Insurers and law firms at risk of cyber-attacks
Practical tips for protecting you – Lawyer fined following mishandling of client files – storage on home computer
In the wake of several recent global cyber-attacks, the insurance and legal markets must recognise vulnerabilities in work practices and take steps to protect sensitive client information. This requires a fundamental change in attitude towards the way electronic data is managed, noting the increasing risk of causing reputational and financial damage to both individuals and companies.
Dangers of poor data management
Important lessons can be learnt from recent action taken by the UK’s Information Commissioner’s Office to fine a senior barrister for her failure to maintain security over sensitive client files.
The barrister created and stored some 725 files on her home computer, which contained sensitive personal information belonging to between 200 and 250 people, including children. Although the desktop computer was password-protected, the files were unencrypted, and were accessible to shared users of the terminal.
The files were inadvertently and temporarily added to an internet directory as a back-up when the barrister’s husband updated software on the home computer. Several of the files could be accessed through internet searches, and some of the uploaded material contained information relating to persons involved in Family Court and Court of Protection proceedings.
The barrister’s conduct – both in relation to failure to prevent access to files by unauthorised third parties, and an ongoing failure over 2 years to encrypt the files – was found to be a serious contravention of the relevant data protection principle under the UK’s Data Protection Act 1988.
The Commissioner considered that there was no good reason for the barrister’s failure to take reasonable steps to prevent the contravention. It was foreseeable that the failure to technically protect the information would have caused substantial distress to clients, particularly were the files could have been accessed by untrustworthy third parties, and she was fined £1,000.
Vulnerabilities in legal & insurance firms
Closer to home, lawyers and insurers should be on high alert following the recent crippling of global law firm DLA Piper by the recent NotPetya ransomware attack.
As cybercriminals become increasingly sophisticated, companies such as law firms and insurers which store highly sensitive personal client information will become more frequent targets.
The costs of such attacks are varied and significant – not only can there be exposure to penalties under the recently established nationwide data breach notification scheme under the Privacy Amendment (Notifiable Data Breaches) Act 2017 (Cth), but affected entities are likely to incur:
- costs of complying with the new legislation
- losses in access to data, as well as lost data or information through corruption or encryption
- costs associated with restoring systems and functionality
- ongoing losses in productivity and profit
- reputational damage and loss of trust from clients
- costs of corrective action, including potential civil claims for damages
Whilst many firms and insurers are sophisticated in their level of infrastructure and cyber-defences, each is exposed to risk where there has not been emphasis on education and training for staff in dealing with electronic information. Staff must be made aware of the various ways cybercriminals may endeavour to access data, including phishing, ransomware and access through unsecured personal devices.
Means of protection
In addition to investing in secure IT systems, legal and insurance entities can take several measures to protect themselves and staff members from malicious cyber-attacks.
- Maintain up-to-date software (including operational and anti-virus software) to minimise exposure to known vulnerabilities that will be targeted by cybercriminals
- Invest in frequent and extensive back-ups so that systems can be restored with minimal loss of data in the event of unwanted encryption or ransomware attacks
- Ensure staff passwords are sufficiently strong and, where possible, employ two-factor authentication for access to sensitive systems
- Limit staff access to sensitive or operational information and, as a matter of business practice, require multiple levels of authorisation to limit security breaches going undetected
- Upgrade data management policies to discourage practice of risky behaviour, such as storage of company or client information on personal devices, or connection of unsecure personal devices to company networks
- Take out necessary cyber-risk and data breach insurance
- Test staff awareness and understanding of risk by controlled exposure to potentially malicious electronic content (e.g. send fake phishing email to selection of random staff to assess responses)
Staff should be thoroughly educated in relation to cyber risks (both existing and emerging), with an emphasis placed on adopting good practices within both their work and home environments. This is particularly so where increased sharing of networks and devices mean the lines between company and personal data are often blurred.
Individuals should be trained to:
- use password managers with two-factor authentication to avoid using weak or replicated passwords
- hover over suspicious links to ensure authentic origins
- limit publicly accessible identifying information (such as dates of birth or addresses)
- be wary of text message authentication where mobile phones can be easily cloned
- use strong antivirus software on home computers
- be wary of letter, email and telephone scams, particularly for older or less technologically savvy individuals.
Recent global attacks have seen cyber security thrust into the spotlight. With increasing digitisation of the legal and insurance industries, it is now more crucial than ever for lawyers and insurers to recognise vulnerabilities in their systems and business practices, so as to ensure the safekeeping of sensitive client data.
Individuals and corporate entities will be exposed to extensive reputational and financial damage where reasonable steps are not taken to meet foreseeable cyber risks.
Date: 18 July 2017