Vulnerabilities / Threats
10/31/2011
12:52 PM
50%
50%

Data Breach Costs: Beware Vendor Contract Fine Print

Organizations often end up paying the consequential costs of data breaches when third-party vendor contracts aren't scrutinized.

My Mistake: 10 CIOs Share Do-Over Worthy Moments
Slideshow: My Mistake: 10 CIOs Share Do-Over Worthy Moments
(click image for larger view and for slideshow)
Whether it's from a vendor improperly securing database information it's hosting for a customer or a storage company that leaves backup information unlocked in a truck, data breaches caused by third parties happen all the time. If organizations are not careful in the way they construct their contracts with those vendors, the organization itself could end up being on the hook for far more of the breach liability than it expected. But if they do it right, they could use that contract as a tool to mitigate risk to their organization.

"As it currently stands, the focus of risk mitigation with respect to security are technical controls and other security measures, and the importance of the contract as a risk mitigating tool is overlooked," said David Navetta, founding partner of the Information Law Group. "As litigation increases in this area, for risk-conscious organizations, the protections in the service provider contracts are going to become very important."

Litigation in these cases of third-party breaches is a common occurrence, frequently with the third-party organization ducking under the radar as their customer gets hammered by class action suits. For example, when a breach that exposed data for 4.9 million active and retired U.S. military personnel was caused by the theft of backup tapes from the car of an employee at Science Applications International Corp. (SAIC), working on behalf of Tricare, in September, the $4.9 billion lawsuit by affected individuals filed last week was lodged against TRICARE and the Department of Defense, not SAIC.

Similarly, Stanford Hospital had a $20 million lawsuit filed against it after an employee at its billing contractor, Multi Specialties Collection Services (MSCS) inadvertently posted patient information on a homework help site online. Stanford has been on a publicity blitz claiming its outsourcer was totally to blame for the breach.

In most cases like those, the details of the actual contract between the organization and the supplier never really become public. Typically they're buried in closed settlement deals and kept locked down with non-disclosures. But John Nicholson, counsel for the global sourcing practice at the Washington, D.C.-based law firm of Pillsbury Winthrop Shaw Pittman, said that suppliers frequently evade the bulk of liability due to poorly drafted service contracts.

Read the rest of this article on Dark Reading.

Comment  | 
Print  | 
More Insights
Register for Dark Reading Newsletters
White Papers
Cartoon
Current Issue
Dark Reading Tech Digest, Dec. 19, 2014
Software-defined networking can be a net plus for security. The key: Work with the network team to implement gradually, test as you go, and take the opportunity to overhaul your security strategy.
Flash Poll
Video
Slideshows
Twitter Feed
Dark Reading - Bug Report
Bug Report
Enterprise Vulnerabilities
From DHS/US-CERT's National Vulnerability Database
CVE-2014-4467
Published: 2015-01-30
WebKit, as used in Apple iOS before 8.1.3, does not properly determine scrollbar boundaries during the rendering of FRAME elements, which allows remote attackers to spoof the UI via a crafted web site.

CVE-2014-4476
Published: 2015-01-30
WebKit, as used in Apple iOS before 8.1.3; Apple Safari before 6.2.3, 7.x before 7.1.3, and 8.x before 8.0.3; and Apple TV before 7.0.3, allows remote attackers to execute arbitrary code or cause a denial of service (memory corruption and application crash) via a crafted web site, a different vulner...

CVE-2014-4477
Published: 2015-01-30
WebKit, as used in Apple iOS before 8.1.3; Apple Safari before 6.2.3, 7.x before 7.1.3, and 8.x before 8.0.3; and Apple TV before 7.0.3, allows remote attackers to execute arbitrary code or cause a denial of service (memory corruption and application crash) via a crafted web site, a different vulner...

CVE-2014-4479
Published: 2015-01-30
WebKit, as used in Apple iOS before 8.1.3; Apple Safari before 6.2.3, 7.x before 7.1.3, and 8.x before 8.0.3; and Apple TV before 7.0.3, allows remote attackers to execute arbitrary code or cause a denial of service (memory corruption and application crash) via a crafted web site, a different vulner...

CVE-2014-4480
Published: 2015-01-30
Directory traversal vulnerability in afc in AppleFileConduit in Apple iOS before 8.1.3 and Apple TV before 7.0.3 allows attackers to access unintended filesystem locations by creating a symlink.

Best of the Web
Dark Reading Radio
Archived Dark Reading Radio
If you’re a security professional, you’ve probably been asked many questions about the December attack on Sony. On Jan. 21 at 1pm eastern, you can join a special, one-hour Dark Reading Radio discussion devoted to the Sony hack and the issues that may arise from it.