Countdown to mandatory data breach notification regime – are you ready?
|Services:||Banking & Finance, Competition & Consumer Law, Corporate & Commercial, Dispute Resolution & Litigation, Insurance, Intellectual Property & Technology, People & Workplace, Real Estate & Construction, Restructuring & Insolvency|
|Industry Focus:||Financial Services, Insurance, Life Sciences & Healthcare, Real Estate & Construction|
|Date:||06 December 2017|
|Author:||Peppy Mitchell, Special Counsel|
What you need to know
- Less than three months from now, many Australian organisations will become subject to an extra layer of privacy compliance.
- Introduced under the Privacy Amendment (Notifiable Data Breaches) Act 2017 (Cth), Australia’s mandatory data breach notification scheme commences on 22 February 2018, meaning the countdown is well and truly on.
- If your business is impacted by the new regime, you should be acting now to ensure you understand your new obligations and will be ready to take appropriate and swift action following any breach requiring notification. We have compiled a list of 10 key questions to help you determine how prepared you are and what you need to consider.
The Privacy Amendment (Notifiable Data Breaches) Act 2017 (Cth) applies to government agencies, private sector organisations with annual turnovers over $3m, and all organisations handling health information or involved in credit reporting.
Under the mandatory regime:
- An ‘eligible data breach’ occurs if information or data is accessed without authority, disclosed without authority or lost and the likely result is serious harm to an individual who is the subject of the data.
- If an eligible data breach has occurred or there are reasonable grounds to believe it has occurred, the organisation must promptly notify the Office of the Australian Information Commissioner (OAIC) and take reasonable steps to notify the affected individuals.
- If an organisation has reasonable grounds to suspect that there may have been a data breach, it must investigate expeditiously, and complete that investigation within 30 days.
- Failure to comply is considered an 'interference with the privacy of an individual’ under the Privacy Act 1988 (Cth) and serious or repeated breaches can result in fines of up to $1.8m.
Data breaches can occur because of malicious hackers, theft by rogue staff or human error, like leaving a laptop at an airport lounge or a folder on a bus.
A data breach can have significant consequences, including investigation and reporting costs, potential fines, and compensation payments to affected individuals and even groups of individuals in funded class actions. There is also a very real possibility of brand or reputation damage and significant impact on company dividends.
Don’t wait until a breach arises before you consider how your organisation will respond. It’s important to be prepared ahead of time – here are 10 questions you should be asking now.
1. Do you know all the data and information that your business holds and uses?
Determine the scale and type of records that could be compromised. Identify all individuals (staff, customers, contractors, and third parties) whose data you hold. Assess whether that data is not only personal but also ‘sensitive information’ (eg information about an individual’s health) or open to particular abuse (eg credit card details).
Consider how the data could be misused (eg to commit financial or identity fraud, or to cause psychological distress) so you can better understand the level of risk attached to that data being hacked or leaked. Consider any external entities through which data or information might flow as part of your business, and ensure they are taking privacy as seriously as you are.
2. Do you know who has access to the data your organisation holds?
Consider what databases you have and the systems they use. Review and record which staff have access to which systems and the data they hold. Implement and monitor strong password updating policies. Regularly review your protocols to ensure system access is limited to those who truly need it, and there is provision for the termination of access for former employees and contractors.
3. Do your systems include audit trails?
If there is a breach or a potential breach, it will help if all systems include records of who accessed what and when. That way you will be in a position to assess the extent of an eligible data breach. This may also help to prove that a potential breach did not eventuate or was contained.
4. Do you have a documented data breach response plan?
Once you know what data matters, it is important for your business to develop, agree on and document your data breach response plan (Response Plan).
We think a good Response Plan should include things like:
- details of your Response Team (discussed further in 5 below)
- how matters will be communicated both internally and externally in the event of a breach, and who will be responsible for handling which aspects
- a snapshot of where data is held and how relevant systems could be shut down quickly in the event of a breach
- actions to be taken if an eligible data breach is suspected, discovered or reported.
It’s critical for a Response Plan to be both simple and flexible – no matter how many data breach scenarios you envisage, hackers are one step ahead and every business’s data breach is different. Having a documented Response Plan is vital, but having the ability to adapt it based on the specifics of a breach will be just as important.
5. Have you identified your Response Team?
Decisions made in the first hours after a potential breach will be crucial. Appoint a small, agile Response Team of strong decision-makers who will perform well under stress. Make sure the Response Team members know their roles, and make sure all relevant stakeholders in your business know the Response Team.
Decide in advance:
- reporting lines for suspected data breaches
- who will decide which external stakeholders, affected individuals and internal staff are to be contacted
- who is responsible for communicating with each group to be contacted
- how to record data breaches, serious or otherwise.
Depending on the size of your organisation, you may want to nominate a second point of contact for each member of the Response Team, to ensure your bases are covered if there are absences during a critical time.
6. Are you regularly testing your business?
Every plan can be improved with practice and testing. For example, it helps to know how long it would take to shut down various systems. Just as a test evacuation of a building can help occupants plan and perfect their response to a fire alarm, a test data breach scenario can help you refine your response and identify any gaps.
Some consultants offer ‘white hat hackers’ or penetration testing services to test your business’s response to a ‘real’ external data threat.
7. Have you checked that you have current and adequate cyber insurance?
While many businesses will have some form of insurance in place for business interruption, industrial risk or cyber-attack, it’s important to check that your insurance is adequate for your business and the volume and type of data records that you handle. Don’t assume that the insurance policy your organisation has relied upon for years will necessarily cover you for all types or levels of loss that you might experience. Talk to your broker.
8. Have you updated your contracts with third parties in your data supply chain?
Many organisations have contractors and subcontractors in their data supply chain. Make sure you know who handles what information. Have a process to regularly audit their performance. Make sure you limit data access to only those personnel who need it.
It is important that your contractors reduce risk by de-personalisation, encryption or purging of unnecessary data. Make sure your contractors are anticipating and avoiding breaches before they happen, participating in and evolving with your compliance program. If a breach does occur, they will need to inform you of the breach and cooperate in any investigation and response.
9. Are you keeping track of guidance and information issued by the OAIC?
The OAIC website contains guides, resources and training materials for different kinds of organisations, such as health service providers who routinely deal with particularly sensitive information of patients. It is a good idea to keep on top of any new information as the new regime draws nearer.
10. Do you keep hard copies of key documents, stored securely?
In our digital world, we forget that in a data breach situation, our online information could be locked or frozen and so we may not be able to access our own notes and plans if they are stored on our systems. Keep old-fashioned hard copies of key documents – such as your Response Plan and Response Team details – locked in a separate location, so you can access them even if your systems are offline.
So, what if there is a breach?
The first 24 hours will be critical and your business will need to be able to act swiftly and yet carefully. By asking these 10 questions now, and regularly revisiting them once the new regime comes into force in February, you can help your organisation plan ahead and be prepared. It’s also a good idea to think about getting trusted external advisors ‘on your books’ now, before a breach. If you’d like to talk to us about recommendations for the skillsets that might suit your business, or if you’d like further information on how the new regime might impact you, please contact: