Why GRC Must Engage the Board of Directors in Data Security
Organizations are still scrambling to comply with the GDPR. Tom Kelly, President and CEO of ID Experts, says the regulation has forced important conversations within organizations. Equally important is the board conversation on how to protect stakeholders’ interests. Tom writes on the role boards can play in paving the way for compliance with data standards.
2018 has without a doubt been one of the busiest years for GRC professionals. Thanks to the implementation of the General Data Protection Regulation (GDPR), governance, risk and compliance workers have struggled to make sense of complex European regulation on data security that, if violated, will result in a heavy fine.
Such struggles are frustrating – and they’re far from being over. If anything, they show signs of ramping up in the years to come. According to a 2017 study from the Center for Cyber Safety and Education, we’re looking at a shortage of 1.8 million cybersecurity workers in North America by 2022. Failure to craft effective data security practices will be costlier than ever before, but finding the people to do it is only becoming more difficult.
This poses a massive challenge for GRC professionals. Cybersecurity and privacy pose enormous risks for a company. News of a breach inevitably means bad press, angry customers and falling stock prices. Similarly, weak privacy policies – and poor communication about those policies to consumers – can lead to a massive backlash, as we saw with the Facebook this past spring.
But unless there’s strong communication between the IT department and the GRC department, vital information can get lost in translation – and you could be called in to explain why the organization wasn’t compliant with data security regulations.
That’s precisely why GRC professionals shouldn’t have to go it alone. No matter the size, scope or sector of your organization, it’s wise to call in the board of directors to manage data security. Whether they realize it or not, boards have a vested interest in cybersecurity and compliance. The more effectively you can convey the importance of their role to them, the more prepared you’ll be in case of a breach.
First, make your case from the numbers. According to the Ponemon Institute, the average data breach in 2017 cost companies a whopping $3.5 million. Worse, they estimate that there’s a 27 percent likelihood that a U.S. company will undergo a breach costing between $1.1 million and $3.8 million in the next two years. And even if there is no technical security breach, failure to make your privacy policies clear could put you in a situation where, several years down the road, consumers are outraged to discover that you’ve been handing over their information to third-party entities all along. These are risks that a board of directors cannot afford to ignore.
Second, make your case from the timing. Although GDPR currently only applies to the data of citizens of the European Union, the time may come when it applies to U.S. citizens as well. Recent reports say that the president has examined the possibility of implementing a U.S. version of GDPR. The sooner GRC professionals and the board of directors can begin to develop privacy systems and policies that protect U.S. data subjects, the less likely it is that your company will be found noncompliant later on.
Third, make your case from the ethics. As politics grow increasingly dysfunctional and partisan, Americans are looking to businesses to direct the country through ethical leadership. According to the 2018 Edelman Trust Barometer, nearly two-thirds of Americans say that “CEOs should take the lead on change, rather than waiting for the government to impose it.” By acting to protect your clients’ data ahead of time, you can demonstrate the kind of leadership that our nation desperately needs.
Once you’ve got the board on board, there are several things you can and should consider doing to mitigate data-related risks. First – and most importantly – you should offer your expertise on which of your company’s assets are most vulnerable in terms of data security. This will vary from industry to industry, as assets might include basic employee or client information, like credit card numbers and usernames and passwords, but will also likely include data specific to your area of expertise, such as algorithms, business plans or intellectual property.
If the answer to any of these questions is “no,” it’s worth taking the extra step to explain it clearly to your clients. It won’t come as a surprise to them, as most people have had their inboxes flooded with GDPR-related notices by now, and it can help deflect any frustration or confusion in the future.
Other possibilities include making your case for adding a data-security expert to the board so the group has an accurate sense of the risks and opportunities of data security and partnering with the IT department to host a cybersecurity tutorial, either for the board or for employees.
Whatever you ultimately decide, however, be sure to act quickly and decisively. Data breaches can compromise an organization’s reputation and brand overnight. By bringing this risk to the board’s attention and pushing for compliance, you’ll prepare your company to navigate the challenges of data security in the coming decades.