Financial Services and GDPR: What 200 Professionals Told Us About Their Data Protection
When the European Union’s (EU) General Data Protection Regulation (DPR) comes into full force May 25, European citizens will receive greater privacy protection and regulators will have a strengthened authority to take action against businesses that breach the new laws. Fines of up to 4% of annual global revenue or €20 million, whichever is greater, can be levied against any organization that processes personal data of EU residents, regardless of where they are based. Stories with doomsday predictions and generous helpings of fear can be found in many publications.
McAfee recently published an executive summary of our report, Beyond GDPR: Data Residency Insights from Around the World, that focuses on responses from the 200 professionals surveyed in the financial services sector. While there remains work to be done, it’s not all doom and gloom for the financial services industry. More than one quarter (27%) of financial services firms surveyed are already set up to comply with the GDPR requirement for controllers to report a breach to the appropriate authorities within 72 hours of becoming aware of a breach, when compared to just 20 percent of other industries. This is most likely the result of greater preparation, as the financial sector has a higher proportion of firms (28%) that have been working on compliance for three to four years, compared to the global average of just two years.
We believe that the looming threat of GDPR fines is an opportunity to communicate the seriousness of these regulations to your board and executives, and to position the firm as one that cares about personal privacy. And that could help boost the bottom line according to survey respondents – some 80% of financial services respondents believe that organizations that properly apply data protection laws will attract new customers.
Knowing what data is stored where is one of the most important steps of this data protection activity, but here are a few more that we recommend.
Step 1. Know Your Data.
Not only where it is, but what it is, why you are collecting it, and what levels of security and encryption are used to protect it. If you are collecting personal data that is not essential to your service offering, you may want to reconsider what you collect to better manage your risk of exposure, and comply with data-minimization principles.
Step 2. Enforce Encryption.
Effective encryption protects data by making it useless to hackers in the event of a data breach. Use proven encryption technologies, such as Triple Data Encryption Standard (DES), RSA, or Advanced Encryption Standards (AES) to ensure the safe storage of both your employees’ data and customers’ data.
Step 3. Pseudonymize personally identifiable information (PII).
Modifying data prior to processing so that it cannot be tracked back to a specific individual provides another layer of data protection. Pseudonymizing your data allows you to take advantage of Big Data and do larger scale data analysis, and is viewed as an appropriate technical and organizational measure under article 32 of the GDPR.
Step 4. Get Executive Management Involved.
The necessary changes to your data storage, monitoring, management, and security systems can require more human and financial resources than are currently budgeted. The potential of significant fines is an excellent opportunity to get the required support from the highest levels of your organization.
Step 5. Appoint a Project Owner.
Staying compliant with various data protection laws is not something that can be done by an IT staffer in their spare time. Consider appointing a data protection officer or equivalent, to take ownership of both implementation and ongoing management of this project. A data protection officer may be required in any event, depending on the nature of the processing carried out.
Step 6. Review Data Security with Cloud Vendors.
With cloud computing and storage touching most business processes in some fashion, consider conducting an audit of all your vendors’ systems, procedures, and contracts, and the data that they are handling and storing on your behalf. After all, each organization will be held responsible for meeting the GDPR requirements.
Step 7. Foster a Security-Aware Culture.
Human errors are often responsible for data and security breaches. It doesn’t matter that your business follows the strictest security protocol —one error made by one uninformed person could lead to irreparable damages. Consider making sure that all your employees and contractors receive proper and regular training on data security and the handling of customer information.
Step 8. Have a Response Plan.
No system is 100% bulletproof. You need an incident response plan in place to make sure that you can recover as quickly as possible in the event of a data breach. Under GDPR law, you are required as a controller to alert the appropriate authorities within 72 hours of becoming aware of a data breach, and you also need to notify any individuals whose personal data has been compromised.
Step 9. Go with a Privacy by Design Approach.
The GDPR places a requirement on organizations to take into account data privacy during design stages of all projects. Companies will want to consider data-protection technologies such as data loss prevention (DLP) and cloud data protection (CASB) from the very beginning of the development. Implement data-protection policies that would help prevent both accidental and malicious data theft by insiders and cybercriminals – doesn’t matter where it resides.
While no one can guarantee that you will not suffer a data loss, following these steps will help you understand where you stand, identify any gaps, and improve your organization’s responsiveness. Loss of customer confidence was the most common concern of financial services organisations (64%), and rapid containment and response is one of the best ways to protect your firm’s valuable reputation. So keep calm, and prepare for GDPR.
Read the full report, Beyond GDPR: Data Residency Insights from Around the World, and learn more about the top data-protection concerns and strategies of more than 800 senior business professionals from eight countries and a range of industries.
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