Protecting Reputation In The Aftermath Of A Data Breach

11 July 2016

Compromised data compromises goodwill. As the public wakes up to how much of its data is in circulation, how long it can be stored and how much value it has, they are rightly demanding that it be properly secured. Consequently, data loss has become one of the biggest threats to corporate reputation. 

Introduction

The media’s response has mirrored the shift in public perception by giving increased coverage to data loss stories. The tone of the reporting has also shifted to become increasingly vitriolic. As with other corporate crisis reporting, it is not necessarily the data breach that damages reputation but the way in which that breach was managed that can tarnish the reputation long after the facts of the story have been forgotten. Conversely, a well-managed response to a data breach can engender trust and enhance a business reputation. This paper will examine the issues in play at each of the four stages of managing a Data Breach.

Detection & Containment

The first stage of managing a data breach is dominated by the four technical objectives of detection, containment, identification and preservation. Detecting the source and scale of the breach are paramount. Capping the breach and ring fencing the affected systems comes next followed by identifying the cause of the breach, its duration and its impact. The final element of this first stage is to preserve all the information needed for any subsequent investigation such as server log files and meta data while minimising business disruption.

For those seeking to protect the organisation’s reputation at this critical stage the two key principles at play will be speed of response and accuracy. As soon as the data leak has been detected the data breach management team will need to act quickly to retain control of the process. The faster they act the better the chances of catching the hacker. The steps taken to contain a breach and to mitigate the harm done to those whose data has been lost will be closely scrutinised by the media.

Roles within the data breach management team need to be clearly understood and respected. The role of the cyber investigators will be to establish the facts to enable decisions to be made and to equip the communicators with reliable data from which they can provide explanations to the media and other external stakeholders. However, there is scope for a tension to build between the demands of the Cyber Security investigators and the communicators.

The editorial formula for reporting the immediate post-detection stage will be to ask how the organisation first became aware of the loss, what level of authentication was in place at the time, the nature and volume of the information that has been lost and how many people have been affected. Any delay is likely to be seized on by social media and criticised. Every hour post-detection will need to be accounted for and any decisions taken will need to be justified against the clock.

Speed of response is crucial for the simple reason that it can cause enormous damage to reputation if the first time the data subjects hear about the breach is via the media rather than from the organisation that was breached. The Communicators may prefer to break the story before the media does so as to retain control in the early stages. They will want as much detail as possible while the Cyber Investigators may need more time to uncover all the relevant facts. In the example of Target's data breach the communicators broke the story early with preliminary estimates of the number of data subjects affected only to have to dramatically revise their estimates upwards to public opprobrium. 

There is also the question of who should break the news and how: The media will be looking for a spokesperson for the organisation with appropriate seniority and technical knowledge. It is rare for these to exist in the same person and organisations should bear this in mind when drafting data breach management policies. It may mean that the data protection officer in the organisation should be media trained and prepared to explain the situation to the media. Likewise there should be a C-Suite executive able to discuss some of the technical details involved in the organisation's data security programme.

Recovery and assessment of ongoing risks

The second stage of managing a data breach requires a comprehensive assessment of how the breach has affected each and every part of the organisation. Data breaches often have a broader impact on the business than might first appear. Business continuity, operations, finance, data transfers, investor and regulator relations and strategic goals could all be directly or indirectly impacted by the breach.

The assessment process should then extend to an analysis of the potential harm to the affected individuals. Put differently, how the lost information could be exploited - for example, payment fraud or identity theft – and what guidance might be provided.

The key principles for protecting reputation at this second stage will be accountability and understanding. The most effective reassurance for stakeholders, both internal and external, will be to take responsibility for managing the containment and recovery process. Accepting responsibility for managing the data loss is not the same as accepting liability for the damage arising from it. If concern about the former delays progress of the later the damage to reputation could last longer than any other form of liability. Clarity and transparency about how the breach is being managed can go a long way to mitigate the damage to reputation.

It is also important to acknowledge the impact that the breach has had on the individuals whose data has been lost or stolen. In some cases, the individuals may not immediately grasp its implications. Maintaining customer trust is imperative and so the gravity of the situation, the sense of invasion or the anxiety that data loss can cause should never be underestimated. For instance, Target was roundly criticised in its management of the data breach that it suffered in 2013 for initially apologising for any mere, ‘inconvenience’ that its customers may have suffered.

The editorial formula for reporting this second stage of the process will be to move on from reporting to analysis: Examining what the different stakeholders think and feel about the breach and to what extent those stakeholders may be re-evaluating their relationship with the Business. Second day stories will also include commentary on any social media response and the origin of the breach - whether it was internal or external - and inevitably the focus will shift to the senior staff involved.

A frequently raised question at this stage is whether there is a difference in how the story should be communicated if the origin of the breach was internal or external. There is a tendency to think that if your organisation has been the subject of an internal hack it should be the cause of corporate embarrassment and may somehow be more damaging than being the subject of an external hack. As a corollary, the subject of an external hack is somehow a victim.  PR efforts to garner public sympathy after a data breach should be resisted for two reasons. First, even though the public feels bad for individuals affected by a breach, it will not sympathise with companies targeted by hackers. While the public perceives companies as having identities and the ability to think, it does not perceive corporations as having the ability to feel. Therefore, corporations can elicit anger but not sympathy. Second, playing the victim card is high-risk because to succeed it relies on an assumption that the company's security was as good as it could be. If the reality is less straightforward the 'victim' pose can rapidly appear disingenuous. For these reasons, the question of whether the breach was caused internally or externally should not be a differentiator in how the story is communicated.

An additional consideration at this stage is to remember that the reporting of a data breach can make an organisation more vulnerable. Once the fact of the breach is in the public domain it sends a signal to hackers everywhere that the company's systems might have other weaknesses to be exploited. While an organisation is putting all its resources into responding to a breach in one area it can potentially leave other areas open to attack.

Notification

The impact of most data breaches is felt across more than one country or jurisdiction. In some territories it is mandatory to notify the Data Regulator (e.g. The UK’s Information Commissioner’s Office). In some territories it is mandatory to notify the affected individuals. There are also likely to be other third parties to whom the breach will have to be notified such as insurers, banks and the Payment Card Industry Security Standards Council. In some jurisdictions the duty to notify the regulator or affected data subjects is time limited.

The key principle for protecting reputation at this third stage is consistency. With different requirements in different jurisdictions for notifying regulators and those whose data has been lost it is vital to be consistent in your treatment of individuals irrespective of jurisdiction. There is nothing worse than a customer, whose data has been lost, finding out about it through the media before you’ve had a chance to notify them.

The present regulatory framework provides considerable scope for breaches in the UK to go unreported to the Regulator or the individuals who have been affected. The relatively lax regulatory obligations can lull organisations into a false sense of security. While it can be a difficult pill to swallow most companies faced with a data breach should notify the regulator and the data subjects regardless of whether they are legally obliged to or not if they want to protect their reputation.

By this stage in the data breach management process the editorial formula for reporting the story will have shifted to the issue of what information has been reported and whether it is correct, how was the information reported, to whom and when. In addition, more human interest stories will be included such as how stakeholders such as customers have been treated – for example, offers of compensation and guidance on generating safer passwords.

There can often be a tendency at this stage to introduce different messaging for the different audiences of the media, the regulator and those whose information has been lost. While the tone of the messaging may vary according to the audience, the critical information or content must be the same. Any discrepancies between the content of the messaging from either one stakeholder to another or between one jurisdiction and another will be exploited and scrutinised by the media and risks inviting the inference that the organisation was trying to cover-up details of the breach from one group or another.

Remediation and review

If a breach was caused, even in part, by security weaknesses, then simply containing the breach and continuing ‘business as usual’ will not be acceptable to the Regulator or affected individuals. Demonstrating that there has been ‘learning’ and consequential improvements to data security from the breach is a key factor in a regulator’s decision as to whether a fine should be imposed and how much that fine might be. A considered evaluation and review will mitigate the risk of a fine and focus any necessary improvements in a way that will be both cost effective and appropriate. 

Any review should include exhaustive simulation of a data breach as it is the most effective preparation for managing such a crisis. A simulation provides the opportunity to rehearse sector-specific scenarios and is the only way in which the response team can practice working together.

The General Data Protection Regulation coming into force in spring 2018 provides a notification time limit of 72 hours from detection of the breach. In such circumstances, the data breach management process will have to be well rehearsed and the best starting point for such rehearsal is the remediation and review exercise.

By this stage in the data breach management process the media will be broadening the scope of its coverage. The editorial formula for reporting the remediation and review stage is likely to include commentary on how the data breach was managed overall and if the verdict is negative there may well be calls for regulatory investigation and Governmental inquiry. In some cases there might also be share-price tracking stories. The longer-term risk is that the management of the data breach will become a peg for future negative reporting of the company generally. For example, future IT glitches may be misreported as data breaches or third party data breaches will be wrongly linked or identified with the company.

Conclusion

Protecting reputation through the management of a data breach is going to get more complicated. While a lot of hacking will remain haphazard and opportunistic an increased proportion is becoming more targeted. Hackers are coming together to hunt in feral packs with combined assaults. For instance, access-denial attacks to the front-end of a business will be accompanied by cyber raiding to the back-end storage of the business.

As Hackers grow more sophisticated they are leaking strategically to fit-in with the news-cycle. A new model of ‘data dumping’ has evolved from the WikiLeaks example to Ashley Madison and more recently the Panama Papers that offers a foretaste of what is to come. The model starts with an announcement of the impending dump of leaked documents which generates anticipation as the announcement churns through the news cycle. The second stage is for key media outlets in different territories to be provided with teaser documents ahead of the dump. The third stage is for the dump to be published on a slow news day and at a time that allows journalists to produce their copy in good time for their own deadlines.

Despite the increasing sophistication of data breaches and the shift in tone of the surrounding media attention it remains possible to regain the trust of stakeholders if a data breach is well managed. Each case is fact sensitive and will require a considerable degree of improvisation. As with other business crises, the more that the predictable elements have been anticipated and rehearsed the better able the organisation will be to manage the unpredictable elements.

In conclusion, the two determining factors in any data breach communication are the interests of the data-subjects whose information has been lost and the existing profile of the company. If the organisation has had data security issues in the past they will almost certainly resurface. It can often be a confronting time for the senior leadership to have to acknowledge that the company's existing profile will play a dominant role in shaping the news reporting of the data breach. In any event, the overriding principles of successful data breach management will always remain accuracy, accountability, speed of response and consistency of communications.

This article was first published in Cyber Security Law & Practice in June 2016. Click here to read the original article.

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About the Author

Magnus Boyd

Partner

Magnus protects individual and corporate reputations by helping clients to manage unwanted media attention. He also advises on information security and helps clients manage the risks to reputation that arise in the event of data loss.

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