Over-Analyzed and Under-Protected: Cybersecurity Compliance is Actually Pretty Simple

by JD Supra Perspectives
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Lawyers and technology consultants are often guilty of overcomplicating things. For some reason, many of us in those industries believe that the more complex and scary our clients perceive their cybersecurity compliance requirements, the more lucrative it will be for us. The truth is quite the opposite. While certainly not easy, data security and privacy compliance is actually pretty simple. 

One need not look far to find real-world facts to support the theory:

  • The estimated $4 billion in costs and losses caused by the wanna.cry ransomware attack that occurred recently? Almost entirely preventable by applying the periodic software updates companies should have been applying anyway.
  • The $2.4 million a Texas-based health system paid to the US Department of Health and Human Services to settle HIPAA violations? According to the HHS imposed Corrective Action Plan that accompanies the settlement, avoidable by implementing the basic policies and procedures all HIPAA-covered entities should have in place anyway, according to the US Department of Health and Human Services.
  • The infamous Ashley Madison hack of 2015 that, quite literally and tragically, resulted in people dying?  Completely avoidable had router/server passwords been re-set from the manufacturers’ defaults or if stronger passwords been used. According to public statements by the Impact Group, the hacktivists that perpetrated the data theft, they got deep into their target’s network by simply using “Pass1234” on routers and servers accessible from the Internet.

The list continues. What makes this all the more frustrating is that companies do not even need to move particularly quickly to remedy known vulnerabilities.

To be sure, Microsoft warned its users of the known vulnerability exploited by wanna.cry some three months before bad things started to happen. The highly regarded annual data breach report issued by Verizon argues that in 99.9% of data security breaches – astounding if correct – the vulnerability was not compromised by hackers for more than a year after it became known and those susceptible to it made aware. 

Microsoft warned its users of the known vulnerability exploited by wanna.cry some three months before bad things started to happen.

We lawyers and consultants would therefore do our clients a great service if we pointed out the simplicity, rather than the complexity, in data security and privacy compliance.

If the lock to your client’s front door is broken, you would not advise them to form a new “door locks sub-committee” of their board of directors, hire a slew of MBAs to analyze what the rest of the industry is doing with door locks, and buy an expensive consultant report on future proofing locks forever. No, you’d advise them to call the neighborhood locksmith and get the best lock they can afford today and do the rest of that complex stuff when they can.

Cybersecurity does not have to be any harder than that. If one of your major applications vendors issues a report about a vulnerability, your client does not need to make the false choice of ignoring it (as so many did with wanna.cry) or immediately shut down every system to patch it. As the Verizon reports indicates, while moving quickly is always best, having a defined plan to move at some reasonable point within a year is infinitely better than never moving at all. 

If the lock to your client’s front door is broken, you would not advise them to form a new “door locks sub-committee” of their board of directors...

That analysis also holds true for non-technical aspects of cybersecurity compliance. Take, for example, two newer and seemingly complex and onerous regulatory regimes: the new Cybersecurity Regulation issued by the New York Department of Financial Services (23 NYCRR 500 et sequ), which became effective on March 1, 2017; and the General Data Protection Regulation under European Union law that will become effective, with global impact, on May 25, 2018. 

Both regulations have caused much handwringing at financial services companies, and much glee in those quarters of the consultant and lawyer worlds where fear and complexity are sales tools. But when one steps back and reads both regulations, and understands their requirements in the context of a client’s business, substantial areas of overlap can be found and leveraged to create a simple and efficient compliance plan. 

To wit, the New York Regulation requires appointment of a Chief Information Security Officer, while the GDPR requires, in many cases, appointment of a Data Protection Officer. Well guess what? By leveraging the affiliate rules under the New York law, companies can use the same person for both roles. And if the company is also HIPAA-regulated, that person can be the required HIPAA appointee as well. Executive appointments are just one simple example. In line item after line item of the various overlapping cybersecurity regulatory regimes affecting companies today, these same efficiencies can be found.

We recommend, therefore, that companies:

  1. Review their own and their vendors’ procedures to ensure that they are doing basic blocking and tackling, including regular application patching, periodic password strength assessments (especially changing of default passwords), and at-rest encryption of sensitive data. These are relatively easy to do, yet have a very high return on investment, because failures in those areas account for virtually all large scale breaches in the last several years;
  2. Categorize all their cybersecurity regulatory obligations across jurisdictions and legal regimes, and find commonalities that can be leveraged for efficient and cost-effective implementation of compliance programs; and
  3. Most importantly, take action rather than just study and over-analyze. Using  basic AES 256 encryption tomorrow is far better than using the most sophisticated, future-proofed, hashed and salted systems two years from now. 

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[A partner at McCarter & English, Rich Green provides legal and business counsel to Global 2000 corporations, Wall Street banks, emerging companies and individual inventors in matters involving the sourcing, commercialization, use and protection of intellectual property, technology and technology-enabled products and services around the world. Jeffery Bouchard, a law clerk with McCarter & English, assisted in the preparation of this article.]

 

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