Cyber Security – Increased Challenges.
Legal News & Analysis - Asia Pacific - Cybersecurity
3 September, 2016
The education sector is rapidly embracing technology. Laptops, tablets and internet connected devices are increasingly the first choice learning tool for students and staff across schools and universities. The advance in use of user powered digital technologies poses significant challenges for institutions – in particular, in protecting its network against infiltration, compromise or attack. In this article, we look at some of the key risks for institutions to consider and address.
The emerging risks:
An unsecured network made up of multiples of devices is, essentially, a labyrinth of open doors for hackers. This risk is more prevalent by the increasingly common implementation of ‘bring your own device’ (BYOD) policies at schools and universities. Take the example of a student who inadvertently infects their personal device with malware by downloading an infected file, clicking on an infected link or by falling victim to a phishing scam. As a device connected to the institution’s network, this user’s infected device could easily be the source of the institution’s next data compromise.
Hackers are not only those external demons who wish to steal information or compromise systems. Academic fraud through internal infiltration is becoming increasingly common. Open networks provide easy gateways for students to access devices held by an examinations board, an assessor or a fellow student. Recent examples include students accessing and plagiarising work in progress on other students’ devices, and accessing and amending assessment transcripts and scores.
Third party liability
Use of a network connected laptop or device for purposes not approved by the institution’s use policy not only increases the risk of malware, but also the risk of third party liability. As consumer awareness as to privacy and information security increases, counterparty expectation as to security policies is also growing. Take the example of a student breaching copyright or accessing inappropriate materials through the network and the increased risk this poses. Third party victims may look to join the institution to claim, on the basis of failure to have sufficiently secure policies that can detect misuse.
Tighter privacy regulations
Educational institutions collect and store information of a personal nature (including student names, addresses, health records, financial and credit information etc). They are, therefore, subject to regulation under local privacy legislation (for example in Australia, the Privacy Act 1988 and in the UK, the Data Protection Act 1998). This requires clear systems and procedures to be in place to protect and manage that information in a way that complies with local law. Failure to have such systems in place could result in fines and penalties of up to AUDUSD 1.3 million (USUSD 940,000) in Australia and fines up to GBP 500,000 (USUSD 720,000) in the UK. The UK (and Europe wide) penalty is set to increase under the General Data Protection Regulation (GDPR), to an upper limit of €20 million or 4% or annual global turnover (whichever is higher).
The data protection regulatory landscape in the UK and in the rest of Europe will soon be significantly altered. On 14 April 2016, the European Parliament adopted the GDPR. This marks the final stage of the legislative process paving the way for the patchwork of national data protection laws, created by the European Data Protection Directive passed in 1995, to be replaced with a uniform law across the European Union. In the UK the rules will replace the Data Protection Act 1998.
UK and European Institutions have less than two years to prepare for the new rules and would be well advised to start now before the GDPR comes into force on 25 May 2018. A raft of new guidance will be issued by EU bodies and national authorities in the coming months which should assist with preparations.
An added complexity for businesses may be the implications of Brexit on the UK’s implementation of the new rules. If the UK votes to leave the EU, there will be a two year negotiation period to determine the UK’s onward relationship with the EU.
Education Institutions should also be mindful of data protection and privacy issues when expanding internationally. In the UAE, for example, although the bar for achieving compliance with the UAE laws relating to privacy is currently low, we consider that certain practices adopted to achieve compliance in more heavily regulated jurisdictions (such as Australia and the UK) can be beneficial. For example, ensuring that third party processors are bound by written terms imposing obligations on them (including relating to the extent of the processing and the data security standards to be adopted to protect the data from loss or destruction), will help to limit the disclosing party’s liability arising from unauthorised use of that data. Similarly, providing information about the potential uses of personal data to a parent or student at the outset of the relationship can generate goodwill, act as an effective means of managing expectations and could even mitigate the risk of a complaint or claim being filed for damages in relation to the use of an individual’s data.
We also understand that the UK Data Protection Commissioner is currently focusing on UK institutions who are expanding internationally to make sure they apply the same standards in territories where they are active.
In complying with their obligations under the GDPR, both data controllers and processors are obligated to implement appropriate technical and organisational measures to ensure a level of security appropriate to the personal data they are processing. The GDPR mandates a list of requirements which should be taken into account and these should be considered when implementing any measures in respect of cyber security. These technical and organisational measures must be regularly tested and breach of security obligations may result in fines of up to €10 million or 2% or annual global turnover (whichever is higher).
With mandatory breach reporting legislation looming across the world (In Australia, draft legislation is currently before Parliament, with final drafts expected later this year), institutions will be expected to have oversight over activity on their networks. They must be in a position to quickly identify rogue devices or weak links, and to mitigate the damage that may be caused by those vulnerabilities.
For UK and European Institutions, the GDPR will introduce a number of wide-ranging changes to EU data protection law, including by introducing 72-hour data breach notifications. Pursuant to the new rules, a data controller must notify the relevant supervisory authority of a personal data security breach within 72 hours of becoming aware of the breach. They may also be required to inform the affected individuals where there is a high risk to their personal data.
What to keep in mind when considering cyber-risk management
There is no ‘one size fits all’ approach to managing cyber-risk. But in managing the risk that devices pose to a network, educational institutions should focus on the following key issues:
- In each situation, independent critical thinking is needed to ensure that the institution’s cyber security strategy is tailored to the risks faced by the institution, including its legal obligations, its critical assets, and the third-party vendors that are relied upon;
- Strategies must go beyond a simple ‘check box’ exercise to a living and breathing strategy that covers the necessary technical aspects as well as providing for ongoing education;
- Cyber-risk should be managed on an organisational level with input from all level of stakeholders and staff – with ultimate supervision by the board and senior management;
- Disaster planning systems and intrusion detection systems should be in place and should be actively and continually monitored; and
- Consideration should be given to risk mitigants – such as specialist cyber insurance - to help mitigate the financial, legal and reputational risks of cyber incidents.
Each of these issues is considered in detail below.
Identification of assets at risk
As with all exercises in risk management, management must identify what critical assets and data are at risk to ensure that there are no blind spots in the organisation’s security strategy. It is important to remember that the assets at risk include not only obvious IT assets such as servers but also assets that are controlled by networked computers. For educational institutions, personal information, health and credit information pose a particularly high level of risk. Sensitive examination related information and student assessment records should also be identified as needing added protection. Organisations should also ensure that all legal and compliance obligations are identified and are considered in planning the security strategy.
Third-party vendors - management and due diligence
In a number of recent high profile cyber attacks on educational institutions, attackers exploited weaknesses in the systems of third-party vendors used by the institutions to gain access to the institutions network. There are likely to be more such incidents as third-party vendors with inadequate defences will often be an attacker’s path of least resistance.
Regulators across the world have expressed concerns about organisations relying on third-party vendors without performing proper due diligence when selecting the vendor or conducting due diligence on an ongoing basis once the vendor has been engaged. An organisation’s cyber-risk management policies should address due diligence, the extent to which third parties are given access to critical data, and response strategies in the event of a third-party incident. Vendor contracts should also include clauses to effectively manage risks and specify the procedures to be adopted where an incident occurs. A third-party vendor must assist the institution to meet its requirements when dealing with affected customers, law enforcement, and insurers under writing cyber-risk.
Due diligence is also necessary when companies consider outsourcing IT functions or adopting cloud based payroll, data and management services.
Education and training
Educating students and staff as to best practice in cyber security is crucial to managing the risk. Institutions should ensure that students and staff are properly informed of their responsibilities regarding the use of IT assets and data security. Training and policies need to encourage students to be aware of and engage in cyber-risk management. Steps should include educating students about cyber risks, best password practices, handling of confidential information, how to recognise risks, when to inform teachers and supervisors of concerns and how to recognise scams and phishing. When staff and students are properly trained, they can become the organisation’s best defence to cyber incidents.
Board and management engagement
Effective cyber-risk mitigation requires communication and cooperation between teachers or lecturers and senior management, including the boards of directors, executive council or board of management. Regulators are increasingly demanding that board minutes and briefing materials demonstrate consideration of cyber security, incident response planning, reporting on actual incidents, and any risks arising from vendors.
Breach and system monitoring
Many cyber incidents have also been attributed to failures by organisations to maintain internal controls such as regularly updated virus software and patches. Patch management practices should provide for the prompt installation of critical patches and the documentation of such actions. BYOD policies should be front and centre, and should require regular patching and updates from all users.
Intrusion detection software should also be considered, as it provides timely detection and reporting of security incidents. The earlier security incidents are identified, the earlier they can be addressed and any loss or damage minimised. This is difficult, however, for institutions with a BYOD policy. For this reason, it may be prudent to engage external firms to monitor internet hotspots for any trace of irregular activity or increased flow of personal information.
Disaster planning and revisiting
Traditional disaster recovery and business continuity plans should be flexible enough to address cyber risks as well as the traditional physical risks institutions face. Plans should facilitate communication between the information security team, risk team and legal team responsible for emergency response, disaster recovery and contingency planning. They should clearly set out the roles and responsibilities of each member of these teams. Tests should be carried out regularly, to ensure systems are adequately responding to different scenarios.
Insurance also provides an important risk management tool for organisations to recover loss and damage that may be caused by a cyber incident. Generally these policies provide coverage for both first party loss (i.e. the damage that is caused directly to the organisation by a cyber incident) and third party loss (i.e. the damage and loss an organisation may incur due to liability it owes to its stakeholders, third parties and regulators).
In conclusion, it is important to remember that institutions of all sizes are experiencing cyber related breaches and attacks, and schools and universities are not immune. Due to the increasing number of cyber incidents, government bodies are demanding that organisations prioritise cyber resilience to protect their systems and stakeholders. While there are no easy answers, educational institutions should consider and follow the guidelines discussed above as a starting point from which to manage their exposure and respond to rapid change.
For further information, please contact:
Beth Cubitt, Partner, Clyde & Co