EU Security Breach Legislation

Impact on Enterprise Risk Management

jos.dumortier@timelex.eu

Forbes, October 3, 2013

EU 2009

• new provisions inserted in the EU electronic communications privacy (ePrivacy) directive (art. 4)

• introduction of first EU security breach notification duty

• limited scope: providers of public electronic communications networks and services

• Belgium 2012: transposition in art. 114/1 and 114/2 of the e-communications act

Summary• notification of specific risk of network

security breach • to the NRA (Belgium: BIPT)• to subscribers

• notification of actual security breach with important impact• to the NRA (Belgium: BIPT)• NRA can notify further to EU

• notification of security breach regarding personal data• to the NRA (Belgium: BIPT)• to subscribers and/or users

Details

• timeframe?

• which information to communicate?

• via which channel?

• when should individuals be notified?

• role of encryption

• ...

Recent example :

EU Proposals to extend the notification duty

1. Draft general data protection regulation (January 2012)

2. Draft e-identification and trust services regulation (June 2012)

3. Draft network and information security (NIS) directive (February 2013)

Draft NIS Directive

a) Obligations for Member States

b) Cooperation mechanism

c) Requirements for market operators and public administrations

Note: minimum harmonisation (minimum common capacity building)!

NIS: Duties for public administrations and market operators

• Obligation to take appropriate technical and organisational measures to manage the risks

• Obligation to notify to the national competent authority incidents having a significant impact on the security of core services

• National competent authority may inform the public where it determines that it is in the public interest

• EC will be empowered to adopt delegated acts (art. 18)

“Market operators”: Annex II of the Draft NIS Directive

• Providers of “information society services” (operating in the EU)• e-commerce platforms• internet payment gateways• social networks• search engines• cloud computing services• application stores

• Operators of “critical information infrastructures” (CIIP operators)• Energy• Transport• Banking• Financial market infrastructures (stock exchange, clearinghouses)• Health sector

EU Proposals to extend the notification duty

1. Draft general data protection regulation (January 2012)

2. Draft e-identification and trust services regulation (June 2012)

3. Draft network and information security (NIS) directive (February 2013)

Draft EU e-Identification and Trusted Services Regulation

1. e-Identification

2. Trust Services

“e-Identification”: mutual recognition

• idea:

• if an online (government) service in a Member State requires access authentication by means of an e-ID,

• then this service should be accessible for e-ID’s notified by other Member States

“Trust Services”

• stricter rules for “trust service providers” (e.g. annual security audit)

• “trust services”: services related to e-signatures, timestamps, e-documents, e-delivery, website authentication, digital certificates

• introduction of security breach notification (to supervisory bodies and data protection commissioners)

• “qualified” trust services : presumption of legal validity

EU Proposals to extend the notification duty

1. Draft general data protection regulation (January 2012)

2. Draft e-identification and trust services regulation (June 2012)

3. Draft network and information security (NIS) directive (February 2013)

On 25 January 2012 the European Commission has officially released a proposal for a comprehensive reform of the 1995 data protection rules on personal data processing.

1. One single European law

If adopted, the proposed Regulation will be valid across the EU.

As a consequence, companies established in more than one EU country will no longer experience difficulties to cope with the divergent rules of the EU Member States.

2. Every company supervised by one data protection commissioner

Personal data processing by companies established in more than one EU country will be monitored by one single supervisory authority.

In principle this will be the data protection commission of the country where the company has its main establishment.

3. Also applicable to companies outside the EU

Theoretically the proposed Regulation claims to be applicable on the processing of personal data of data subjects residing in the EU by a controller not established in the EU,

… where the processing activities are related to the offering of goods or services to such data subjects, or to the monitoring of the behaviour of such data subjects.

4. Basic rules remain but would be better implemented

The supervisory authorities will be empowered to fine companies that violate EU data protection rules.

This can lead to penalties of up to €1 million or up to 2% of the global annual turnover of a company.

Moreover responsibility and liability of the controller for any processing of personal data is more clearly established.

5. Abolition of the general obligation to notify

The general notification obligation would be abolished, and replaced by procedures and mechanisms which focus instead on those processing operations which are likely to present specific risks.

6. Data protection officers

The controller and the processor would in the future be requested to designate a data protection officer in any case where:

(a) the processing is carried out by a public authority or body; or

b) the processing is carried out by an enterprise employing 250 persons or more; or

(c) the core activities of the controller or the processor consist of processing operations which, by virtue of their nature, their scope and/or their purposes, require regular and systematic monitoring of data subjects.

7. Consent: always explicit

Tacit consent will no longer be sufficient as a legal ground for personal data processing.

Moreover consent can no longer be integrated into terms and conditions but must be presented distinguishable in its appearance from this other matter.

8. Right to be forgotten?

The right to erasure would be extended in such a way that a controller who has made the personal data public would be obliged to inform third parties which are processing such data that a data subject requests them to erase any links to, or copies or replications of that personal data.

9. “Data portability”

The data subject would be allowed to transmit those data, which they have provided, from one automated application, such as a social network, into another one.

This should apply where the data subject provided the data to the automated processing system, based on their consent or in the performance of a contract.

10. Security breach notification

As soon as a controller becomes aware that a personal data breach has occurred, he would be obliged to notify this breach to the supervisory authority without undue delay and, where feasible, within 24 hours.

The individuals whose personal data could be adversely affected by the breach would also have to be notified without undue delay in order to allow them to take the necessary precautions.

Conclusions

• current scope still limited (telecom providers, ISPs, etc.)

• extension to other sectors under discussion

• lack of co-ordination between proposed rules is criticized

• many questions remain about practical implementation

Jos Dumortiertime.lex - Information & Technology LawCongresstraat 35B-1000 Brussel(t) +32 (0)2 229 19 47www.timelex.eu / jos.dumortier@timelex.eu