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Under the Corporations Act, directors are required to have particular regard around their duty of care, due diligence and continuous disclosure obligations when running a company. This applies to directors involved in running a private, as well as a public organisation. Such obligations extend to all aspects of a business, including a business’s IT infrastructure and security.
Directors are no longer able to push the responsibility of cyber compliance on to the IT department or to a third party IT service provider. It is a director’s duty to be involved in managing and understanding the real risk associated with cyber security, along with ensuring a strong compliance regime exists that addresses cyber security within the business. Failure to discharge such duties can expose directors to claims from shareholders, along with investigations from regulators such as the Australian Investment & Security Commission (ASIC) and the Office of the Australian Information Commissioner (OAIC).
Australian Government agencies, not for profit organisations and all businesses with revenue greater than $3m have responsibilities under the Privacy Act 1988. Even those small businesses with less than $3m of revenue but who collect health information, sell and/or purchase personal information for a benefit have obligations under the Act. It is becoming more common for small businesses to ‘Opt In’ to the Privacy Act and therefore send a clear message to their clients that they are committed to strong privacy practices. In recent times the Australian Privacy Principals have been updated through the Privacy Amendment (Enhancing Privacy Protection) Act 2012 (Cth). Australian Privacy Principal (APP) 11 requires entities governed by the Act to take reasonable steps to protect personal information it holds from:
(a) Misuse, interference and loss; and
(b) From unauthorised access, modification and disclosure.
Significant penalties may apply for breaches of the Privacy Act, including fines of up to $340,000 for individuals and $1.7m for organisations. With this in mind, directors of companies need to start understanding the following about their business.
With obligations on directors increasing at a rapid rate, cyber risk management should now be at the forefront of all directors’ minds.
A message from our Managing Director, Tony McCormick.
The recent Cyber Attacks on the Australian Government Offices and Business is yet another reminder of how financially devastating these matters can be.
Many of these are not specifically targeting businesses, just mass attempts to get in to computer systems.
In March this year, we had a very small Cyber Incursion, by way of Business Email Compromise.
Quickly found and having our IT Managed Service Provider, working in partnership with our Insurer’s Cyber Security Firm, the problem was fixed very promptly.
As at yesterday we have costs of $56,632.13 and we still have some more costs to come.
All paid by our Insurer. A quality Cyber Insurance Policy and Response Program. The word quality is very important here.
The costs from our IT MSP (like many others, these costs are not covered in our regular Agreement), Cyber Security Firm, Specialist Vendor to establish and report on what the attackers looked at, notification to the OAIC (Office of the Australian Information Commissioner https://www.oaic.gov.au/ ) and we are still to finalise the last two aspects before this will be complete.
This was a very small attack but as you can see, costs have added up quickly and it will probably be four to five months of time to put this behind us.
As the Manager of our Cyber Insurance Placement Team said yesterday, “Scary times mate, any client that doesn’t have cyber insurance is risking their livelihood now!”
Please put in place as a matter of urgency, a high quality Cyber Insurance Policy/Program, that includes a very prompt, proven and effective Cyber Response arrangement.
Contact one of our Professional Account Managers to discuss.
Regards
A.P (Tony) McCormick and The MHI team.