Australia’s Mandatory Data Breach Reporting Scheme: a year on what have we learned?

 
 
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Twelve months on, consumers are arguably more troubled about the lack of safeguards for privacy, while businesses face the prospect of further regulation and oversight. Without a fundamental shift in how privacy is addressed, the cycle of heightened concern followed by further regulation looks set to continue. In this article, Melanie Marks Principal of elevenM and InfoGovANZ advisory board member, examines how data breaches are happening and the benefits of a more proactive and embedded approach of privacy by design.

Australian businesses became subject to a mandatory data breach reporting scheme on 22 February 2018.  Angst and anticipation came with its introduction – angst for the disruption it might have on unprepared businesses and anticipation of the positive impact it would have for privacy.

Twelve months on, consumers are arguably more troubled about the lack of safeguards for privacy, while businesses face the prospect of further regulation and oversight. Without a fundamental shift in how privacy is addressed, the cycle of heightened concern followed by further regulation looks set to continue.

It would be folly to pin all our problems on the Notifiable Data Breaches (NDB) scheme. Some of the headline events that exacerbated community privacy concerns in the past year fell outside its remit. The Facebook / Cambridge Analytica scandal stands out as a striking example.

The NDB scheme has also made its mark. For one, it has heralded a more transparent view of the state of breaches. More than 800 data breaches have been reported in the first year of the scheme.

The data also tells us more about how breaches are happening. Malicious attacks are behind the majority of breaches, though humans play a substantial role. Not only do about a third of breaches involve a human error, such as sending a customer’s personal information to the wrong person, but a large portion of malicious attacks directly involve human factors such as convincing someone to give away their password.

And for the most part, businesses got on with the task of complying. In many organisations, the dialogue has shifted from preventing breaches to being well prepared to manage and respond to them. This is a fundamentally positive outcome – as data collection grows and cyber threats get more pernicious, breaches will become more likely and businesses, as they do with the risk of fire, ought to have plans and drills to respond effectively.

And still, the jury is out on whether consumers feel more protected. Despite the number of data breach notifications in the past year, events suggest it would be difficult to say transparency alone had improved the way businesses handle personal information.

The sufficiency of our legislative regime is an open question. The ACCC is signalling it will play a stronger role in privacy, beginning with recommending a strengthening of protections under the Privacy Act. Last May, the Senate also passed a motion to bring Australia’s privacy regime in line with Europe’s General Data Protection Regulation (GDPR), a much more stringent and far-reaching set of protections. And just last week, our Attorney-General announced that sweeping changes are proposed to Australia’s Privacy Act, including hefty increases to penalties, empowerment for individuals and bolstered powers and funding for the Australian Information Commissioner. Legislation to make the changes is anticipated in the second half of the year.

Australian businesses ought not be surprised with the changes afoot. In the US, where Facebook’s repeated breaches have catalysed the public and polity, moves are underway towards new federal privacy legislation. States like California have already brought in GDPR-like legislation, while Asian countries are similarly strengthening their data protection regimes. With digital protections sharpening as a public concern, a federal election in Australia this year further adds to the possibility of a strengthened approach to privacy by authorities.

Businesses will want to free themselves of chasing the tail of compliance to an ever-moving regulatory landscape. Given the public focus on issues of trust, privacy also emerges as a potential competitive differentiator.

A more proactive and embedded approach to privacy addresses both these outcomes. Privacy by design is emerging as a growing discipline by which privacy practices are embedded at an early stage. In short, with privacy in mind at an early stage, new business initiatives can be designed to meet privacy requirements before they are locked into a particular course of action.

We also need to look to the horizon, and it’s not as far away as we think. Artificial intelligence (AI) is already pressing deep within many organisations, and raises fundamental questions about whether current day privacy approaches are sufficient. AI represents a paradigm shift that challenges our ability to know in advance why we are collecting data and how we intend to use it.

And so, while the mandatory data breach notification legislation was a major step forward in the collective journey to better privacy, in many ways the conversation is just starting.

Melanie Marks, Principal elevenM and InfoGovANZ Advisory Board Member