment involved.
The tools can protect sensitive information at the point of access whilst preserving the valuable patterns and relationships in the data. This gives companies the best of both worlds - the ability to innovate and use data safely.
The Race For DPO Talent
The potential (and often all-too-real) repercussions of a lax approach to data privacy mean that senior executives have a clear and present responsibility to ensure a better approach across the organization.
The principle of responsibility has been enforced with the introduction under the GDPR of the Data Protection Officer (DPO). The DPO should be appointed by all companies whose core business operations involve large scale, regular and systematic monitoring of data subjects, or the large scale processing of sensitive personal data. The DPO must report to the highest management board and will be responsible for ensuring that the organization is compliant with data protection law.
However, the International Association of Privacy Professionals (IAPP) forsees a shortage of DPO’s, as there are currently insufficient IAPP certified professionals worldwide, despite the rise in qualifications issued.
One has to ask whether internal hires will really be able to make the changes required under the new legislation. Like compliance before it, is this approach really addressing the problem or paying lip-service to the role?
Whilst the DPO is now integral to an organization’s approach to privacy, and may own it, DPOs and CDO/CIOs need to work together on organizations’ privacy engineering strategies.
Privacy by design, as mandated in the GDPR, promotes the incorporation of privacy and data protection compliance in the early stages of any project and throughout its lifecycle. This means that certain roles within the company will have specific responsibilities in addition to those held by the DPO, CDO and CIOs, as indicated in the matrices overleaf.
Conclusion - Innovation and Safety Go Hand-in-Hand
The world is painfully waking up to privacy risk. As ever more personal information is collected, the threat to the privacy of individuals is intensifying, and customers are increasingly aware of the risks of handing over their data.
This means that it is imperative for boards to install the tools, technologies and processes that will not only assure data protection, but help their organizations maintain a watertight reputation for that protection.
More than a question of risk or reputation management, data security is a lynchpin of organizational evolution. Innovation is catalyzed by access to the insights sensitive data provides. Lose public trust, and the evolution of a company may be compromised.
Board Agenda: 5 Steps to Embed Privacy into the DNA of Your Business.
- Ensure the CIO or CDO has a clear view of the sensitive data held by the organization, and what is currently being done with it.
- Consider and agree upon the data needs of the business – these could include data science/analytics, innovation, development and testing, IT, research – the key is to understand who will need access to the data, and to what level.
- Assess and define privacy policies -This will generally be the responsibility of the legal team, or DPO, working closely with the CIO or CDO.
- Apply technical controls to mitigate privacy risk, and to bring consistency and full accountability to the governance of confidential data.
- Train teams about the privacy risks when handling sensitive data, and how best to manage those risks.