How Cybersecurity Incidents Can Bring Legal Difficulties for Organizations?
There is no escaping the buzzwords of data security and cyber security at the moment. Cyber threats are constantly evolving and pose a threat to financial institutions. Cyberattacks are becoming ever more sophisticated, and a major cyber security breach can have catastrophic consequences. The nature of the threat and the methods by which they are conducted continue to grow ever more sophisticated.
Cyberattacks and data breaches continue to rise, despite the best cybersecurity practices. A constant threat to every individual is the theft of personal, financial, health, or intellectual property information. A Risk Based Security research report found that data breaches in 2019 increased by 33.3% and record breaches by 112% compared to 2018.
Sadly, organizational preparedness hasn't increased at the same rate. More than 57% of Kaspersky study respondents don't have a cyber-security policy in place, and this number increases to 71% for medium-sized businesses. Therefore, smaller and medium-sized businesses face a heightened risk of being held responsible for breaking relevant laws.
What level of cybersecurity is your system on, and have you taken precautions against a data breach? It is time to upgrade your cyber-security infrastructure if you are not confident it is up to scratch. Unless you act quickly, you might find yourself facing lengthy legal proceedings and hefty fines. Besides that, if reputational damage cannot be managed within a reasonable timeframe, the cost could be very high!
Data Breach: Legal Consequences of Cyber Attacks
A cyberattack poses a wave of challenging tasks for company executives, including finding and remediating the breach, identifying those responsible, managing the breach internally, and conducting a forensic investigation of the event. Business owners need to be aware of more than just the issues they are facing today: they also need to consider the legal implications of a security breach.
The value of data in the modern digital economy surpasses that of oil or gold. Your company has a legal obligation to protect customer data from cyberattacks. A highly dynamic environment such as cyberspace calls for technologically advanced cyber law. Data breaches can put your company's customer accounts at risk, resulting in heavy fines if you fail to protect them.
The legal consequences of a data breach must be understood by all businesses, but especially by small and medium businesses that can protect themselves from cyber-attacks.
Data protection standards, insurance coverage, liability, the preservation of evidence, and the possibility of a lawsuit or class action are some of the areas that attorneys should consider when assisting in a cybersecurity incident.
Legal teams need to assist victims in taking the right decisions after cyberattacks to protect themselves against financial and reputational harm. Cybersecurity systems are no longer sufficient to prevent financial and reputational damage.
People who work in the IT industry and security, people who are not lawyers, need to often think like lawyers or at least be accompanied by a lawyer to solve problems.
Lawyer-client privilege is a major issue that enterprise players should bear in mind. Clients seeking legal advice can stay confidential and the attorney cannot be forced to testify against them. The purpose of this clause is to ensure anonymity for clients when they seek the advice of an attorney.
The concept of privileged disclosure is not understood by everyone. Even though it may be considered privileged communication, the content of the communication cannot be presumed to be privileged, such as the information revealed by a cyberattack or data breach.
A security incident is not privileged because its underlying factors are not. Take note of this. For the privilege to remain intact, you need to ensure that you distinguish between investigations, reports, and forensic investigations.
You should conduct privileged investigations separately from regular business investigations if you want them to be privileged. Reports from incidents should be used solely for litigation preparation, not for business outcomes. This separate team should be in place 100 percent.
It should also be noted that corporations cannot opt out of privilege in any single area. Trying to "have your cake and eat it too" can create further legal challenges in some jurisdictions, as an "all or nothing" strategy may be required.
Aspects of Penalties
According to regional jurisdictions, fines may vary in likelihood and severity based on the level of the breach, the number of potential victims, and the number of individuals affected.
A legal team will be able to define your firm's legal liability in the event it is held accountable for a data breach. Because state and country laws differ, it will be important to consult your legal team. Your case will be judged based on the level of threat, the type of compromised data, and above all how well you prepared. It's also vital to notify anyone affected and the appropriate authorities promptly.
You can reduce the number of fines and other expenses if you demonstrate compliance on a high level and have an effective response plan in place. If you run a small or medium-sized business, you have to be very attentive to the legal formalities, but the legal teams of large companies handle all of the legal formalities for you. There are more ramifications than just fines-the theft of the essence of your company is at stake.
The Litigation Process
If you fail to notify the concerned individuals and authorities about a data breach, you may still be held accountable. Cyber-attacks present risks, but if you don't warn the relevant individuals and authorities, you could still face legal action.
Other reasons for litigation may include a lax data security policy and a lack of a quick response to mitigate damage. Shareholders and customers may bring lawsuits in some regional jurisdictions.
The Takeaway: Preparing For Legal Challenges
It is obvious to you what the requirements for data collection are for your business. Data security should be discussed from a technological as well as a legal standpoint in board meetings. The cybersecurity disclosure policy, procedures, and system of your firm should be discussed using the cybersecurity disclosure guidance document of your country. Ensure that your company has cybersecurity insurance and a solid data storage strategy.
Since cyber security is a specialized field, it is important to have a qualified professional oversee the process to ensure the maximum level of security possible. A well-designed reporting process will enable organizations to combat the threat of the most advanced cyberattacks.