GDPR could cut cost of cyber crime

Strict new EU data protection laws could ultimately save companies money, reduce cyber crime and help earn the trust of consumers, according to a briefing paper from Marsh. The GDPR, which will apply in all EU member states from May 25, 2018, will bring about tougher data protection laws and higher penalties for companies holding data on EU citizens. The new rules, which include more onerous requirements for data management and increased enforcement powers for regulators, represent a huge challenge for businesses, according to Marsh. But they are also an opportunity, it said. “The GDPR provides companies with the opportunity to regain customers’ trust and leverage technology to grow their businesses. However, this can only be done if companies move away from viewing the GDPR as a compliance-driven, tick-box exercise, and embrace it to improve data management strategies in such a way that drives their business forward,” Marsh says in its paper. For some organisations, the GDPR is seen as an unwelcome cost. However, Marsh believes that by embracing the regulation, businesses may also save money. The European Commission has estimated that the GDPR may reduce costs for businesses by as much as €2.3bn a year through harmonised rules. Marsh believes that the GDPR framework could assist companies in the battle against cyber crime. For example, the requirement for organisations to appoint a data protection officer (DPO) who will report into the highest management level should create “a cyber risk culture” and may even improve board-level ownership of cyber risk, Marsh predicts. “It has been estimated that cyber crime cost the global economy more than $450bn in 2016. The GDPR and the requirements contained within it should go some way to reducing this figure by enhancing cyber security levels and therefore reducing the potential for data loss, operational disruption, physical damage, and also reputational and brand damage,” says Marsh in its briefing. According to analysis by Oliver Wyman, FTSE 100 companies in the UK could face fines of up to £5bn a year if they don’t comply with the GDPR. Had the GDPR been in place for the past five years, the analysis showed that FTSE 100 companies could owe up to £25bn in fines to EU regulators. However, recent surveys suggest that many UK companies will not be ready for the GDPR in time. Research by Varonis Systems, found that 75% of organisations will struggle to meet the regulations by their 2018 deadline. Data from the Direct Marketing Association revealed that nearly half of UK businesses do not believe that they will be ready in time, while a quarter of companies have yet to start planning for the GDPR. In May, a survey from Crown Records found that one in four businesses had cancelled their GDPR plans because they believe that they will not need to comply because of Brexit. Although the UK is scheduled to leave the EU in March 2019, the GDPR will apply to UK companies. Even after Brexit, UK data protection laws are expected to be aligned with the GDPR, while any business offering services to UK consumers is likely to be caught by the EU regulation. “The government has indicated that, in order to achieve its goal of free data flows with the EU post-Brexit, the UK will replace the DPA with legislation that mirrors the GDPR,” Marsh says. It argued that new data protection legislation is overdue. European and UK data protection laws preceded the internet boom and birth of social media. At the same time, many organisations have captured swathes of data without proper protocols for processing, storing, and sharing information, often without any real understanding of its relevance and value to their business. “The GDPR will provide an impetus to improve data security and controls around the use of personal information. In turn, it presents an opportunity for organisations to better understand their data and how it may be used to add value to their business,” says Marsh. “Most importantly of all, however, it is hoped that the actions required of organisations to comply with GDPR will go a long way toward helping to repair the recent breakdown in trust between consumers and organisations in terms of how personal data is used, enabling businesses to take greater advantage of the data,” it adds.

GDPR could cut cost of cyber crime

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