The Information Commissioner’s Office (ICO) recently issued Carphone Warehouse with a massive £400,000 penalty after a cyber-attack in 2015 led to hackers gaining unauthorised access to the personal data of over 3 million customers and 1,000 employees, including names, addresses and historical payment card details.

Following the ICO’s investigation, Carphone Warehouse was revealed to have failed to have taken adequate steps to protect the personal data of its staff and its customers. In particular:

  • the software used to access their internal systems were out-of-date;
  • the technical security measures in place were inadequate;
  • security testing was sporadic at best; and
  • there were insufficient procedures in place to identify and purge historic data.

This case perfectly demonstrates the close relationship between data protection and cyber security and the fact that if businesses fail to adopt a robust approach in respect of cyber security this can significantly increase the risk of committing a serious breach of data protection law.

With the General Data Protection Regulation (GDPR) due to impose additional obligations on all businesses that carry out data processing activities as of 25 May 2018, there has never been a better time for businesses to review their internal policies and procedures to ensure that they have everything in place to help ensure ongoing compliance with their data protection obligations. One big piece of this exercise will need to cover the approach the business takes to cyber security.

What are the potential cyber security risks to your business?

  • Changing threats – historically, cyber-crime was confined to organised crime groups aiming to make money from the businesses they attacked. Whilst these types of organisations still exist today, businesses also face cyber-attacks from large political or social groups wanting to create disruption in certain industries or to influence events. The continued investigation into the alleged interference by members of the Russian government into the US Presidential Election is just one example of this. Furthermore, some individuals will carry out cyber-attacks on businesses simply to showcase their advanced hacking skills and see how much damage they can cause.
  • Technology – as firms continue to strive to create new technological solutions to their business issues, this inadvertently presents new opportunities to cyber-criminals to infiltrate and harm other businesses. Businesses also want to be able to do more and more with the technology and data at their disposal. Whilst the benefits of the cloud, increased automation and other similar technological innovations are undoubtedly numerous, they have also introduced new vulnerabilities which businesses will need to address in order to protect themselves against.
  • Increased regulatory compliance – new pieces of legislation like the GDPR are imposing more stringent obligations on businesses in respect of the measures they need to take to ensure the security of the data they hold is maintained.

What are some of the steps that a business can take to protect itself from cyber-attacks?

Gavin Evans of Trend Micro, a leading global provider of enterprise data and cyber security solutions, considers that there are four main layers within an organisation where cyber security measures need to be taken:

  • Email – a lot of data is probably going to enter the business via email. Cyber-criminals will often hack into or imitate valid email addresses (either from staff or external contacts) in order to launch a cyber-attack.
  • Endpoints – endpoints are the devices used by the employees of a business to access the network e.g. laptops and mobile phones. Each endpoint represents an opportunity for a hacker to gain unauthorised access to the system.
  • Network – this is what links all the business together, allowing staff to communicate with each other and access shared resources. If a cyber-criminal were to install malware on a business’s systems so that the network went down, the business may not have any access to its resources
  • Server – servers are made up of the software and hardware that store all the valuable resources and data of a business. It is arguable that servers should be the most protected part of any computer system.

Businesses should consider implementing the following practices when assessing how to improve the levels of their cyber security:

  • Install encryption software and implement internal procedures to prevent email phishing.
  • Backup business systems so that they can be restored quickly in the event of a cyber-attack. It is recommended to have multiple back-ups, with one stored outside the business network.
  • Keep up-to-date with patching so as to minimise the risk of hackers exploiting vulnerable and out-of-date software. The ICO revealed that this was something that Carphone Warehouse was particularly guilty of and which made it easier for the business to be hacked.
  • Install security software on each endpoint and ensure that employees do not use personal devices to access the business’s systems.
  • Implement a security system on the business’s server. This could include the use of firewalls, passwords, limiting access to business critical data and keeping the location of your servers secret. There are also many professional organisations offering cyber security solutions which can be tailored to a particular business.
  • Provide regular cyber security training to staff to raise awareness, educate them on best practice so as to avoid being deceived by email phishing. Businesses may even wish to run simulation testing to see how employees respond to a cyber-attack.

How does this relate back to data protection?

The GDPR requires all businesses that process data to implement appropriate technical and organisational measures to ensure a level of security appropriate to the data it processes. Failure to do this could expose a business to fines of up to 4% of global turnover or €20million (whichever is the higher).

Establishing robust cyber security policies and procedures is not only going to reduce the risk of a business being exposed to a cyber-attack; it is also going to help reduce the risk of the security of its personal data being compromised, thus assisting the business to comply with its obligations under the GDPR.  

If a business is a supplier of goods or services, it should consider what obligations it has in its customer contracts in relation to data protection, in particular:

  • Does it understand the extent of its data protection obligations?
  • Are there any specific obligations with regards to security of data or implementing cyber security measures?
  • Is it currently complying with these obligations?
  • Is it able to comply with its data protection obligations?

With the GDPR soon to come into force, this may be an appropriate time for suppliers to review and update their customer contracts in order to manage their own risk and exposure as well as manage customer expectations of which party bears responsibility for what.

 

About the author

Patrick McCallum Solicitor

Patrick assists the Outsourcing, Technology and Commercial Team on general commercial matters.