InfoGovANZ

Information Governance Think Tank

OAIC Notifiable Data Breaches Scheme – The first 4 years

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The Notifiable Data Breaches (NDB) scheme commenced in February 2018, introducing new obligations for Australian government agencies and private sector organisations with an annual turnover of $3 million AUD or more. Notably, under the NDB scheme organisations are required undertake an assessment should they suspect: 

  • Unauthorised access to or disclosure of personal information, or loss of personal information where access by unauthorised persons is likely to occur, 
  • Serious harm to the individuals to whom the information relates is likely to occur, and 
  • The risk of serious harm cannot be addressed through remedial action. 

If the assessment indicates that serious harm is likely to result from a data breach, they must notify the Office of the Australian Information Commissioner (OAIC) as well as all affected individuals so they can take action to address possible consequences and also. As data breaches and subsequent investigations are often significantly complex, an organisation or agency is given a baseline of 30 days to assess whether a data breach is likely to result in serious harm. However, once the organisation has formed the view that a data breach has occurred, individuals who may be seriously impacted by the data breach must be notified as soon as practicable. For example, in their recent data breach Optus has indicated that the assessment process took place over the course of no more than a couple of days prior to start of the notification process. 

The OAIC has published bi-annual reports summarising the details of reported data breaches since 2018 and this article examines some of the identifiable trends in these reports over the past four years. The OAIC report for the most recent 6-month period (Jan-Jun 2022) should be released in the next few weeks, however some released statistics from the impending report indicate that the observed trends discussed in this article continue through the most recent period. The full OAIC reports are available from https://www.oaic.gov.au/privacy/notifiable-data-breaches/notifiable-data-breaches-statistics, and further information is available on the OAIC website: https://www.oaic.gov.au/privacy/data-breaches.  

Organisations that fail to report a notifiable data breach can be subject to the same penalty as if they committed a serious or repeated breach of privacy, however organisations may look for a defensible reason to avoid reporting a breach as opposed to having to report a data security failure to the regulator. Even serious breaches where substantive personal data has been lost might be considered non-notifiable should the breached organisation feel they have undertaken sufficient remediation action which lessens the chance of serious harm.  

Ransomware attacks, one of the common externally perpetrated data breach events, have evolved in recent years to extend beyond holding data in an encrypted state and often now include the exfiltration of sensitive data from target organisations. Data is often held by the attacker, with the threat of publication on the dark web balanced against payment of the ransom. Should the breached organisation make payment of the ransom, the attacker generally will agree to delete the exfiltrated data. While it is essentially impossible to be certain that all copies of this data have been deleted, a breach organisation is likely to consider such an arrangement as sufficient “remediation” of the breach event in that the likelihood of the data being used in such a way that would cause serious harm to individuals is substantially reduced. In such circumstances, the breached organisation may choose not to report the incident to the OAIC, despite the severity of the initial data breach.

Breach Notification Trends 

Due to the complex nature of data breaches and reclassification of notifications over time, there is some variation in breach notification statistics between the time of OAIC publication and the present date. The stats shown in this article are taken from each quarterly/bi-monthly report which reflected notification data at the time of report publication, however it should be noted that breach statistics will have changed to a degree from what we have summarised from the OAIC reports. 

Over the past 4 years, there have been more than 3,500 reported data breaches, of which 60% were Malicious (or criminal), 35% were Human Error and 4% were due to System Faults. Taking into account that 2018 was a partial reporting year, approximately 1,000 breaches would have been reported to the OAIC across 2018 and 2019, with a slight uptick in 2020 and a substantial reduction in 2021. A summary of the data breach notifications made to the OAIC are displayed in the table immediately below 

Year  Breaches  Change  Malicious  Change  Human error  Change  System fault  Change 
20181  749    449    265    35   
2019  997  0%  625  +4%  329  -7%  43  -9% 
2020  1,057  +6%  627  0%  380  +16%  50  +16% 
2021  910  -14%  545  -13%  324  -15%  41  -18% 
Total  3,713    2,246    1,298    169   

 The table above also shows that malicious action breach incidents (combining both internal and externally originated) increased in 2019 compared against “non-malicious” breach types, however this trend was reversed in the following year. This was followed by was a slight reduction in all types of breach notifications in 2021. Overall, the OAIC NDB reports show a fairly flat trajectory over the length of the scheme.  

Conversely, US data on publicly reported data breaches over this time period shows year on year increases between 2018 and 2021, effectively doubling from 1,244 to 2,407 per year over this time period2. It is worth noting that data breach reporting requirements in the US vary from state to state and are substantially different to the Australian NDB scheme. However, the significant difference in the overall trend of breach reports is still interesting, particularly as the US Data indicate that the number and severity of malicious cyber-attacks appear to be increasing over time 3.  in contrast, the declining number of reported malicious breaches (as well as non-malicious breaches) in the Australian NDB data suggests there may be other systemic factors at play with regards to the number and type of breaches reported under NDB scheme.   

Number of individuals impacted by a breach 

As can be seen in the table below, the majority of data breaches tend to have low numbers of individuals affected by the breach. However, the number data breaches affecting large numbers of individuals remained fairly steady over the data period, indicating that a significant proportion of the Australian population is likely to have been impacted by a data breach throughout this time period. 

Year  Total Breaches  <1k  1k-5k  5k-10k  10k-25k  25k-50k  50k-100k  100k-250k  250k-500k  500k-1m  >1m  Unknown 
2018  749  638  61  15  9  1  4  4  1  0  2  14 
2019  997  834  74  19  16  7  5  5  2  0  5  30 
2020  1,057  890  90  12  13  14  6  2  4  2  7  13 
2021  910  787  71  12  15  7  5  4  2  1  4  2 
Total  3,692  3,149  296  58  53  29  20  15  9  6  16  59 

Kinds of personal information (PI) involved in breaches 

The majority of personal information present in data breaches was contact information, followed almost equally by financial and identity information. The proportions of personal information types present in data breaches has not changed significantly year to year, indicating that there has not been significant changes in the how organisations are holding or protecting particular types of personal information over this period.  

The higher number of breaches relating to contact information will be, to some degree, a function of the fact that only certain organisations need to hold more specific personal information about their customers. Despite the apparent lower impact from breaches relating to contact information, such data is still of substantial value for cyber-criminals for use in phishing and other targeted attacks, and may also be combined with information from other data breaches for more specific criminal use. 

Year  Contact Info  Financial Details  Identity Information  TFN  Health  Other sensitive information 
2018  647  335  273  186  148  61 
2019  817  398  293  255  157  85 
2020  890  408  439  272  184  134 
2021  803  376  432  256  184  140 
Total  3,157  1,517  1,437  969  673  420 

Maliciously originated breaches 

Most forms of malicious/criminal attack have been fairly consistent year-on-year, however ransomware in particular has been increasing year on year and 45% of all ransomware incidents occurred in 2021. The steady increase in this form of money-motivated cyber-attack aligns with anecdotal and industry reports of increases in this type of activity from organised cyber-criminal gangs and certain nation-state actors. 

It is interesting to consider the Optus data breach in the light of whether it would be considered a maliciously originated breach, a system fault, or a combination of both. While it certainly appears the case that a maliciously motivated individual or group has exfiltrated Optus customer data, the methods used remain a matter of debate and have not been fully confirmed by Optus or the federal government. Should it have been the case, an oversight which results in an API (Application Programming Interface) connected to a customer details database being left in an open state to external connections would almost certainly be viewed as a failure of internal systems and procedures. Optus’ CEO has indicated that the breach cause was not as straightforward as this, suggesting a more complex cause involving specific malicious technical action. 

Year  2018  2019  2020  2021  Total 
Malicious Breaches  449  625  627  545  2,246 
Theft paper/Storage  73  80  53  61  267 
Social Engineering  28  52  84  65  229 
Rogue Employee/Insider Threat  41  71  60  54  226 
Cyber (ALL)  307  422  430  365  1,524 
Cyber – Phishing  125  146  132  113  517 
Cyber – Stolen Credentials  79  140  108  100  426 
Cyber – Ransomware  18  29  69  86  202 
Cyber – Hacking  27  34  59  31  151 
Cyber – Brute  34  25  30  18  107 
Cyber – Malware  20  37  24  16  95 
Cyber – Other  5  10  9  2  26 

Human error breaches 

The majority of human error breaches are due to wrongly addressed emails, and this has been consistently the highest category, even with the 15% reduction in 2021.  Unlike malicious or systemic breaches, human error breaches – as classified by the OAIC – have limited technical controls that can be implemented to assist with prevention. Instead, education and procedure remain the best defence against these type of breaches. 

Year  2018  2019  2020  2021  Total 
Human Error Breaches  265  329  380  324  1,298 
Wrong email recipient  74  101  160  136  471 
Wrong hardcopy recipient  33  30  37  18  118 
Loss of hard/soft storage  34  40  25  23  122 
Unintended release/publication  41  76  62  71  250 
Failure to use BCC  22  18  30  25  95 
Failure to redact  14  19  20  23  76 
Unauthorised verbal disclosure  8  19  18  11  56 
Insecure disposal  8  5  2  0  15 
Wrong Recipient (Other)  19  21  25  17  82 
Other  12  0  1  0  13 

 

Business Sector Activity 

The Health, Finance and Business Services sectors collectively made up over 45% of all reported breaches in 2019 and 2020. In 2021, where a substantial reduction of breaches reports were made compared to previous periods, the combined breaches in there three sectors were still approximately 40% of the overall reports. Maliciously originated data breaches in the Legal, Accounting and Management sector was the only category to see a substantial rise in 2021, with almost all other types of breaches in these sectors seeing a decline from the previous year. 

Given the level of highly personal information held by Health sector organisations, the fact that these organisations feature so highly in the NDB statistics is of cause for specific concern. While federal and state legislation provides guidance for the collection, management and use of health data, as well as highlighting the highly confidential nature of such data, Australia currently does not have an equivalent to the US HIPA Act where substantive penalties and sanctions can be levied specifically pertaining to non-criminal use or loss of health data.

Sector  2019  2020  2021  Total 
Health – Malicious  111  97  87  295 
Health – Human Error  106  135  74  315 
Health – System Error  5  6  7  18 
Finance – Malicious  77  98  57  232 
Finance – Human Error  59  47  44  150 
Finance – System Error  10  11  12  33 
Legal, accounting & management – Malicious  60  42  61  163 
Legal, accounting & management – Human Error  25  22  24  71 
Legal, accounting & management – System Error  2  5  1  8 
Total  455  463  367  1285 

The OAIC provide details on the top 5 sectors reporting data breaches over each period. As only the Health, Finance and Legal, Accounting & Management sectors have consistently appeared in the periodic reports, and only the 2019-2021 reporting periods include complete data, only the data from those three sectors and three periods has been included in this analysis.  

 

Observations 

The OAIC official data breach statistics show an overall declining trend in reported breaches under the NDB scheme. On the surface this would potentially represent a good new story – in that organisations are becoming better at preventing data breaches and successful malicious attacks on organisations may becoming fewer. The counter-argument to this observation is the legal advice and remediation response organisations are using to inform their decisions on whether a breach falls under the NDB may have changed over time, resulting in fewer breaches being reported rather than fewer breaches actually occurring. 

The recent data breach incident at Optus has highlighted the widescale impact that a large data breach can have both on the breached organisation and the individuals to which the data belonged to. In terms of the scale, size and type of data that was taken, in addition to the media coverage, there would be little chance that any person assessing this breach would consider that it would not require mandatory reporting. However, in circumstances where a less comprehensive data set was exposed, with substantially fewer affected individuals, the potential for serious harm may not be considered as high, resulting in variable decisions to report.  

A smaller scope breach just involving loss of customer name and address information might be considered to hold lesser chance to cause serious harm by themselves. When such a breach is potentially remediated – say by payment of a ransom – it may be the case that an organisation feels that the breach no longer meets the threshold to require mandatory reporting and notification of affected individuals. However there is little in the way of guarantees that organisations can seek from cyber-criminals who hold exfiltrated data at ransom. The destruction of this data upon payment of a ransom is entirely in the control of the criminals and cannot be verified by the organisation.  

It is also worth noting that a somewhat “lesser” data breach containing names and addresses may be combined with data sets containing account details, passwords and identify information obtained from other breaches. In a similar way that de-identified “Big Data” sets hold the potential for  “re-identifcation” of individuals, combining multiple data sets residing on the dark web following successive breaches of different organisations results in a substantially higher chance of serious harm to affected individuals over time. As such, the OAIC and the Federal Government may wish to consider the provision of further guidance around notification requirements based on the type of data that exposed during a breach as well as what successful remediation of a breach should cover. 

The Optus data breach has also demonstrated that certain types of organisation are required for regulatory reasons to collect more personal information than others. There appears to be substantial uncertainty in the various regulations governing this requirement as to the length of time such information needs to be held and also as to how such information can be used and must be protected by the collecting organisation. Undoubtedly both Federal and State governments in Australia have observed this issue in recent weeks and it can be hoped that specific actions clarifying and improving regulatory requirements around collection, storage, use and disposal of personal information by Australian organisations will be forthcoming in the near future. 

 

Other obligations in reporting an NDB 

Organisations may have other obligations outside of those contained in the Privacy Act that relate to personal information protection when responding to a data breach. These may include data protection obligations under state-based or international data protection laws. Notably, Australian businesses may need to comply with the European Union’s (EU’s) General Data Protection Regulation (GDPR) if they have an establishment in the EU, if they offer goods and services in the EU, or if they monitor the behaviour of individuals in the EU. 

For data breaches affecting certain categories of information, other mandatory or voluntary reporting schemes may exist. For example, entities may need to consider reporting breaches to: 

  • the entity’s financial services provider 
  • police or law enforcement bodies 
  • the Australian Securities & Investments Commission (ASIC) 
  • the Australian Prudential Regulation Authority (APRA) 
  • the Australian Taxation Office (ATO) 
  • the Australian Transaction Reports and Analysis Centre (AUSTRAC) 
  • the Australian Cyber Security Centre (ACSC) 
  • the Australian Digital Health Agency (ADHA) 
  • the Department of Health 
  • State or Territory Privacy and Information Commissioners 
  • professional associations and regulatory bodies 
  • insurance providers.

Useful resources 

Office of the Australian Information Commissioner https://www.oaic.gov.au/privacy 

Australian Cyber Security Centre (ACSC) https://www.cyber.gov.au/ 

IDCare https://www.idcare.org/about-idcare/what-is-idcare 

Scamwatch https://www.scamwatch.gov.au/ 

MoneySmart https://www.moneysmart.gov.au/ 

The Office of the eSafety Commissioner https://www.esafety.gov.au/ 

Author

Dr Peter Chapman, Director, Forensic Technology – KPMG

Thank you to Matthew Golab, Director – Legal Informatics and R&D at Gilbert and Tobin, for his analysis of the OAIC reports and contribution to this article.