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8/24/2017
10:30 AM
Peter Merkulov
Peter Merkulov
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GDPR Compliance Preparation: A High-Stakes Guessing Game

It's difficult to tell if your company is meeting the EU's data privacy and security standards -- or US standards, for that matter.

The countdown to the European Union's General Data Protection Regulation (GDPR) continues, and while companies spend their millions on compliance, questions remain as to whether they are spending their precious euros wisely. Data management tech firm Veritas recently issued a report concluding that although 31% of companies surveyed believe they are already compliant with GDPR, which goes into effect May 2018, only 2% really are operating under the terms of this omnibus data security and privacy regulation.

That's a gaping hole in readiness, one that should give pause to everyone doing business in the EU and with European trading partners.

Part of the problem may be in the vagaries that come with any regulation. Initially, terminology can be unclear and subject to broad interpretation. Often regulators draft their laws in the hope that vigorous legal challenges will aid in setting precedents and establishing the definitions that provide clarity. This is an important part of the regulatory process.

When it comes to data security, the landscape seemingly shifts daily, upsetting convention. In recent months, for example, two global malware campaigns — WannaCry and NotPetya — exposed common vulnerabilities in the security of thousands of companies whose systems were infected by ransomware. It's difficult to say whether the companies whose data was affected would have been found in violation of GDPR. However, if such an attack takes place after May 2018, and it is believed negligence was involved, there's a chance the European Commission could choose to act.

I've spoken to several legal and compliance experts regarding whether the WannaCry and NotPetya attacks could trigger action under the current GDPR regulation. One expert's answer summed up the consensus: "It depends; it's complicated."

This particular expert told me his firm has fielded inquiries from companies concerned that US data breach notification laws could have been triggered as a result of the ransomware attacks. In the case of California's data breach law, SB 1386, the conditions for noncompliance are "unauthorized acquisition of computerized data that compromises the security, confidentiality, or integrity of personal information maintained by the person or business."

This expert commented that the information known about the NotPetya attack doesn't seem to meet California's data breach standard. However, when working with hypotheticals, there's no way to definitively say. Perhaps there are terms in customer agreements that bind the enterprise to a lower standard of compliance under contractual obligation.

The definition of a data breach under GDPR is much broader than US law, he said, and includes the "accidental or unlawful destruction, loss, alteration, unauthorized disclosure of, or access to, personal data transmitted, stored or otherwise processed." In short, according to GDPR there is a lower threshold for the conditions under which an incident may be considered a data breach. Falling victim to a ransomware campaign may well qualify.

The challenge for organizations preparing for GDPR compliance is in determining their appetite for risk and investing in the tools and processes necessary to achieve their desired level of security.

After that, businesses can only wait and hope their data protection measures meet with the authorities' approval and that their organization isn’t chosen by the EU to be used as a cautionary tale.

Given the questions and uncertainties that are swirling around GDPR compliance today, I wonder if Veritas's figure of a 2% rate of compliance isn't overly optimistic.

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Peter Merkulov serves as chief technology officer at Globalscape. He is responsible for leading product strategy, product management, product marketing, technology alliances, engineering and quality assurance teams. Merkulov has more than 16 years of experience in the IT ... View Full Bio
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KaelynLowmaster
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KaelynLowmaster,
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8/25/2017 | 4:33:34 AM
GDPR v. CSL?
I'm curious whether compliance rates for China's Cybersecurity Law are progressing any more quickly than those for companies trying to navigate GDPR. Two very different emerging regulatory regimes to be sure (esp. as they relate to geographical reach - GDPR's extraterritoriality v. China's focus on domestic internet sovereignty), but the personal data they're seeking to govern is similar, as are the financial consequences for getting it wrong. Hopefully the longer runway for preparation will lead to fewer of the "cautionary tale"-type prosecutions you mention as possible for EU companies, but we're already seeing some investigations of big domestic players in China. I have a feeling the latter will be a much less consistent process, and that other juristictions will have a lot to learn from the differing approaches we're seeing with instituting GDPR v. CSL.
PeterMerkulov
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PeterMerkulov,
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8/29/2017 | 2:42:36 PM
Re: GDPR v. CSL?
You raise a good point about CSL. Whereas there has been much discussion and debate about GDPR, and the EU has promoted it and pushed for compliance preparation well in advance of next year's implementation, China's Cybersecurity Law was put into effect without much understanding within China, let alone among foreign businesses doing business in China. The NY Times wrote about the problem earlier this year: https://www.nytimes.com/2017/05/31/business/china-cybersecurity-law.html.
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