Legal Impact of Data Protection and Management in the Digital Age

Legal Impact of Data Protection and Management in the Digital
Age

CommunicAsia2017 Summit speaker, Steve Tan, Partner, Deputy Head
– Technology, Media & Telecommunications, Rajah & Tann LLP, shares the
legal aspects of adopting new technology and ensuring compliance with data
protection regulations.  

With increasing access to mobile devices and the internet, the
amount of data created annually worldwide is predicted to soar to 180
zettabytes (180 trillion gigabytes) in 2025, with approximately 80 billion
devices connected to the Internet[1]. 

As organisations look towards data to track consumer patterns
and guide business direction, they should also be mindful of the legal
regulations that govern the protection of data and the possibility of a data
breach. In the past year, we have seen some of the largest data breaches in
history with millions of accounts compromised and the release of personal data
such as addresses and telephone numbers for sale on the black market. Such
high-profile data breaches have been increasing in size and prevalence in
recent years, with cyber criminals (and even state actors) taking keen interest
in obtaining sensitive corporate and personal information. Besides such hacking
attacks, a data breach can also arise from employee mischief or neglect, an
inadvertent leak, lack of or failure in security measures, just to name a few.

Regardless of the cause, the threat of data breaches is imminent
and can have severe repercussions for organisations, especially if they are
found guilty of failing to take sufficient measures to secure their data.
Singapore’s data protection law has one of the highest fines in Asia with each
breach subject to a potential fine of S$1 million. Similarly, breaching
Europe’s new General Data Protection Regulation can result in a fine of the
larger of either 20 million Euro or 4 per cent of the organisation’s global
annual turnover.

Beyond financial penalties, a data breach can cause irreversible
damage to a company’s reputation as well as potentially significant damages
payable in civil liability to third parties, not to mention possible personal criminal
liability for senior management.

Ensuring compliance in an evolving landscape

Organisations should be well aware of the prevailing legal
regulations that govern ever growing popular technology solutions such as cloud
storage, collection, analysis, and offshore storage of customer data. Here are
a few tips for organisations to ensure that they comply with the legal
regulations where they operate in. 

1.     Have a clear understanding of how personal data is used and
managed in your organisation. Some
questions that business leaders need to ask include what personal data has been
collected, who has access to this data, whether the purposes of processing of
such personal data are lawful, where and how it is kept and secured, and how
long such personal data is kept on file. In some instances, data storage and
protection is managed on behalf of an organisation by an outsourced service
provider. Organisations need to ensure that they understand the level of
protection to the data provided by the outsourced service provider and
ascertain whether regulations, including sector-specific ones, permit
offshoring or cross-border data sharing. In some countries, there appears to be
a growing trend of data localisation which means organisations are not
permitted to transfer any such data overseas. Data protection regulations in
ASEAN countries are also set to develop in future in light of commitments
arising from the formation of the ASEAN Economic Community (AEC) in end 2015
and the continued digitalization of everything. Singapore, Malaysia and the
Philippines are presently the only countries with dedicated robust data
protection laws, and it is only a matter of time before the rest of the ASEAN
countries follow suit, with significant implications for foreign organisations
operating in those countries.

2.     Conduct regular audits and penetration testing. The authorities do recognise the fact that cyber criminals
often use sophisticated measures in their attacks. However, as seen with the
many data breaches around the world, it is most often the case that the
organisation itself has failed to have sufficient security measures in place.
It is also a known fact that many organisations are not doing enough to protect
customer data or their important data. At the bare minimum, organisations need
to meet the regulatory standards for data protection and compliance. Beyond
this, they should also conduct regular audits and security assessments such as
penetration testing, to ensure the integrity of their security framework and
that employees are abiding by set guidelines, especially when handling
sensitive information.

3.     Be willing to seek external advice. By working closely with professionals such as specialised
lawyers with the relevant expertise, organisations will be able to have a
better understanding of other factors that could affect their business
decisions, such as a digital transformation initiative to move data to the
cloud. Legal advice is also important for organisations that operate in a
highly regulated industry, such as financial institutions, which could have
sector-specific laws that add on a further layer of compliance by the
organisation. In the event of a data breach or cyberattack resulting in leaked
data, that organisation would suffer the brunt of not only data protection laws
but also sector-specific laws.

Ultimately, the burden of cyber security falls
on the organisation itself, and regulations call for them to ensure that
sufficient security measures and practices are put in place. The proper use, storage, and security of data should not be
seen solely as the responsibility of a ‘few good men’ within the organisation
such as the IT head or the data protection officer, but rather as a culture
that permeates throughout the entire organisation.

New technological innovations have the potential to disrupt current
practices and pose challenges for security management, but with the right data
protection measures in place, organisations will be able to take full advantage
of these to drive their business forward.

For more insights, join Steve Tan, Partner,
Deputy Head – Technology, Media & Telecommunications, Rajah & Tann LLP
at the CommunicAsia2017 Summit on Conference Day 2, 24 May 2017 speaking
on the topic ‘Grappling with the Internet of Things, Disruptive Technology,
Cloud of Things and Data Privacy’.