In today's business world, where digital technologies are everywhere, cyber attacks have become a serious and constant threat. They can cause major legal and financial harm, and their impact can be far-reaching for all businesses, from large corporations to small and medium-sized firms. Cyber attacks can affect customers, employees, supply chains, finances, operations, and reputations. This makes cyber security an essential priority for all businesses.
This article explores the key risks, mitigation strategies, and the legal framework for cybersecurity, including how complying with UK GDPR can help you prevent attacks and data breaches.
For support with UK GDPR compliance or cyber attack prevention advice, contact our data privacy legal experts. We can help you reduce risk through data audits, enhanced data management, and tailored cyber security training, including checklists for UK GDPR compliance.
We will examine the following:
- What regulations does your business need to comply with?
- What are the business implications of a cyber attack?
- What are the legal implications of a cyber attack?
- How should your business deal with a cyber security breach?
- How can your business prevent cyber attacks?
- How Can UK GDPR compliance help prevent cyber risks?
What regulations does your business need to comply with?
Your cyber security requirements will depend on your business type and the risks involved. Proactive action to prevent cyber attacks is essential for most businesses, but there is no single set of regulations governing this.
Instead, various regulations apply, with some rules universal and others specific to certain industries.
Key Regulations include:
- UK GDPR: These rules require the secure processing of personal data using appropriate technical and organisational measures, including risk analysis and data protection methods like pseudonymisation and encryption.
- Security of Network & Information Systems (NIS) Regulations: These rules govern IT systems and apply to businesses in the energy, health, and transport sectors. They also apply to cloud service providers. They are designed to mitigate the fallout from incidents affecting the security of network and information systems.
Other laws target cyber security in financial services and electronic communications businesses. Regulatory requirements are flexible, ensuring measures are appropriate and proportionate to the specific business.
What are the business implications of a cyber attack?
Cyber attacks can range from hacking by cyber criminals to phishing. They have the potential to significantly affect your brand and market position.
They can trigger severe damage to your business operations, by causing extended downtime and core business functionality breakdowns. This can result in lost productivity, revenue, and increased customer dissatisfaction, significantly impacting your reputation and damaging trust and profit margins. Loss of confidence from your customers can further harm your brand and impact future revenue streams. Companies can also find themselves heavily out of pocket, given the costs of investigating and handling cyber attacks and data breaches.
Business supply chains are especially susceptible to cyber attacks. Cyber breaches can disrupt the flow of goods and services, by delaying supply chain activities, and inflating costs for your business and your partners, raising mistrust and damaging partnerships within your supply chain.
Employee morale and productivity can also suffer deeply from cyber attacks. Job insecurity, financial losses, and personal data loss can cause significant stress and anxiety for your staff and can lead to increased absences, higher staff turnover, and a disengaged and low-performing workforce.
What are the legal implications of a cyber attack?
A cyber attack can have serious legal repercussions for your business. and can potentially lead to financial losses, regulatory fines, and customer claims.
For instance, a cyber attack leading to loss of personal data could result in enforcement action by the Information Commissioner’s Office (ICO) under the UK GDPR, which can impose heavy fines for breaches of data protection principles. These fines can be as high as £17.5 million or 4% of a business's global annual turnover, whichever is higher.
A cyber attack can also lead to potential issues with your contracts and customers, resulting in various legal implications and consequences. For instance, contractual breaches and liabilities such as a customer claiming a breach of contract or damages due to a data breach may arise. Cyber attacks or similar data security incidents could also give rise to customers terminating their contracts, and refusing to work with your or a supplier again.
How should your business deal with a cyber security breach?
If you fall victim to a cyber attack, one of the first crucial steps is to contact your insurer immediately. This prompt action is vital for several reasons:
- It ensures you comply with your policy's notification requirements, potentially preserving your coverage.
- It allows the insurer to provide immediate guidance and support, including access to cyber security experts and legal advisors.
- It initiates the claims process, helping to mitigate financial losses.
Other legal considerations and obligations include:
- Data Protection Act 2018 and UK GDPR compliance:
- Report personal data breaches to the Information Commissioner's Office (ICO) within 72 hours of becoming aware of the breach, if it's likely to result in a risk to individuals' rights and freedoms.
- Inform individuals without delay if there is a high risk to their rights and freedoms.
The ICO can provide valuable advice on managing the breach and may need to be involved in any subsequent investigation or regulatory action.
- Network and Information Systems (NIS) Regulations 2018: Operators of essential services and relevant digital service providers must report significant incidents to the relevant competent authority.
- Financial Conduct Authority (FCA) regulations: FCA-regulated firms must report material cyber incidents.
- Contractual obligations: Notify clients, partners, or suppliers as per contractual agreements.
- Companies Act 2006: Directors have a duty to promote the success of the company, which may include managing cyber risks and reporting significant incidents.
- Industry-specific regulations: Certain sectors may have additional reporting requirements (e.g., healthcare, telecommunications).
- Criminal law: Report certain cybercrimes to law enforcement agencies.
- Securities regulations: Listed companies may need to disclose material cyber incidents to the market.
- Privacy and Electronic Communications Regulations (PECR): Telecom providers have specific security and breach notification obligations.
Businesses should also maintain records of all breaches, implement measures to prevent future attacks, and cooperate with authorities in any investigations.
Besides any legal obligations you may have to report a cyber attack, doing so demonstrates your commitment to transparency and proper handling of the incident.
You should also report the breach to the National Cyber Security Centre (NCSC): Whilst you are not legally required to do so, the NCSC can help minimise reputational damage from personal data loss.
How can your business prevent cyber attacks?
Given the threats highlighted above, it is vital for your business to take active steps to prevent a cyber attack from occurring.
You should educate all staff about malware, unsecured networks, and email protocols, provide appropriate training for new software systems, and implement an information security policy necessary for secure access control to your systems, as well as conducting regular security reviews.
For managing risks in commercial transactions, ensure any third parties you work with have adequate security by conducting due diligence on their IT systems, data policies, and training policies. Also, consider implementing security policies for them to follow.
How Can UK GDPR compliance help prevent cyber risks?
Complying with the UK GDPR framework will help your business minimise risk and enhance your data security measures, to mitigate against the potential for cyber attacks and data breaches which involve personal data.
The UK GDPR obligates businesses to establish robust technical and organisational measures to protect personal data. Implementing such measures will reduce your businesses vulnerability to cyber threats.
Here are some key strategies to both prevent cyber attacks and safeguard any personal information you may deal with:
- Prioritise UK GDPR compliance – build good data practices, conduct regular data protection audits, and continuously assess your compliance with the UK GDPR rules. This will help ensure compliance and enable you to better protect the data you have.
- Deliver regular employee training – cyber security awareness training will help your staff to recognise and report suspicious activities, reducing the likelihood of cyber attacks against your business.
You should also consider a robust checklist for cyber security measures directing staff to:
- Analyse risks to data security posed the organisation processes personal data.
- Assess the cost of implementing any security measures and their proportionality.
- Introduce an information security policy and review and update it regularly.
- Implement essential technical controls and consider signing up to the government-backed Cyber Essentials certification scheme.
- Use encryption and/or pseudonymisation where appropriate.
- Introduce adequate recovery systems to deal with any security breach.
- Regularly review your security systems.
- Ensure third-party processors you deal with maintain adequate security protocols.
- Focus on data minimisation – by collecting only the personal data that is strictly necessary for your business purposes. This approach not only reduces the risk of unauthorised access to sensitive information but also limits your company's exposure and potential liability in the event of a cyber attack or data breach.
- Maintain regular and secure backups – to enable swift recovery in case of a cyber attack or data breach. It also helps you to ensure business continuity.
- Carry out consistent penetration testing – which replicates real-world attacks to identify weaknesses in your defences. This process can help you to uncover vulnerabilities that could be manipulated by malicious third parties and prepares you for pre-emptive remediation.
- Encourage strong passwords, access controls and encryption – by implementing policies and encryption protocols that help to safeguard sensitive data an prevent unauthorised access. Access controls such as multi-factor authentication can also help to prevent unauthorised access.
- Plan to detect and handle incidents – with a clear plan on how to respond to data breaches so you can quickly contain any damage. Your business plan should include procedures for identifying breaches, preventing them, and implementing recovery measures. It should also cover your legal obligations to report personal data breaches to the data protection regulator and affected data subjects where required.
Businesses should always prioritise cyber security, practice good data governance, and observe the UK GDPR rules. Contingency planning, employee training, and effective detection mechanisms are essential for mitigating the risks of cyber attacks and managing data breaches promptly.
These measures not only fortify data security but also foster trust among customers and stakeholders, ultimately boosting long-term business confidence. By carefully evaluating and implementing these strategies and best practices, your organisation can substantially mitigate the risk of severe damage resulting from cyber attacks, safeguarding your reputation and financial well-being. In addition to assisting with cyber security risk management, our team can assist you across all areas of data protection and privacy law.
