What Security Compliance is Required to Mitigate Legal Liability?

Information technology is a major advancement in how we manage data and process transactions, with some technology being sufficient enough to minimize human input. This technology has become so common that we now rely on it for financial and data services. Most companies use information technology to process transactions and store customer information for rapid access. 

This information has worked wonders for general convenience, which has made it an important part of society. Unfortunately, this is a double-edged sword since it stores information that can compromise the safety and financial situation of the customers who store their data online. Fortunately, cybersecurity protocols exist to try and protect customers and preserve the integrity of their data.

While most companies try to protect the data as best they can, there is only so much they can do. Cyber-attacks are increasingly common as more and more information is translated from physical copies to digital variants. As a result, people with exceptional computer skills attempt to access information repositories for personal gain. 

Because of the dangers of cybercrime, most companies have to employ a series of countermeasures to protect their customers. Several federal laws focus on cybercrime and the protections companies must employ. Otherwise, data breaches are the company’s liability due to a lack of compliance with those policies. The question is: what must companies comply with to mitigate liability?

Cybersecurity Data Protection

Ensure Network Security

Companies that process transactions or provide data storage solutions have access to sensitive information. This information is usually stored on a network database that helps the company access important data to better provide for their clients. Unfortunately, these networks are not impregnable digital fortresses but are data pools that allow consistent traffic. 

While access to a network is usually restricted to authorized users, a demographic of criminals use their technological knowledge to bypass the restrictions. When these cybercriminals succeed, they can take the sensitive information the companies maintain and repurpose it for their own goals.

Because of the risk associated with this information, the company must maintain a secure network. Network vulnerability is one of the most dangerous issues affecting a group or individual. Fortunately, one of the first things cybersecurity teams learn is how to identify and repair gaps in network security. 

A Secure Network

The trick is finding the vulnerabilities so they can be repaired and the network’s security improved. The main tool that cybersecurity teams use is penetration testing to try and identify network security issues as though they were trying to hack the network themselves. This usually uncovers vulnerabilities the cybersecurity team might not have noticed before.

When a company stores information on a network, they become responsible for that information and must protect it to the best of its ability. Private information is a liability for the company if they do not manage it properly. If a company or data provider knowingly stores information in a network with an egregious vulnerability, their liability skyrockets. Conversely, maintaining a well-secured and regularly tested network mitigates liability when a breach occurs. This is because you took every caution to protect the information, but a particularly talented cybercriminal discovered a previously unknown workaround.

Maintaining a secure network helps you remain compliant with the legal requirements to which companies are held. Unfortunately, network security is not the only issue that can impact a company’s liability. Other details must be considered to protect your company from legal fallout.

Destroy Data When Applicable

A major concern with information technology services is that data will fall into the wrong hands, which is why there is a major effort to protect networks and databases. This security is not exclusive to digital databases that are wirelessly accessed but extends to physical storage devices. Hard drives, flash drives, and other physical storage devices can be exploited if they fall into the wrong hands. That is why information from previous clients and customers must be purged when it is no longer important to the service. Data must be deleted after a certain time because there is a legal requirement to keep information from spreading. 

However, deleting customer information is not as simple as it sounds because regulations dictate how it is discarded. These regulations are especially important for healthcare, legal, and financial sectors, where this information is particularly damaging. This is why specialized federal regulations are set to manage the disposal of information.

Destroying Client and Customer Data

Companies must dispose of and store information according to the following regulations:

  • HIPAA: The Health Insurance Portability and Accountability Act of 1996 was enacted to cover 5 titles focusing on healthcare. HIPAA applies exclusively to medical providers and restricts how they store, distribute, and dispose of information about certain patients.
  • FACTA: The Fair and Accurate Credit Transactions Act of 2003 focuses on protecting every citizen’s right to access accurate copies of their credit reports. This is designed to prevent identity theft and usually affects financial institutions like banks or credit unions.
  • SOX: The Sarbanes-Oxley Act of 2002 is another financial regulation focusing more on record keeping and reporting. This regulates how companies disclose their earnings and store financial records. 
  • GLBA: The Gramm-Leach-Bliley Act, also known as the Financial Services Modernization Act of 1999, is a banking regulation that applies rules to companies trying to merge services under a new organization. This regulates how this information is shared between the institutions combining resources, so there is no violation of client privacy.
  • PCI DSS: The Payment Card Industry Data Security Standard is a set of regulations governing the storage of payment card information. This helps prevent credit card fraud since a company cannot store full card information.

These acts regulate information that could compromise a customer’s or client’s security and privacy. When a network stores this information improperly or stores more information than is legally permissible, they are endangering its customers. If a cybercriminal bypasses the firewalls and safety measures that protect the company’s stored data, excess information could cause more complications for the victims than they would experience otherwise. When disposing of information, you must follow the guidelines outlined in the regulations applicable to your industry.

Destroying storage devices that have sensitive information on them usually requires a Certificate of Destruction that lists the serial number. This is one of the regulations that help you comply with the law. Failure to comply with this particular requirement can endanger your clients and lead to legal complications for the company.

Have An Effective Response Plan

Establishing a secure network is extremely important since it minimizes the risk of cyberattacks and data breaches. Unfortunately, the keyword is “minimizes” since there are no guarantees against cyberattacks, and a breach could still occur. Cybercrime is constantly evolving as new techniques and resources are developed and those abusing them practice their skills. 

While cybersecurity has evolved with the new technology and practices, they are imperfect and cannot account for every possible vulnerability in a system. These overlooked or undiscovered issues provide the opening cybercriminals need to launch their attacks. 

While breaches are rare, it is a possibility that every company and network must consider when regulating data. This is because a breach could occur when they least expect it and compromise the integrity of the information in their network. Every network’s cybersecurity team must create a response plan that can be executed immediately after the breach occurs. 

When cybercriminals breach a network, they try to access and store as much sensitive information as possible before being booted from the system. This means timing is critical when countering a breach to ensure the hacker cannot access too much information.

Responding to a Data Breach

A typical data breach response plan requires the following steps to maximize the odds of a successful counter:

  1. Identification: This means identifying the breach that occurred. The best way to do this is constantly monitoring internal systems and activity. This will help the cybersecurity team note who logs into the system and what they access. Once the breach is identified, the team can move on to the next stage.
  2. Containment: After identifying the breach, the team must act quickly to isolate the information the cybercriminal can access. Containment can include shutting off access to certain network parts so the hacker is limited in what they can access. Then the team can focus on altering affected accounts and changing the passwords to keep the hacker from logging back into the system.
  3. Investigation: The next stage of the response is investigating the breach to determine what information was stolen and how the breach occurred. This means figuring out how the cybercriminal breached the network and through which firewall. This provides critical information to the cybersecurity team, directly affecting the next stage.
  4. Recovery: The final stage of the response plan is the recovery stage, where the cybersecurity team works to undo the associated damage. This means patching the vulnerabilities the cybercriminal exploited, restoring lost data, and enhancing security protocols to ensure there is less risk of a repeated breach.

Maintaining an effective response plan for the network is an essential part of the cybersecurity process. Additionally, it is part of complying with the regulations that help address liability for breaches. If your network does not maintain the proper security measures, it is considered negligence since you did not perform your due diligence to protect against a breach. Negligence is an egregious breach of duty and should not be taken lightly, especially since it amplifies liability for any data breach that affects your clients.

Why is Liability Mitigation Important?

Managing liability is an extremely important part of operating an effective business since it can radically damage the sustainability of an organization. Liability impacts the legal repercussions that can be brought against the company. The higher the liability, the more likely a lawsuit will be brought against you. Part of operating a business of any kind is ensuring no vulnerabilities harm your clients. When they are harmed by something you could have prevented but did not protect against, they have the right to seek legal damages for your failure to protect them.

Your level of liability corresponds directly to what security measures are in place to minimize breaches or other issues. The greater a company’s liability, the more likely a lawsuit against them will succeed. The ability to secure a corporate network directly correlates to that company’s liability when a breach occurs. If you do not comply with the federal government’s requirements, you are liable for any harm to the people who use your services. 

Cybersecurity Liability Mitigation

Maintaining a cybersecurity presence is the best way to protect against liability issues due to poor network security. While this might seem cumbersome, there is no substitute when you are regulating sensitive information on a data network. The biggest obstacle is getting a reliable cybersecurity team to handle your network. Fortunately, there might be an easier solution than you realize.

Technically Speaking…

Security compliance involves following the basic requirements for protecting information stored on a general network. Compliance is important to companies that use cloud-based or centralized networks to manage customer information. The customers who employ their services expect security when they allow the company to handle their data. 

When that data is compromised because the company failed to secure its network, it can be devastating, and the company is responsible. Your liability can cause significant legal issues if it is revealed that the breach could have been avoided had you complied with federal requirements for network defense. This is why retaining cybersecurity services is an excellent method for keeping up with the requirements for network security liability.

A Cybersecurity Expert

We at U.S. Cybersecurity offer a complete range of cybersecurity services that will help you maintain and improve the security of your network. Penetration testing allows us to assess weaknesses in network security, and our expertise allows us to patch the issues to reinforce security. Our services would keep your network in compliance with security requirements and mitigate any liability should a breach occur. If you want to improve the security of your network, we encourage you to visit our website and learn about the services we offer. We are standing by to assist you.

Herman McCargo

Herman is a Microsoft Certified Security Engineer and Cybersecurity Specialist. He’s been in the technology field for over 20 years and has expertise working with the most critical technology infrastructures. He has a deep understanding of cyber risks, threat mitigation and prevention, and overseeing infrastructure.