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.
"Working with McCormick Harris was a very positive experience. I’ve been with McCormick Harris for a couple of years now, and have always found them very professional and up to date in their approach. From a customer service perspective, they were helpful and attentive to my needs and understood my business in such a way that made the insurance assessments straightforward and easy to understand."- Simon Mulqueen – Bendigo Funerals