Tag Archives: eu data protection regulation

[Podcast] Mintz Levin’s Sue Foster on the GDPR, Part II

[Podcast] Mintz Levin’s Sue Foster on the GDPR, Part II

In this second part of our interview with attorney and GDPR pro Sue Foster, we get into a cyber topic that’s been on everyone’s mind lately: ransomware.

A ransomware attack on EU personal data is unquestionably a breach —  “accidental or unlawful destruction, loss, alteration, unauthorised disclosure of, or access  …”

But would it be reportable under the GDPR, which goes into effect next year?

In other words, would an EU company (or US one as well) have to notify a DPA and affected customers within the 72-hour window after being attacked by, say, WannaCry?

If you go by the language of the law, the answer is a definite …  no!

Foster explains that for it to be reportable, a breach has to cause a risk “to the rights and freedoms of natural persons.”  For what this legalese really means, you’ll just have to listen to the podcast. (Hint: it refers to a fundamental document of the EU.)

Anyway, personal data that’s encrypted by ransomware and not taken off premises is not much of a risk for anybody. There’s still more subtleties involving ransomware and other EU data laws that I think is best explained by her, so you’ll just have to listen to Sue’s legal advice directly!

There’s also very interesting analysis by Foster on the implications of the GDPR for Internet-of-Things gadget makers.

Come for the ransomware, but stay for the IoT:

[Podcast] Mintz Levin’s Sue Foster on the GDPR, Part I

[Podcast] Mintz Levin’s Sue Foster on the GDPR, Part I

Sue Foster is a London-based partner at Mintz Levin. She has a gift for explaining the subtleties in the EU General Data Protection Regulation (GDPR). In this first part of our interview, Foster discusses how the GDPR’s new extraterritoriality rule would place US companies under the law’s data obligations.

In the blog, we’ve written about some of the implications of the GDPR’s Article 3, which covers the law’s territorial scope. In short: if you market online to EU consumers — web copy, say, in the language of some EU country  — then you’ll fall under the GDPR. And this also means you would have to report data exposures under the GDPR’s new 72-hour breach rule.

Foster points out that if a US company happens to attract EU consumers through their overall marketing, they would not fall under the law.

So a cheddar cheese producer from Wisconsin whose web site gets the attention and business of French-based frommage lovers is not required to protect their data at the level of the GDPR.

There’s another snag for US companies, an update to the EU’s ePrivacy Directive, which places restrictions on embedded communication services. Foster explains how companies, not necessarily ISPs, that provide messaging — that means you WhatsApp, Skype, and Gmail — would fall under this law’s privacy rules.

Sue’s insights on these and other topics will be relevant to both corporate privacy officers and IT security folks.

Listen and learn:

Data Security Compliance and DatAdvantage, Part III:  Protect and Monitor

Data Security Compliance and DatAdvantage, Part III:  Protect and Monitor

At the end of the previous post, we took up the nuts-and-bolts issues of protecting sensitive data in an organization’s file system. One popular approach, least-privileged access model, is often explicitly mentioned in compliance standards, such as NIST 800-53 or PCI DSS. Varonis DatAdvantage and DataPrivilege provide a convenient way to accomplish this.

Ownership Management

Let’s start with DatAdvantage. We saw last time that DA provides graphical support for helping to identify data ownership.

If you want to get more granular than just seeing who’s been accessing a folder, you can view the actual access statistics of the top users with the Statistics tab (below).

This is a great help in understanding who is really using the folder. The ultimale goal is to find the true users, and remove extraneous groups and users, who perhaps needed occasional access but not as part of their job role.

The key point is to first determine the folder’s owner — the one who has the real knowledge and wisdom of what the folder is all about. This may require some legwork on IT’s part in talking to the users, based on the DatAdvantage stats, and working out the real-chain of command.

Once you use DatAdvantage to set the folder owners (below), these more informed power users, as we’ll see, can independently manage who gets access and whose access should be removed. The folder owner will also automatically receive DatAdvantage reports, which will help guide them in making future access decisions.

There’s another important point to make before we move one. IT has long been responsible for provisioning access, without knowing the business purpose. Varonis DatAdvantage assists IT in finding these owners and then giving them the access granting powers.

Anyway, once the owner has done the housekeeping of paring and removing unnecessary folder groups, they’ll then want to put into place a process for permission management. Data standards and laws recognize the importance of having security policies and procedures as part of on-going program – i.e., not something an owner does once a year.

And Varonis has an important part to play here.

Maintaining Least-Privileged Access

How do ordinary users whose job role now requires then to access a managed folder request permission to the owner?

This is where Varonis DataPrivilege makes an appearance. Regular users will need to bring this interface up (below) to formally request access to a managed folder.

The owner of the folder has a parallel interface from which to receive these requests and then grant or revoke permissions.

As I mentioned above, these security ideas for last-privilege-access and permission management are often explicitly part of compliance standards and data security laws. Building on my list from the previous post, here’s a more complete enumeration of controls that Varonis DatAdvantage supports:

  • NIST 800-53: AC-2, AC-3, AC-5, CM-5
  • NIST 800-171: 3.1.4, 3.1.5, 3.4.5
  • PCI DSS 3.x: 7.1,7.2
  • HIPAA: 45 CFR 164.312 a(1), 164.308a(4)
  • ISO 27001: A.6.1.2, A.9.1.2, A.9.2.3, A11.2.2
  • CIS Critical Security Controls: 14.4
  • New York State DFS Cybersecurity Regulations: 500.07

Stale Sensitive Data

Minimization is an important theme in security standards and laws. These ideas are best represented in the principles of Privacy by Design (PbD), which has good overall advice on this subject: minimize the sensitive data you collect, minimize who gets to see it, and minimize how long you keep it.

Let’s address the last point, which goes under the more familiar name of data retention. One low-hanging fruit to reducing security risks is to delete or archive sensitive data embedded in files.

This make incredible sense, of course. This stale data can be, for example, consumer PII collected in short-term marketing campaigns, but now residing in dusty spread-sheets or rusting management presentations.

Your organization may no longer need it, but it’s just the kind of monetizable data that hackers love to get their hands on.

As we saw in the first post, which focused on Identification, DatAdvantage can find and identify file data that hasn’t been used after a certain threshold date.

Can the stale data report be tweaked to find stale data this is also sensitive?

Affirmative.

You need to add the hit count filter and set the number of sensitive data matches to an appropriate number.

In my test environment, I discovered that C:Share\pvcs folder hasn’t been touched in over a year and has some sensitive data.

The next step is then to take a visit to the Data Transport Engine (DTE) available in DatAdvantage (from the Tools menu). It allows you to create a rule that will search for files to archive and delete if necessary.

In my case, my rule’s search criteria mirrors the same filters used in generating the report. The rule is doing the real heavy-lifting of removing the stale, sensitive data.

Since the rule is saved, it can be rerun again to enforce the retention limits. Even better, DTE can automatically run the rule on a periodic basis so then you never have to worry about stale sensitive data in your file system.

Implementing date retention policies can be found in the following security standards and regulations:

  • NIST 800-53: SI-12
  • PCI DSS 3.x: 3.1
  • CIS Critical Security Controls: 14.7
  • New York State DFS Cybersecurity Regulations: 500.13
  • EU General Data Protection Regulation (GDPR): Article 25.2

Detecting and Monitoring

Following the order of the NIST higher-level security control categories from the first post, we now arrive at our final destination in this series, Detect.

No data security strategy is foolproof, so you need a secondary defense based on detection and monitoring controls: effectively you’re watching the system and looking for unusual activities.

Varonis and specifically DatAlert has unique role in detection because its underlying security platform is based on monitoring file system activities.

By now everyone knows (or should know) that phishing and injection attacks allow hackers to get around network defenses as they borrow existing users’ credentials, and fully-undetectable (FUD) malware means they can avoid detection by virus scanners.

So how do you detect the new generation of stealthy attackers?

No attacker can avoid using the file system to load their software, copy files, and crawl a directory hierarchy looking for sensitive data to exfiltrate.  If you can spot their unique file activity patterns, then you can stop them before they remove or exfiltrate the data.

We can’t cover all of DatAlert’s capabilities in this post — probably a good topic for a separate series! — but since it has deep insight to all file system information and events, and histories of user behaviors, it’s in a powerful position to determine what’s out of the normal range for a user account.

We call this user behavior analytics or UBA, and DatAlert comes bundled with a suite of UBA threat models (below).  You’re free to add your own, of course, but the pre-defined models are quite powerful as is. They include detecting crypto intrusions, ransomware activity, unusual user access to sensitive data, unusual access to files containing credentials, and more.

All the alerts that are triggered can be tracked from the DatAlert Dashboard.  IT staff can either intervene and respond manually or even set up scripts to run automatically — for example, automatically disable accounts.

If a specific data security law or regulations requires a breach notification to be sent to an authority, DatAlert can provide some of the information that’s typically required – files that were accessed, types of data, etc.

Let’s close out this post with a final list of detection and response controls in data standards and laws that DatAlert can help support:

  • NIST 800-53: SI-4, AU-13, IR-4
  • PCI DSS 3.x: 10.1, 10.2, 10.6
  • CIS Critical Security Controls: 5.1, 6.4, 8.1
  • HIPAA: 45 CFR 164.400-164.414
  • ISO 27001: A.16.1.1, A.16.1.4
  • New York State DFS Cybersecurity Regulations: 500.02, 500.16, 500.27
  • EU General Data Protection Regulation (GDPR): Article 33, 34
  • Most US states have breach notification rules

Data Security Compliance and DatAdvantage, Part I:  Essential Reports for ...

Data Security Compliance and DatAdvantage, Part I:  Essential Reports for Risk Assessment

Over the last few years, I’ve written about many different data security standards, data laws, and regulations. So I feel comfortable in saying there are some similarities in the EU’s General Data Protection Regulation, the US’s HIPAA rules, PCI DSS, NIST’s 800 family of controls and others as well.

I’m really standing on the shoulders of giants, in particular the friendly security standards folks over at the National Institute of Standards and Technology (NIST), in understanding the inter-connectedness. They’re the go-to people for our government’s own data security standards: for both internal agencies (NIST 800-53) and outside contractors (NIST 800-171).  And through its voluntary Critical Infrastructure Security Framework, NIST is also influencing data security ideas in the private sector as well.

One of their big ideas is to divide security controls, which every standard and regulation has in one form or another, into five functional areas: Identify, Protect, Detect, Respond, and Recover. In short, give me a data standard and you can map their controls into one of these categories.

The NIST big picture view of security controls.

The idea of commonality led me to start this series of posts about how our own products, principally Varonis DatAdvantage, though not targeted at any specific data standard or law, in fact can help meet many of the key controls and legal requirements. In fact, the out-of-the-box reporting feature in DatAdvantage is a great place to start to see how all this works.

In this first blog post, we’ll focus on DA reporting functions that roughly cover the identify category. This is a fairly large area in itself, taking in asset identification, governance, and risk assessment.

Assets: Users, Files, and More

For DatAdvatange, users, groups, and folders are the raw building blocks used in all its reporting. However, if you wanted to view pure file system asset information, you can go to the following three key reports in DatAdvantage.

The 3a report gives IT staff a listing of Active Directory group membership. For starters, you could run the report on the all-encompassing Domain Users group to get a global user list (below). You can also populate the report with any AD property associated with a user (email, managers, department, location, etc.)

For folders, report 3f provides access paths, size, number of subfolder, and the share path.

Beyond a vanilla list of folders, IT security staff usually wants to dig a little deeper into the file structure in order to identify sensitive or critical data. What is critical will vary by organization, but generally they’re looking for personally identifiable information (PII), such as social security numbers, email addresses, and account numbers, as well as intellectual property (proprietary code, important legal documents, sales lists).

With DatAdvantage’s 4g report, Varonis lets security staff zoom into folders containing sensitive PII data, which is often scattered across huge corporate file systems. Behind the scenes, the Varonis classification engine has scanned files using PII filters for different laws and regulations, and rated the files based on the number of hits — for example, number of US social security numbers or Canadian driver’s license numbers.

The 4g report lists these sensitive files from highest to lowest “hit” count. By the way, this is the report our customers often run first and find  very eye-opening —especially if they were under the impression that there’s ‘no way millions of credit card numbers could be found in plaintext’.

Assessing the Risks

We’ve just seen how to view nuts-and-bolts asset information, but the larger point is to use the file asset inventory to help security pros discover where an organization’s particular risks are located.

In other words, it’s the beginning of a formal risk assessment.

Of course, the other major part of assessment is to look (continuously) at the threat environment and then be on the hunt for specific vulnerabilities and exploits. We’ll get to that in a future post.

Now let’s use DatAdvantage for risk assessments, starting with users.

Stale user accounts are an overlooked scenario that has lots of potential risk. Essentially, user accounts are often not disabled or removed when an employee leaves the company or a contractor’s temporary assignment is over.

For the proverbially disgruntled employee, it’s not unusual for this former insider to still have access to his account.  Or for hackers to gain access to a no-longer used third-party contractor’s account and then leverage that to hop into their real target.

In DatAdvantage’s 3a report, we can produce a list of stale users accounts based on the last logon time that’s maintained by Active Directory.

The sensitive data report that we saw earlier is the basis for another risk assessment report. We just have to filter on folders that have “everyone” permissions.

Security pros know from the current threat environment that phishing or SQL injection attacks allow an outsider to get the credentials of an insider. With no special permissions, a hacker would then have automatic access to folders with global permissions.

Therefore there’s a significant risk in having sensitive data in these open folders (assuming there’s no other compensating controls).

DatAdvantage’s 12 L report nicely shows where these folders are.

Let’s take a breath.

In the next post, we’ll continue our journey through DatAdvantage by finishing up with the risk assessment area and then focusing on the Protect and Defend categories.

For those compliance-oriented IT pros and other legal-istas, here’s a short list of regulations and standards (based on our customers requests) that the above reports help support:

  • NIST 800-53: IA-2,CM-8
  • NIST 800-171: 3.51
  • HIPAA:  45 CFR 164.308(a)(1)(ii)(A)
  • GLBA: FTC Safeguards Rule (16 CFR 314.4)
  • PCI DSS 3.x: 12.2
  • ISO 27001: A.7.1.1
  • New York State DFS Cybersecurity Regulations: 500.02
  • EU GDPR: Security of Processing (Article 32) and Impact Assessments (Article 35)

G’Day, Australia Approves Breach Notification Rule

G’Day, Australia Approves Breach Notification Rule

Last month, Australia finally amended its Privacy Act to now require breach notification. This proposed legislative change has been kicking around the Federal Government for a few years. Our attorney friends at Hogan Lovells have a nice summary of the new rule.

The good news here is that Australia defines a breach broadly enough to include both unauthorized disclosure and access of personal information. Like the GDPR, Australia also considers personal data to be any information about an identified individual or that can be reasonably linked to an individual.

In real-world terms, it means that if hackers get phone numbers, bank account data, or medical records or if malware, like ransomware, merely accesses this information, then it’s considered a breach.

So far, so good.

There’s a ‘But’

However, the new Australian requirement  has a harm threshold that also has to be met for the breach to be reportable. This is not in itself unusual in that we’ve seen these same harm thresholds in US states breach notification laws, and even the EU’s GDPR and the NIS Directive.

In the Australian case, the language used is that the breach will “likely to result in serious harm.”  While not explicitly stated, the surrounding context in the amendment says that breach would have to cause serious physical, psychological, emotional, economic, reputational, and financial harm or other effect that a “reasonable” person would agree.

By the way, this is also similar to what’s in the GDPR’s preamble.

The Australian breach notification rule, though, goes further with explicit remediation exceptions that give the covered entities – privacy sector companies, government agencies, and health care providers – even more wiggle room. If the breached entity can show that they have taken actions involving the disclosure or access before it results in serious harm, then they don’t have to report it.

I suppose you could come up with scenarios where there’s been, say, limited exposure of passwords from a health insurance company’s website, the company freezes the relevant user accounts, and the instructs affected individuals to contact them about resetting passwords. That might be a successful remediation.

You can see what the Australian regulators were getting at. By the way, I don’t think this rule is as “floppy” as one publication called the notification criteria. But it does give the covered entities something of a second chance.

Anyway, if there’s a harmful breach event, then Australian organizations will have to notify the regulators as soon as possible after discovery. They’ll need to provide them with breach details, including the information accessed, as well as steps affected individuals should take.

The Australian breach notification rule is set to go into effect in a few weeks, and there will be a one-year grace period from that point. Failure to comply can result in investigations, forced remedial actions, and fines or compensations.

Cybersecurity Laws Get Serious: EU’s NIS Directive

Cybersecurity Laws Get Serious: EU’s NIS Directive

In the IOS blog, our cyberattack focus has mostly been on hackers stealing PII and other sensitive personal data. The breach notification laws and regulations that we write about require notification only when there’s been acquisition or disclosure of PII by an unauthorized user. In plain speak, the data is stolen.

These data laws, though, fall short in two significant ways.

One, the hackers can potentially take data that’s not covered by the law: non-PII that can include corporate IP, sensitive emails from the CEO, and other valuable proprietary information. Two, the attackers are not interested in taking data but rather in disruption: for example, deploying DoS attacks or destroying important system or other non-PII data.

Under the US’s HIPAA, GLBA, and state breach laws as well as the EU’s GDPR, neither of the two cases above — and that takes in a lot of territory — would trigger a notification to the appropriate government authority.

The problem is that data privacy and security laws focus, naturally, on the data, instead of the information system as a whole. However, it doesn’t mean that governments aren’t addressing this broader category of cybersecurity.

There’s not been nearly enough attention paid to the EU’s Network and Information Systems (NIS) Directive, the US’s (for now) voluntary Critical Infrastructure Security Framework, Canada’s cybersecurity initiatives, and other laws in major EU countries.

And that’s my motivation in writing this first in a series of posts on cybersecurity rules. These are important rules that organizations should be more aware. Sometime soon, it won’t be good enough, legally speaking, to protect special classes of data. Companies will be required to protect entire IT systems and report to regulatory authorities when there’s been actions to disrupt or disable the IT infrastructure.

Protecting the Cyber

The laws and guidelines that have evolved in this area are associated with safeguarding critical infrastructure – telecom, financial, medical, chemical, transportation. The reason is that cybercrime against the IT network of, say, Hoover Dam or the Federal Reserve should be treated differently than an attack against a dating web site.

Not that an attack against any IT system isn’t a serious and potentially costly act. But with critical infrastructure, where there isn’t an obvious financial motivation, we start entering the realm of cyber espionage or cyber disruption initiated by governments.

In other words, bank ATM machines suddenly not dispensing cash, the cell phone network dropping calls, or – heaven help us! — Google replying with wrong and deceptive answers, may be a sign of a cyberwar or at least a cyber ambush.

A few months back, we wrote about an interview between Charlie Rose and John Carlin, the former Assistant Attorney General in the National Security Division of the Department of Justice. The transcript can be found here, and it’s worth going through it, or at least searching on the “attribution” keyword.

Essentially, Carlin tells us that US law enforcement is getting far better at learning who are behind cyberattacks. The Department of Justice is now publicly naming the attackers, and then prosecuting them. By the way, Carlin went after Iranian hackers accused of intrusions into banks and a small dam near New York City. Fortunately, the dam’s valves were still manually operated and not connected to the Internet.

Carlin believes there are important advantages in going public with a prosecution against named individuals. Carlin sees it as a way to deter future cyber incidents. As he puts it, “because if you are going to be able to deter, you’ve got to make sure the world knows we can figure out who did it.”

So it would make enormous sense to require companies to report cyberattacks to governmental agencies, who can then put the pieces together and formally take legal and other actions against the perps.

First Stop: EU’s NIS Directive.

As with the Data Protection Directive for data privacy, which was adopted in 1995, the EU has again been way ahead of other countries in formalizing cyber reporting legislation. Its Network and Information Systems Directive was initially drafted in 2013 and was approved by the EU last July.

Since it is a directive, individual EU countries will have to transpose NIS into their own individual laws. EU countries will have a two-year transition period to get their houses in order. And an additional six months to select companies providing essential services (see Appendix II).

In Article 14, operators of essential services are required to take “appropriate and proportionate technical and organisational measures to manage the risks posed to the security of network and information systems.”  They are also required to report, without undue delay, significant incidents to a Computer Security Incident Response Team or CSIRT.

There’s separate and similar language in Article 16 covering digital service providers, which is the EU’s way of saying ecommerce, cloud computing, and search services.

CSIRTs are at the center of the NIS Directive. Besides collecting incident data, CSIRTs are also responsible for monitoring and analyzing threat activity at a national level, issuing alerts and warnings, and sharing their information and threat awareness with other CSIRTs.  (In the US, the closest equivalent is the Department of Homeland Security’s NCCIC.)

What is considered an incident in the NIS Directive?

It is any “event having an actual adverse effect on the security of network and information systems.”  Companies designated as providing essential services are given some wiggle room in what they have to report to a CSIRT. For an incident to be significant, and thus reportable, the company has to consider the number of users affected, the duration, and the geographical scope.

Essential digital service operators must also take into account the effect of their disruption on economic and “societal activities”.

Does this mean that a future attack against, say, Facebook in the EU, in which Messenger or status posting activity is disrupted would have to be reported?

To this non-attorney blogger, it appears that Facebooking could be considered an important societal activity.

Yeah, there are vagaries in the NIS Directive, and it will require more guidance from the regulators.

In my next post in this series, I’ll take a closer look at cybersecurity rules due north of us for our Canadian neighbor.

Update: New York State Finalizes Cyber Rules for Financial Sector

Update: New York State Finalizes Cyber Rules for Financial Sector

When last we left New York State’s innovative cybercrime regulations, they were in a 45-day public commenting period. Let’s get caught up. The comments are now in. The rules were tweaked based on stakeholders’ feedback, and the regulations will begin a grace period starting March 1, 2017.

To save you the time, I did the heavy lifting and looked into the changes made by the regulators at the New York State Department of Financial Services (NYSDFS).

There are a few interesting ones to talk about. But before we get into them, let’s consider how important New York State — really New York City — is as a financial center.

Made in New York: Money!

To get a sense of what’s encompassed in the NYDFS’s portfolio, I took a quick dip into their annual report.

For the insurance sector, they supervise almost 900 insurers with assets of $1.4 trillion and receive premiums of $361 billion. Under wholesale domestic and foreign banks — remember New York has a global reach — they monitor 144 institutions with assets of $2.2 trillion. And I won’t even get into community and regional banks, mortgage brokers, and pension funds.

In a way, the NYSDFS has the regulatory power usually associated with a small country’s government. And therefore the rules that New York makes regarding data security has an outsized influence.

One Rule Remains the Same

Back to the rules. First, let’s look at one key part that was not changed.

NYSDFS received objections from the commenters on their definition of cyber events. This is at the center of the New York law—detecting, responding, and recovering from these events—so it’s important to take a closer look at its meaning.

Under the rules, a cybersecurity event is “any act or attempt, successful or unsuccessful, to gain unauthorized access to, disrupt or misuse an Information System or information …”

Some of the commenters didn’t like the inclusion of “attempt” and “unsuccessful”. But the New York regulators held firm and kept the definition as is.

Cybersecurity is a broader term than a data breach. For a data breach, there usually has to be data access and exposure or exfiltration. In New York State, though, access alone or an IT disruption, even when attempted (or executed but not successfully) is considered an event.

As we’ve pointed out in our ransomware and the law cheat sheet, very few states in the US would classify a ransomware attack as a breach under their breach laws.

But in New York State, if ransomware (or a remote access trojan or other malware) was loaded on the victim’s server and perhaps abandoned or stopped by IT in mid-hack, it would indeed be a cybersecurity event.

Notification Worthy

This leads naturally to another rule, notification of a cybersecurity event to the New York State regulators, where the language was tightened.

The 72-hour time frame for reporting remains, but the clock starts ticking after a determination by the financial company that an event has occurred.

The financial companies were also given more wiggle room in the types of events that require notification: essentially the malware would need to “have a reasonable likelihood of materially harming any material part of the normal operation…”

That’s a mouthful.

In short: financial companies will notify the regulators at NYSDFS when the malware could seriously affect an operation that’s important to the company.

For example, malware that infects the digital console on the bank’s espresso machine is not notification worthy. But a key logger that lands in a bank’s foreign exchange area and is scooping up user passwords is very worthy.

The NYDFS’s updated notification rule language, by the way, puts it more in line with other data security laws, including the EU’s General Data Protection Regulation (GDPR).

So would you have to notify the New York State regulator when malware infects a server but hasn’t necessarily completed its evil mission?

Getting back to the language of “attempt” and “unsuccessful” found in the definition of cybersecurity events, it would appear that you would but only if the malware lands on a server that’s important to the company’s operations — either because of the data it contains or its function.

State of Grace

The original regulation also said you had to appoint a Chief Information Security Officer (CISO) who’d be responsible for seeing this cybersecurity regulation is carried out. Another important task of the CISO is to annually report to the board on the state of the company’s cybersecurity program.

With pushback from industry, this language was changed so that you can designate an existing employee as a CISO — likely a CIO or other C-level.

One final point to make is that the grace period for compliance has been changed. For most of the rules, it’s still 180 days.

But for certain requirements – multifactor authentication and penetration testing — the grace period has been extended to 12 months, and for a few others – audit trails, data retention, and the CISO report to the board — it’s been pushed out to 18 months.

For more details on the changes, check this legal note from our attorney friends at Hogan Lovells.

EU GDPR Spotlight: Do You Have to Hire a DPO?

EU GDPR Spotlight: Do You Have to Hire a DPO?

I suspect right about now that EU (and US) companies affected by the General Data Protection Regulation (GDPR) are starting to look more closely at their compliance project schedules. With enforcement set to begin in May 2018, the GDPR-era will shortly be upon us.

One of the many questions that have not been full answered by this new law (and still being worked out by the regulators) is under what circumstances a company needs to hire a data protection officer (DPO).

There are three scenarios mentioned in the GDPR (see article 37) where a DPO is mandatory: the core activities involve the processing of personal data by a public authority; the core activities involve “regular and systematic monitoring of data subjects on a large scale”; or the core activities require large-scale processing of special data—for example, biometric, genetic, geo-location, and more.

Companies falling into the second category, which I think covers the largest share, are probably pondering what is meant by “regular and systematic monitoring” and “large-scale”.

As a non-legal person, I even noticed these provisions were a bit foggy.

A few months ago, I asked GPDR legal specialist Bret Cohen at Hogan Lovells about what the heck was meant.

Cohen’s answer was that, well, we’ll have to wait for more guidance from the regulators.

And Thus Spoke the Article 29 Working Party

No, the Article 29 Working Party (WP29) is not the name of a new Netflix series, but will, under the GDPR, become a kind of super data protection authority (DPA) providing advice and insuring consistency between all the national DPAs.

Anyway, last month the WP29 published a guidance addressing the confusing criteria for DPOs.

And after reading it, I suppose, I’m still a little confused.

For those of us who were following the GDPR and watching how this legal sausage was made, the DPO was one of the more contentious provisions.

There were differences of opinion on whether a DPO should be mandatory or optional and on the threshold requirements for having one in the first place. Some were arguing that it should be the number of employees (250) of a company and others, the number of records of personal data processed (500).

The parties — EU Commission, Parliament, and Council — finally settled on DPOs being mandatory but they removed specific numbers. And so we’re left with this vague language.

The new guidance provides some clarification.

According to the WP29, “regular and systematic” means, in human-speak, a pre-arranged plan that’s carried out repeatedly over time.

So far, so good.

What does “large scale” mean?

For me, this is the more interesting question. The WP29 said the following factors need to be taken into consideration:

  • The number of data subjects concerned – either as a specific number or as a proportion of the relevant population
  • The volume of data and/or the range of different data items being processed
  • The duration, or permanence, of the data processing activity
  • The geographical extent of the processing activity

We’re All Monitoring Web Behavior

You can kind of see what the law makers were grappling with in the list of factors. But it’s still a little muddy.

Obviously, an insurance company, bank, or retailer that collects personal data from millions of customers would require a DPO.

However, a small web start-up with a few employees can be also engaged in large-scale monitoring.

How?

Suppose their free web app is being accessed by tens or hundreds of thousands of visitors per month. The startup’s site may not be collecting personal data or very minimal personal data other than tracking browser activity with cookies or by other means.  I use plenty of freebie sites this way — especially news sites — and the advertising I see reflects their knowledge of me.

But according to the guidance and other language in the GDPR, monitoring of web behavior would be a type of “monitoring” that’s mentioned in the DPO provisions.

I could be mistaken but it seems to me that any company with a website that receives a reasonable amount of traffic would be required to have a DPO.  And this would include lots of B2Bs that don’t necessarily have a large customer base compared to a consumer company. For validation of this view, check out this legal post.

It’s a confusing point that I’m hoping to get resolved by our attorney friends.

In the meantime, more explanation on this somewhat wonkish, but important topic, can be found here by the brilliant people over at the IAPP.

What We Learned From Talking to Data Security Experts

What We Learned From Talking to Data Security Experts

Since we’ve been working on the blog, Cindy and I have chatted with security professionals across many different areas — pen testers, attorneys, CDOs, privacy advocates, computer scientists, and even a guru. With 2016 coming to an end and the state of security looking more unsettled than ever, we decided it was a good time to take stock of the collective wisdom we’ve absorbed from these pros.

The Theory of Everything

A good place to begin our wisdom journey is the Internet of Things (IotT). It’s where the public directly experiences all the issues related to privacy and security.

We had a chance to talk to IoT pen tester Ken Munro earlier this year, and his comments on everything from wireless coffee pots and doorbells to cameras really resonated with us:

“You’re making a big step there, which is assuming that the manufacturer gave any thought to an attack from a hacker at all. I think that’s one of the biggest issues right now is there are a lot of manufacturers here and they’re rushing new product to market …”

IoT consumer devices are not, cough, based on Privacy by Design (PbD) principles.

And over the last few months, consumers learned the hard way that these gadgets were susceptible to simple attacks that exploited backdoors, default passwords, and even non-existent authentication.

Additional help to the hackers was provided by public-facing router ports left open during device installation, without any warning to the poor user, and unsigned firmware that left their devices open to complete takeover.

As a result, IoT is where everything wrong with data security seems to show up. However, there are easy-to-implement lessons that we can all put into practice.

Password Power!

Is security always about passwords? No, of course not, but poor passwords or password defaults that were never reset seem to show up as a root cause in many breaches.

The security experts we’ve spoken to have, without prompting from us, often bring up the sorry state of passwords. One of them, Per Thorsheim, who is in fact a password expert himself, reminded us that one answer to our bad password habits is two-factor authentication (TFA):

“From a security perspective, adding this two-factor authentication, is everything. It increases security in such a way that in some cases even if I told you my password for my Facebook account, as an example, well because I have two –factor authentication, you won’t be able to log in.  As soon as you type in my user name and password, I will be receiving a code by SMS from Facebook on my phone, which you don’t have access to. This is really good.”

We agree with Thorsheim that humans are generally not good at this password thing, and so TFA and biometric authentication will certainly be a part of our password future.

In the meantime, for those of who still cling to just plain-old passwords, Professor Justin Cappos told us awhile back that there’s a simple way to come up with better password generation:

“If you’re trying to generate passwords as a human, there are tricks you can do where you pick four dictionary words at random and then create a story where the words interrelate. It’s called the “correct horse battery staple” method! “

Correct-horse-battery-staple is just a way of using a story as a memory trick or mnemonic. It’s an old technique but which one helps create crack-proof passwords.

One takeaway from these experts: change your home router admin passwords now (and use horse-battery-staple).  Corporate IT admins should also take a good, hard look at their own  passwords and avoid aiding and abetting hackers

Cultivate (Privacy and Security) Awareness

Enabling TFA on your online accounts and generating better passwords goes a very long way to improving your security profile.

But we also learned that you need to step back and cultivate a certain level of privacy awareness in your online transactions.

We learned from attorney and privacy guru Alexandra Ross about the benefits of data minimization, both for the data companies that collect and the consumers who reveal their data:

“One key thing is to stop, take a moment, and be mindful of what’s going on. What data am I being asked to submit when I sign up for a social media service?  And question why it’s being asked.

It’s worth the effort to try to read the privacy policies, or read consumer reviews of the app or online service.”

And

“If you’re speaking to the marketing team at a technology company—yeah, the default often is let’s collect everything. In other words, let’s have this very expansive user profile so that every base is covered and we have all these great data points.

But if you explain, or ask questions … then you can drill down to learn what’s really necessary for the data collection.”

In a similar vein, data scientist Kaiser Fung pointed out that often there isn’t much of a reason behind some of the data collection in the first place:

“It’s not just the volume of data, but that the fact that the data today is not collected without any design or plan in mind. Often times, people collecting the data are really divorced from any kind of business problem.”

Listen up IT and marketing people: think about what you’re doing before you submit your next contact form!

Ross and other PbD advocates preach the doctrine of data minimization: the less data you have, the lower your security risk is when there’s an attack.

As our privacy guru, Ross reminded us that there’s still lot of data about us spread out in corporate data systems.  Scott “Hacked Again” Schober another security pro we chatted with makes the same point based on his personal experiences:

“I was at an event speaking … and was asked if I’d be willing to see how easy it is to perform identity theft and compromise information on myself. I was a little reluctant but I said ok, everything else is out there already, and I know how easy it is to get somebody’s information. So I was the guinea pig. It was Kevin Mitnick, the world’s most famous hacker, who performed the theft. Within 30 seconds and at the cost of $1, he pulled up my social security number.”

There’s nothing inherently wrong with companies storing personal information about us. The larger point is to be savvy about what you’re being asked to provide and take into account that corporate data breaches are a fact of life.

Credit cards can be replaced and passwords changed but details about our personal preferences (food, movies, reading habits) and our social security numbers are forever and a great of source raw material for hackers to use in social engineered attacks.

Data is Valuable

We’ve talked to attorneys and data scientists, but we had the chance to talk to both in the form of Bennett Borden. His bio is quite interesting: in addition to being a litigator at Drinker Biddle, he’s also a data scientist. Borden has written law journal articles about the application of machine learning and document analysis to e-discovery and other legal transactions.

Borden explained how as employees we all leave a digital trail in the form of emails and documents, which can be quite revealing. He pointed out that this information can be useful when lawyers are trying to work out a fair value for a company that’s being purchased.

He was called in to do a data analysis for a client and was able to show that internal discussions indicated the asking price for the company was too high:

“We got millions of dollars back on that purchase price, and we’ve been able to do that over and over again now because we are able to get at these answers much more quickly in electronic data.”

So information is valuable in a strictly business sense. At Varonis, this is not news to us, but still it’s still powerful to hear someone who is immersed in corporate content as part of his job to tell us this.

To summarize, as consumers and as corporate citizens, we should all be more careful about treating this valuable substance: don’t give it away easily, and protect if it’s in your possession.

More Than Just a Good Idea

Privacy by Design came up in a few of our discussions with experts, and one of its principles, privacy as a default setting, is a hard one for companies to accept. Although PbD says that privacy is not a zero-sum game — you can have tough privacy controls and profits.

In any case, for companies that do business in the EU, PbD is not just a good idea but in fact it will be the law in 2018. The concept is explicitly spelled out in the General Data Protection Regulation’s (GDPR) article 25, “Data protection by design and by default”.

We’ve been writing about the GDPR for the last two years and of its many implications. But one somewhat overlooked consequence is that the GDPR will apply to companies outside of the EU.

We spoke with data security compliance expert Sheila FitzPatrick, who really emphasized this point:

“The other part of GDPR that is quite different–and it’s one of the first times that this idea will be put in place– is that it doesn’t just apply to companies that have operations within the EU. Any company regardless of where they are located and regardless of whether or not they have a presence in the EU, if they have access to the personal data of any EU citizen, they will have to comply with the regulations under the GDPR. That’s a significant change.”

This legal idea is sometimes referred to as extraterritoriality. And US e-commerce and web service companies in particular will find themselves under the GDPR when EU citizens interact with them. IT best practices that experts like to talk about as things you should do are becoming legal requirements for them.  It’s not just a good idea!

 

Our final advice for 2016: read the writing on the wall and get yourself in position to align yourself with PbD ideas on data minimization, consumer consent, and data protection.

Ransomware: Legal Cheat Sheet for Breach Notification

Ransomware: Legal Cheat Sheet for Breach Notification

You respond to a ransomware attack in many of the same ways you would to any other cyber attack. In short: have plans in place to analyze the malware, contain the damage, restore operations if need be, and notify any regulatory or enforcement authorities.

And your legal, IT, and communications team should be working together in all your response efforts. Legal meet IT, IT meet legal.

So far so good. But ransomware is a different animal.

Unlike in just about any other cyber attack, the hackers announce what they’re doing: it’s called a ransom note.

The discovery process therefore happens far more quickly, not as is often the case, months later.

And the hackers’ goal is to leave the data on site, encrypted of course, so there’s no immediate concern of credit card or account theft.

I suppose those are some minor pluses to ransomware. However, this raises a big legal question.

Since the data is just accessed, but not exposed to outsiders, does this mean that the victim won’t have to notify authorities and consumers as required by the few US data laws and regulations that have breach notification language?

We thought it was an interesting question as well.

And that’s why we wrote a white paper on this important (if somewhat obscure) legal topic.

The paper provides essential background on the data security laws that many US companies will have to deal with: Health Insurance Portability and Accessibility Act (HIPAA), Gramm-Leach-Bliley Act (GLBA), state laws, and the EU’s own data laws.

It’s a great read for those directly involved in a breach response. But to spare the casual IT person from all the legalese,  we’ve mercifully put together this cheat sheet.

Breach Notification Rules for Ransomware

The real issue to investigate is whether unauthorized access alone triggers a notification to customers. In effect, that is what ransomware is doing – accessing your PII without your permission.

We present for your ransomware breach response edification the following:

  1. Healthcare – HIPAA’s Breach Notification rules requires covered entities (hospital, insurers) to notify customers and the Department of Health and Human Services (HHS) when there’s been unauthorized access to protected health information (PHI). This is the strictest federal consumer data laws when it comes to a ransomware breach response. There are, though, some exceptions so read the paper to learn what they are!
  2. Consumer banks and loan companies – Under GLBA, the Federal Trade Commission (FTC) enforces data protection rules for consumer banking and finance through the Safeguards Rule. According to the FTC, ransomware (or any other malware attack) on your favorite bank or lender would not require a notification. They recommend that these financial companies alert customers, but it’s not an explicit obligation.
  3. Brokers, dealers, investment advisors – The Securities and Exchange Commission (SEC) has regulatory authority for these types of investment firms. Under GBLA, the SEC came up with their own rule, called Regulation S-P, which does call for a breach response program. But there’s no explicit breach notification requirement in the program. In other words, it’s something you should do, but you don’t have to.
  4. Investment banks, national banks, private bankers – With these remaining investment companies, the Federal Reserve and various Treasury Department agencies jointly came up with their own rules. In this case, these companies have “an affirmative duty” to protect against unauthorized use or access, and notification is part of that duty. In the fine print it says, though, that there has to be a determination of “misuse” of data. Whether ransomware’s encryption is misuse of the data is unclear. In any case, the rules spell out what the notification must contain — a description of the incident and the data that was accessed.
  5. US state laws – Currently, there are 48 states that have consumer breach notification laws. However, only two states, New Jersey and Connecticut, require a breach notification on access alone, thereby covering a ransomware attack. But there’s additional fine print that may allow companies to avoid reporting the breach to affected consumer in their state.
  6. EU data laws – Under the Data Protection Directive (DPD), there isn’t a breach notification requirement. Some countries such as Germany, though, have added it in their national data laws. (And ISPs and telecoms under the EU’s e-Privacy Directive already have their own breach reporting rule.) But the new EU General Data Protection Regulation, which will go into effect in 2018, does have a 72-hour rule requiring notification to local data protection authorities (DPAs) and consumers when “personal data” is accessed. However, a harm-based threshold is applied – the breach would have to “result in a risk to the rights and freedoms” of consumers. Notification for a ransomware attack would be very dependent on specific circumstances, and we’ll likely have to wait for more clarification from the regulators.

That’s the cheat sheet. However, the white paper provides a lot more context, and also goes into a few of the subtleties, particularly involving HIPAA .

Our view?

Always report a ransomware breach to the appropriate agencies and law-enforcement authorities.

For IT people who want to impress their peers in the legal department, and for legal eagles who need some quick background on ransomware, this white paper covers it all. Download it today!

[Podcast] More Sheila FitzPatrick: Data Privacy and EU Law

[Podcast] More Sheila FitzPatrick: Data Privacy and EU Law

In the next part of our discussion, data privacy attorney Sheila FitzPatrick gets into the weeds and talks to us about her work in setting up Binding Corporate Rules (BCRs) for multinational companies. These are actually the toughest rules of the road for data privacy and security.

What are BCRs?

They allow companies to internally transfer EU personal data to any of their locations in the world.  The BCR agreement has to get approval from a lead national data protection authority (DPA) in the EU. FitzPatrick calls them a gold standard in data compliance — they’re comprehensive rules with a clear complaint process for data subjects.

Another wonky area of EU compliance law she has worked on is agreements for external transfer data between companies and third-party data processors. Note: it gets even trickier when dealing with cloud providers.

This is a fascinating discussion from a working data privacy lawyer.

And it’s great background for IT managers who need to keep up with the lawyerly jargon while working with privacy and legal officers in their company!


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