The Blindside Of: Data Breaches

Alexander Freund

Over the course of the last couple of years as the number of data breaches has become much more frequent, and the public awareness surrounding those breaches has heightened, many of our customers have come to appreciate our record on data breaches.  To date, none of our managed service customers have had to manage or remediate a breach, which as many of you may not be aware, can be expensive and painful.  Just how expensive and painful is the topic that I would like to address today.

We have recently worked with a number of companies that were referred to us after a data breach, and the effort involved in locking down a poorly managed environment, isolating the extent of the breach in terms of the data that was exposed, and communicating with the parties whose data was exposed will likely be a huge business interruption, cost a lot of money, and create some very negative publicity for the breached entity.

For those of you that are not familiar with Florida law regarding data breaches, Florida Gov. Rick Scott signed the Florida Information Protection Act (SB 1524) into law, amending Florida’s breach notification status effective July 1, 2014.  According to Karen Booth of Law360.com, “the act replaces Florida’s current breach notification statute (Fla. Stat. § 817.5681) with a new statute (Fla. Stat. § 501.171), which, among other changes: (1) expands the definition of “personal information” triggering breach notification obligations to include an individual’s online account credentials (following California’s recent amendments, and also to include an individual’s name in connection with his or her health care or health insurance information; (2) expands the definition of “breach” from “unlawful and unauthorized acquisition” of personal information to “unauthorized access,” of such information; (3) reduces the deadline for notifying affected individuals from 45 to 30 days after discovery; (4) requires notification to the Florida attorney general regarding breaches affecting more than 500 individuals “in Florida”; (5) imposes unique requirements to provide copies of forensic reports, “policies regarding breaches,” and other documentation to the attorney general upon request; (6) requires reasonable data protection and secure disposal of personal information; and (7) retains relatively unique provisions of Florida’s current statute imposing daily monetary fines for late notice and requiring vendors to notify data owners of breaches within 10 days of discovery, while maintaining that the statute creates no private right of action.”

To adhere to these new state requirements for identifying and reporting to the affected users and the Florida AG once a breach has occurred, proactively preparing for a breach becomes almost mandatory.  What does this kind of preparation look like?

First, there are a number of IT infrastructure changes and specific software tools that should be added to the environment to assist in identifying the scope of breach.  These include enabling more extensive logging on all internet exposed devices, access permissions and authentication logging on the internal network and on any external websites where the entity might be storing PI (Personal Information) data, and identification and isolation of any PI data within the IT infrastructure.  Once these changes have been made, a separate program to collect and permanently store all of these logs is critical to being able to rapidly scan these logs to establish when the breach occurred, what data was exposed to the breach, and when the breach was closed.  If none of these can be established, then by default, the breached entity would have to presume that all data was exposed to the breach, significantly widening the impact of the breach.

Second, it is clear from the new requirement that the Florida AG can request lots of information to establish whether the breached entity was negligent.  That the Florida AG can request documentation that includes corporate policies for data breaches, forensic reports, incident response plans and reports, and other documentation should be a clear indication that the state plans on assessing how well prepared the entity was to react appropriately to the breach.

As we have assisted more referral customers in working through the difficulties of a data breach, what has become quite clear is that being able to rapidly close the breach, identify the scope of a breach, and having well documented and published corporate policies regarding breaches is imperative to reducing the liability, cost, and business interruption a breach will create.

For more information on IT security best practices, or to schedule an audit of your company’s IT infrastructure, call us at 305-278-7100.

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