security

You’ve no doubt heard that on Tuesday the European Court of Justice declared the U.S.- EU Safe Harbor invalid. Under European law, the transfer of EU citizens’ personal data to a third country may only occur if the third country ensures adequate protection of that data. A European Commission decision in 2000 declared the United States’ laws and policies provided such adequate protection, through the vehicle of the U.S.- EU Safe Harbor Framework. Nearly 4,500 U.S. companies partake of Safe Harbor protected status – at least until this week’s European Court of Justice’s ruling pulled the plug.

As a result of this ruling, each of the European Union’s 28 national data protection authorities (“DPAs”) now has the power to establish its own rules and regulations for data transfers. Although the U.S. and the European Commission are engaged in continuing negotiations for “Safe Harbor 2.0,” there is no certainty about when the new framework will be established, or even what the framework will be. In the meantime, the question looms – what will the national DPAs do?

 will be missed, but his wisdom will endure. Who else could have observed “No one goes there nowadays. It’s too crowded”? The information governance equivalent is “No one has information anymore. There’s too much of it.” In the last decade we have witnessed the systemic utilitization of computing power. Data used to be housed predominantly within a company’s own systems, but now, through remote storage, SaaS, PaaS, and other cloud solutions, more and more information is hosted by third-party providers. Also, as marketplace forces compel organizations to leverage or outsource functions that used to reside internally, operational service providers increasingly create, receive, maintain, and process information on the organization’s behalf.

It follows that information governance (the organization’s approach to satisfying information compliance and controlling information risk while maximizing information value) can no longer simply be an internally-focused exercise. IG “has come to a fork in the road, and must take it.” Service provider selection, contracting, and oversight are now primary vehicles of information governance – because when it comes to governing your organization’s information, “the future ain’t what it used to be.”

Do data breaches cause lasting reputational damage for organizations? We all know breach response is expensive –  just ask Target, which posted data breach-related costs of $162 million through fiscal year 2014, plus another $129 million for the first half of FY2015, all net of $90 million in cyber insurance. That’s a lot of zeros, and it’s not over yet. According to Ponemon’s 2015 Cost of Data Breach study, the average U.S. cost of a “malicious or criminal breach” is $230 per compromised record, $210 per record for a “system glitch” breach, and $198 per record for “human error” breaches. The U.S. breaches in the study averaged more than 28,000 compromised records and an average total cost of over $6.5 million.

But beyond response hard costs, the X factor for many companies is a fear of crippling reputational damage in the wake of a large-scale data breach. As it turns out, such fears may be unfounded, and may also be unhelpful.

At DEF CON you’ll often hear that “every company is receiving penetration testing, but some companies pay for the pleasure.” My take is that every company pays for penetration testing – some companies pay in planned expenditures, but others pay in response costs, reputation loss, business interruption, legal liability, and increased insurance premiums. Or as Claus Moser observed, “Education costs money, but then so does ignorance.”

Last week’s DEF CON post shared insights from DEF CON 23 presenters on the fast-moving threat environment. Below are post-DEF CON observations on strengthening an organization’s cyber risk management strategy.

Faces lit by computers, the hackers’ objectives were clear — attack and defend. At this year’s DEF CON, the largest hacker convention in the United States, pre-qualified teams of hackers from around the globe faced-off in a network-security simulation that combined network sniffing, cryptanalysis, programming, reverse-engineering, and other tactics that would make Lisbeth Salander blush. Back in 1993, the first DEF CON had roughly 100 participants. This year, badges dangled from the necks of nearly 20,000 attendees, including hackers, lawyers, academics, journalists, and government officials.

DEF CON has an edgy narrative — it’s notorious for criminal exploits, wild parties, and Mohawk-fitted outcasts. But that story line is much too simple. And “too simple” is what security researchers—or hackers, depending on your sensibilities—proclaim after they expose the vulnerabilities in products and infrastructure we rely on daily.

Below are highlights and insights from presentations at DEF CON 23 that illustrate the evolving cyber risks and policy dilemmas facing governments, individuals, and the private sector.

Costs continue to mount for Target as the company works to put its massive 2013 data breach behind it. Target and Visa recently announced an agreement for Target to reimburse Visa card issuers as much as $67 million for costs associated with the historic breach. The settlement is considerably larger, and more likely to succeed, than the proposed $19 million deal between Target and MasterCard that issuers previously rejected as too low.

Do you often feel that despite best efforts to circle the wagons your information security team is fighting a losing battle with broken down tools? Even though information security budgets have increased in the last couple of years—likely in response to the very visible increase in high-profile data breaches—discretionary budget dollars are scarce. I recently heard the poker term “dead money”  used to describe that large portion of every IT budget that has been committed long before it is received, much like the money we all must dedicate to mortgages, utilities, food, and transportation. Thus, for every $100 of total IT spend, we may be left with just $0.60 for new baubles and geegaws, as my grandmother used to say.

For years, federal district courts have reliably dismissed data breach consumer class actions at the outset, citing the U.S. Supreme Court’s 2013 decision in Clapper v. Amnesty International. Defendants’ tried-and-true argument goes like this:  (1) under Clapper, plaintiffs must allege at least an imminent risk of a concrete injury to have standing under Article III of the U.S. Constitution; (2) the data breach plaintiffs haven’t alleged such an injury, and any future alleged injuries are too speculative; (3) so no standing, and no case.  But last week, in Remijas v. Neiman Marcus Group, the Seventh Circuit disagreed. The Neiman Marcus decision pumps new life into consumer data breach claims, and plaintiffs will undoubtedly argue that it sounds a death knell for Clapper in data breach litigation.

Old-school company intranets are like soooo boring. Why not juice things up? Sure, we’ll keep the one-directional content (employee policies, company announcements, etc.), but let’s add a dynamic platform for employee interactive training modules, capturing employee responses and quiz results. Why stop there – how about a message board for employees, to turn dull company communications into an energized conversation? And in today’s mobile world, shouldn’t we enable remote access from anywhere our employees happen to be, 24/7? What could possibly go wrong?

Well … a whole lot will go wrong, unless the company first applies an information governance perspective. So let’s ask a few questions to explore what information risks and compliance issues are at play.

Companies suffering a data breach have a lot to worry about. High on that list is Norman Siegel, a founding member of Stueve Siegel Hanson LLP. Siegel is a prominent data breach plaintiffs’ lawyer – he helped lead the team representing consumers in the consolidated Target data breach lawsuits, and currently serves as lead counsel representing consumers in the pending Home Depot data breach litigation. He also is co-chair of the Privacy and Data Breach Litigation Group of the American Association for Justice.

I recently asked Siegel for his thoughts on the current landscape of data breach consumer litigation. Here is what he shared.