Information Security Standards and Certifications in Contracting
When organizations contract for outsourced IT services, they look for assurances that the vendor will provide adequate security, often in the form of a security schedule or annex to the contract, or by reference to a widely accepted information security standard. In some cases, the customer insists as well on a certification or audit by an expert third party.
Business managers and lawyers often have only the vaguest notions of what these schedules, standards, and certifications mean. They rely on the organization’s IT staff or consultants for “the technical stuff.” But in the end it is the business managers and lawyers who determine what the organization needs, operationally and contractually. To do that well, they should have at least a basic understanding of the more common information security standards and certifications.
Contracting for Cloud Computing Services
Nearly every day, businesses are entering into arrangements to save the enterprise what appear to be significant sums on information technology infrastructure by placing corporate data ‘‘in the cloud.’’ Win-win, right? Not so fast. If it seems too good to be true, it probably is. Many of these deals are negotiated quickly, or not negotiated at all, due to the perceived cost savings. Indeed, many are closed not in a conference room with signature blocks, ceremony, and champagne, but in a basement office with the click of a mouse. Unfortunately, with that single click, organizations may be putting the security of their sensitive data (personal information, trade secrets, intellectual property, and more) at risk, and may be overlooking critical compliance requirements of privacy and data security law (not to mention additional regulations). My article "Contracting for Cloud Computing Services: Privacy and Data Security Considerations," published this week in BNA's Privacy & Security Law Report, explores a number of contractual provisions that organizations should consider in purchasing cloud services. You can read the full article here, reprinted with the permission of BNA.
Information Governance
When it comes to creating policies for handling personal data in an organization, who decides? How are those policy decisions made and kept up to date?
These are questions of governance – I would call it “information governance.” Most large enterprises have established responsibilities and procedures for information technology governance and specifically for IT security policies, procedures, procurement, management, and training. In many cases, however, these have not been fully mapped to personal data compliance and risk management requirements, which should be defined and monitored by a somewhat different group of people, from departments beyond IT and security. Unless privacy issues are visible in the internal governance process, the organization – and the individuals that deal with it -- may be exposed to some nasty surprises.
The Legal Defensibility Era is Upon Us
The ISSA Journal was recently kind enough to provide me with the opportunity to publish an article entitled "The Legal Defensibility Era" (the cover article for its May 2010 publication, which focuses on legal issues impacting information security). Here is the abstract for the article:
The era of legal defensibility is upon us. The legal risk associated with information security is significant and will only increase over time. Security professionals will have to defend their security decisions in a foreign realm: the legal world. This article discusses implementing security that is both secure and legally defensible, which is key for managing information security legal risk.
So, what does "legal defensibility" mean in the security context?
Continue Reading...Observations on the Dept. of Commerce's Privacy Inquiry
Earlier in the week, I referenced the U.S. Department of Commerce’s Notice of Inquiry concerning “Information Privacy and Innovation in the Internet Economy” (the “Inquiry”). DataGuidance.com recently did a short article on the Inquiry in which I am quoted. I have now had a chance to review the document in more detail and believe that this Inquiry and the report that it generates has the potential to usher in a paradigm shift and reshape the privacy environment as it relates to commerce. Unfortunately, it also has the potential to be a frustrating exercise involving entrenched special interests banging their heads against a wall in a political forum. Nonetheless, whether the Inquiry ends up yielding any legislation, industry standards, best practices or a strategic frame work for privacy, the document itself reflects some of key challenges faced at the intersection of privacy and commerce. This post outlines some of my observations after reading the Inquiry.
Continue Reading...Live from the IAPP Global Privacy Summit in Washington, DC, It's Monday Afternoon
This week, I will be providing short updates from the IAPP Global Privacy Summit in Washington, DC. The conference will be in full swing tomorrow, and I will report on various panels and topics of interest. In the meantime, as I prepare to see old and new friends at the Welcome Reception this evening, a few thoughts on what I expect to see and hear a lot over the next few days:
- How can we harmonize the EU Data Protection Directive and EU member country privacy laws with the flow of data in today's global economy? It is unfortunate that a number of IAPP participants from the EU will not make it to DC for the Summit this year due to the Icelandic volcano. Nonetheless, I expect active dialogue regarding cross-border data transfers, safe harbor v. standard contractual clauses v. binding corporate rules, and, in particular, the impact of the growth of cloud computing and other outsourcing arrangements (or, at least, the growth of the hype around cloud computing). It would also be nice to hear more about the EU Cookie Consent law - there is a panel scheduled to take place, but unknown if that will happen in light of the volcano debacle.
- HIPAA/HITECH and Medical Identity Theft: Health care privacy topics are hotter than ever, especially with the growing number of reported security breaches affecting more than 500 individuals under the new HHS breach notification rules promulgated pursuant to the HITECH Act.
- "Reasonable Security": What does Massachusetts think? What does the FTC think? What in the world is it and how in the world can organizations comply?
- On a related note, FTC Enforcement, with a focus on behavioral marketing issues and evolving notions of notice and consent. What trends will we see over the next several years, particularly with the growth of social media and online behavioral advertising?
- Social media: how it affects the workplace, corporate policies and procedures, and "reasonable expectations" of privacy.
- The forecast for federal legislation - not just on breach notification, but security requirements, online behavioral marketing and, getting lots of media attention these days, potential revisions to ECPA (being driven, once again, by the cloud computing explosion).
- Breaches, breaches, and more breaches. Of course.
A few things that appear to be missing from this year's agenda - the FTC's current review of the rules under the Children's Online Privacy Protection Act (COPPA), enforcement of the Red Flags Rule (the FTC will start enforcing the Rule June 1), and the growing number of state laws (Washington, Nevada, Minnesota) requiring compliance with the PCI Standard.
Stay tuned, I will endeavor to post developments on a daily basis.
The Curious Case of EMI v. Comerica: A Bellwether on the Issue of "Reasonable Security"?
Security breaches in the online banking world continue to yield interesting lawsuits (you can read about three others in this post). The latest online banking lawsuit filed by Experi-Metal Inc. (“EMI”) against Comerica (the “EMI Lawsuit”) provides some new wrinkles that could further illuminate the boundaries of “reasonable security” under the law. Brian Krebs has a good article summarizing the case. In addition, bankinfosecurity.com has a recent article on this matter (in which yours truly was quoted). In this post we take a look at the EMI Lawsuit, consider some legal questions that the case raises, and analyze how it might impact the question of what constitutes “reasonable security” under the law.
Continue Reading...Data Integrity and Evidence in the Cloud
How does cloud computing affect the risks of lost, incomplete, or altered data? Often, the discussion of this question focuses on the security risks in transmitting data over public networks and storing it in dispersed facilities, sometimes in the control of diverse entities. Less often recognized is the fact that cloud computing, if not properly implemented, may jeopardize data integrity simply in the way that transactions are entered and recorded. Questionable data integrity has legal as well as operational consequences, and it should be taken into account in due diligence, contracting, and reference to standards in cloud computing solutions.
Continue Reading...Information Security Clauses and Certifications - Part 1
Outsourcing business and IT functions often means outsourcing compliance and liability risks as well. When a service contract involves protected categories of personal information, both parties need to understand the security requirements and risks. The contract should allocate responsibilities to prevent and respond to security breaches. The contract may also set expectations more precisely by incorporating a written security policy or referring to a widely accepted information security standard, sometimes accompanied by a requirement for a third-party security audit or assessment.
What contractual information security provisions should you consider, as a customer or as a vendor or business partner, when the contract contemplates the exchange of protected information? What do security standards and audits entail for a vendor, and what do they offer for a customer?
Continue Reading...Online Banking and "Reasonable Security" Under the Law: Breaking New Ground?
With the report of another data security-related lawsuit involving online banking (another 2009 lawsuit referenced here involved an alleged loss of over $500,000), and a recent victory for a plaintiff on a summary judgment motion in a similar online banking data security breach case, the question arises whether online banking breaches will yield some substantive case law on the issue of “reasonable” security procedures as a matter of law. Ironically, this question may be answered by reference to a 20 year old model code (UCC 4A) originally drafted to address technological advances from that era. This post explores two complaints recently filed against banks for online banking (Patco Construction Co. v. People’s United Bank ("PATCO”) and JM Test Systems, Inc. v. Capital One Bank ("JMT")) and a court’s ruling on a motion for summary judgment in similar lawsuit (Shames-Yeakel v. Citizens Bank Memo and Memo Order on Motion for Summary Judgment – “Shames-Yeakel” case). In short, since the Shames-Yeakel case proceeded past the "damages" pleading phase, it (and possibly these other online breach suits) reveals how some courts view security "standards" and approach the question of whether a company has achieved "reasonable security." I also believe they demonstrate the difficulty defendants face if they have to defend their security measures in a litigation context after a security breach.
Continue Reading...NDAs: Worth the Effort?
Confidentiality or nondisclosure agreements ("NDAs") are widely used but often poorly reasoned or inadequately implemented. When are they worth the effort? How can they be made more effective in protecting a company's secrets or the secrets of others for which it is responsible?
Continue Reading...
