This is the third and final blog in a series about the new digital frontier for data risk management. For the full picture, be sure to read part 1 and part 2.
Mining customer information for valuable nuggets that enable new business opportunities gets riskier by the day — not only because cyberthieves constantly find new ways to steal that gold, but also due to the growing number of privacy regulations for corporations that handle increasingly valuable data.
The enactment of the European Union (EU)’s General Data Protection Regulation (GDPR) in May of this year was just the start. Beginning in early 2020, the California Consumer Privacy Act of 2018 (CCPA) will fundamentally change the way businesses manage the personal information they collect from California residents. Among other changes, organizations will find a much broader definition of personal information in the CCPA compared to other state data breach regulations. Pundits expect this legislation to be followed by a wave of additional data privacy laws aimed at shoring up consumers’ online privacy.
One major factor behind these new regulations is the widely perceived mishandling of personal information, whether intentionally or unintentionally as a result of a serious data breach perpetrated by cybercriminals or malicious insiders.
Taming the Wild West With New Privacy Laws
The first GDPR enforcement action happened in September, when the U.K. Information Commissioner’s Office charged Canadian data analytics firm AggregateIQ with violating the GDPR in its handling of personal data for U.K. political organizations. This action highlights the consequences that come with GDPR enforcement beyond the regulation’s potential penalty of up to 20 million euros, or 4 percent of a company’s annual revenues worldwide, whichever is higher. It can also require the violator to cease processing the personal information of affected EU citizens.
Although the CCPA does not take effect until January 2020, companies that handle the personal information of Californians will need to begin keeping records no later than January 2019 to comply with the new mandate, thanks to a 12-month look-back requirement. The act calls for new transparency and disclosure processes to address consumer rights, including the ability to opt in and out, access and erase personal data, and prevent its sale. It applies to most organizations that handle the data of California residents, even if the business does not reside in the state, and greatly expands the definition of personal information to include IP addresses, geolocation data, internet activity, households, devices and more.
While it’s called the Consumer Privacy Act, it really applies to any resident, whether they are a consumer, employee or business contact. There may still be corrections or clarifications to come for the CCPA — possibly including some exclusions for smaller organizations as well as health and financial information — but the basic tenants are expected to hold.
Potential Civil Lawsuits and Statutory Penalties
The operational impact of these new regulations will be significant for businesses. For example, unlike other regulations, companies will be required to give consumers a “do not sell” button at the point of collecting personal information. Companies will also be required to include at least two methods to submit requests, including a toll-free number, in their privacy statements.
The cost of failure to comply with data privacy regulations is steep. Organizations could face the prospect of civil penalties levied by the attorney general, from $2,500 for each unintentional violation up to $7,500 for each intentional violation, with no upper limit. Consumers can also sue organizations that fail to implement and maintain reasonable security procedures and practices and receive statutory payments between $100 and $750 per California resident and incident or actual damages, whichever is greater. As one of the most populous states in the nation, representing the fifth-largest economy in the world, a major breach affecting California residents could be disastrous.
5 Tips to Help Protect Your Claim
The need to comply with data privacy regulations has obviously taken on greater urgency. To do it effectively requires a holistic approach, rather than one-off efforts aimed at each specific set of regulations. Organizations need a comprehensive program that spans multiple units, disciplines and departments. Creating such a program can be a daunting, multiyear effort for larger organizations, one that requires leadership from the executive suite to be successful. The following five tips can help guide a coordinated effort to comply with data privacy regulations.
1. Locate All Personal and Sensitive Data
This information is not just locked up in a well-secured, centralized database. It exists in a variety of formats, endpoints and applications as both structured and unstructured data. It is handled in a range of systems, from human resources (HR) to customer relationship management (CRM), and even in transactional systems if they contain personally identifiable data.
Determining where this information exists and its usage, purpose and business context will require the help of the owners or custodians of the sensitive data. This phase can take a significant amount of time to complete, so take advantage of available tools to help discover sensitive data.
2. Assess Your Security Controls
Once personal data is identified, stakeholders involved in creating a risk management program must assess the security controls applied to that data to learn whether they are adequate and up-to-date. As part of this activity, it is crucial to proactively conduct threshold assessments to determine whether the business and operating units are under the purview of the CCPA.
At the same time, it’s important to assess how personal information is handled and by whom to determine whether processes for manipulating the data need to change and whether the access rights of data handlers are appropriate.
3. Collaborate Across the Enterprise
Managing data risk is a team effort that requires collaboration across multiple groups within the organization. The tasks listed here require the involvement of data owners, line-of-business managers, IT operations and security professionals, top executives, legal, HR, marketing, and even finance teams. Coordination is required between data owners and custodians, who must establish appropriate policies for who can access data, how it should be handled, the legal basis for processing, where it should be stored, and how IT security professionals should be responsible for enforcing those policies.
4. Communicate With Business Leaders
Effectively communicating data risk, including whether existing controls are adequate or require additional resources and how effectively the organization is protecting customer and other sensitive data, requires a common language that can be understood by business executives. Traditional IT security performance metrics, such as block rates, vulnerabilities patched and so on, don’t convey what the real business risks are to C-level executives or board members. It’s critical to use the language of risk and convey data security metrics in the context of the business.
5. Develop a Remediation Plan
Once the business’s compliance posture with the CCPA is assessed, organizations should develop risk remediation plans that account for all the processes that need to change and all the relevant stakeholders involved in executing the plan.
Such a plan should include a map of all relevant personal information that takes into account where the data is stored, how it is used and what controls around that data need to be updated. It should also describe how the organization will safely enable access, deletion and portability requests of California residents, as well as process opt-out requests for sharing their data.
Automate Your Data Risk Management Program
Thankfully, there are tools available to help automate some of the steps required in developing and maintaining a holistic data risk management initiative. Useful data from security information and event management (SIEM), data loss prevention (DLP), application security, and other IT tools can be combined with advanced integration platforms to streamline efforts.
Privacy mandates such as the GDPR and the CCPA are just the start; a California-style gold rush of data privacy regulations is on the horizon. Countries such as Brazil and India are already at work on new data privacy laws. A comprehensive data risk management program established before more regulations go into effect is well worth its weight in gold.
Learn Why Data Privacy Is The New Strategic Priority