After hearing a lot lately about big companies suffering data breaches, it is important to remember that, according to inc.com, half of all cyberattacks target small to mid-sized businesses (SMBs). Based on a 2016 State of SMB Cybersecurity Report, CNBC reported that in the prior 12 months half of all SMBs in the U.S. had been hacked. This makes sense when one considers FBI reporting (pdf) that an average of 4,000 ransomware attacks happen every day in the U.S., as observed in statements from SEC Commissioner Luis A. Aguilar, who in October 2015 said that:

Cybersecurity is clearly a concern that the entire business community shares, but it represents an especially pernicious threat to smaller businesses. The reason is simple: Small and midsize businesses are not just targets of cybercrime; they are its principal target.

Clearly, SMBs need to address this significant risk to their businesses. Strong IT safeguards are part of the solution, but not a silver bullet. Administrative and physical safeguards also are needed, such as access management policies, awareness training, equipment inventory, and vendor assessment and management programs. But even the best safeguards cannot prevent all breaches. Thus, SMBs need to be prepared for responding to the inevitable – that they will experience a data breach of some kind. Below are three key steps SMBs should take to improve their level of breach response preparedness.

Understand your risks and vulnerabilities

 

  • Not all SMBs are created equal, at least with respect to inherent business risk of a cyber breach. Factors such as the type of business, jurisdictions in which business is conducted, and the amount and nature of the personal information involved in the business (payment card data, health data, SSNs, etc.) drive this risk.
  • Core competencies may be lacking. That is, members of the organization’s IT staff may be very adept at systems management, but significantly lacking when it comes to the latest cybersecurity tools and attack methodologies to provide competent leadership and execution.

Develop and practice an “Incident Response Plan”

 

  • Identify the internal team (e.g., leadership, IT, in-house counsel, and HR). These are the persons in the business who will direct the response to the incident. They will need to make quick, informed and prudent decisions that likely will be critical to the success of the response process, and possibly the future of the business.
  • Identify the external team (e.g., outside legal counsel, forensic investigator, and public relations). Having external members of the team identified ahead of time can be vital to the success of any preparedness plan. When a breach happens, valuable time can be lost trying to identify, evaluate, and engage third-party service providers necessary for the response.
  • Take into account all legal and contractual obligations that may affect the response process.
  • Clarify the roles and responsibilities of the team members at key points in the response process – discovering the incident, investigation, coordination with law enforcement, remediation, notification, third party inquiries, compliance, and reevaluation. This should include a well-defined decision making process to facilitate good choices and avoid delays.
  • Practice, practice, practice. It is likely that members added to the response team do not have first-hand experience with helping to coordinate a breach response. And, even a well-drafted plan does not give persons charged with implementing the plan a feel for what is involved. Once an SMB creates its plan, it should gather its internal and external breach response team members to simulate a breach in action in order to help members gain valuable experience with navigating the issues in a breach response, as well as working with each other.

Create awareness throughout the organization.

 

  • Educate employees on how to recognize attacks and other forms of data breach.
  • Instruct employees on what to do immediately if they believe an attack has occurred (e.g., who to notify IT, how to disconnect from the network).
  • Instruct employees on what not to do (e.g., deleting system files, attempting to restore the system to an earlier date).

All breach notification laws mandate that notification, if required, must be made without unreasonable delay. In some cases, notification can be required in as few as 15 days or even 72 hours. Thus, in all cases, SMBs have to act fast, sometimes very fast, making decisions that can have significant reputational implications for the business, as well as shape compliance and legal risks. Preparedness can make all the difference in the success of an SMB’s response to a data breach.

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Photo of Joseph J. Lazzarotti Joseph J. Lazzarotti

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP)…

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP) with the International Association of Privacy Professionals. Trained as an employee benefits lawyer, focused on compliance, Joe also is a member of the firm’s Employee Benefits practice group.

In short, his practice focuses on the matrix of laws governing the privacy, security, and management of data, as well as the impact and regulation of social media. He also counsels companies on compliance, fiduciary, taxation, and administrative matters with respect to employee benefit plans.

Privacy and cybersecurity experience – Joe counsels multinational, national and regional companies in all industries on the broad array of laws, regulations, best practices, and preventive safeguards. The following are examples of areas of focus in his practice:

  • Advising health care providers, business associates, and group health plan sponsors concerning HIPAA/HITECH compliance, including risk assessments, policies and procedures, incident response plan development, vendor assessment and management programs, and training.
  • Coached hundreds of companies through the investigation, remediation, notification, and overall response to data breaches of all kinds – PHI, PII, payment card, etc.
  • Helping organizations address questions about the application, implementation, and overall compliance with European Union’s General Data Protection Regulation (GDPR) and, in particular, its implications in the U.S., together with preparing for the California Consumer Privacy Act.
  • Working with organizations to develop and implement video, audio, and data-driven monitoring and surveillance programs. For instance, in the transportation and related industries, Joe has worked with numerous clients on fleet management programs involving the use of telematics, dash-cams, event data recorders (EDR), and related technologies. He also has advised many clients in the use of biometrics including with regard to consent, data security, and retention issues under BIPA and other laws.
  • Assisting clients with growing state data security mandates to safeguard personal information, including steering clients through detailed risk assessments and converting those assessments into practical “best practice” risk management solutions, including written information security programs (WISPs). Related work includes compliance advice concerning FTC Act, Regulation S-P, GLBA, and New York Reg. 500.
  • Advising clients about best practices for electronic communications, including in social media, as well as when communicating under a “bring your own device” (BYOD) or “company owned personally enabled device” (COPE) environment.
  • Conducting various levels of privacy and data security training for executives and employees
  • Supports organizations through mergers, acquisitions, and reorganizations with regard to the handling of employee and customer data, and the safeguarding of that data during the transaction.
  • Representing organizations in matters involving inquiries into privacy and data security compliance before federal and state agencies including the HHS Office of Civil Rights, Federal Trade Commission, and various state Attorneys General.

Benefits counseling experience – Joe’s work in the benefits counseling area covers many areas of employee benefits law. Below are some examples of that work:

  • As part of the Firm’s Health Care Reform Team, he advises employers and plan sponsors regarding the establishment, administration and operation of fully insured and self-funded health and welfare plans to comply with ERISA, IRC, ACA/PPACA, HIPAA, COBRA, ADA, GINA, and other related laws.
  • Guiding clients through the selection of plan service providers, along with negotiating service agreements with vendors to address plan compliance and operations, while leveraging data security experience to ensure plan data is safeguarded.
  • Counsels plan sponsors on day-to-day compliance and administrative issues affecting plans.
  • Assists in the design and drafting of benefit plan documents, including severance and fringe benefit plans.
  • Advises plan sponsors concerning employee benefit plan operation, administration and correcting errors in operation.

Joe speaks and writes regularly on current employee benefits and data privacy and cybersecurity topics and his work has been published in leading business and legal journals and media outlets, such as The Washington Post, Inside Counsel, Bloomberg, The National Law Journal, Financial Times, Business Insurance, HR Magazine and NPR, as well as the ABA Journal, The American Lawyer, Law360, Bender’s Labor and Employment Bulletin, the Australian Privacy Law Bulletin and the Privacy, and Data Security Law Journal.

Joe served as a judicial law clerk for the Honorable Laura Denvir Stith on the Missouri Court of Appeals.