Companies Still Not Prepared to Comply with GDPR and Potential EU Data Breaches
A GDPR survey reveals that businesses across the globe continue to face challenges understanding and responding to EU data breaches, despite making investments in new personnel and changing business practices.
The McDermott-Ponemon study conducted by Ponemon Institute surveyed companies in the US and EU, and for the first time in China and Japan, as they assessed progress and challenges after one year under the GDPR requirements.
- Nearly 50% of respondents experienced at least one personal data breach that was required to be reported under GDPR
- One-quarter of respondents on average in all countries say their readiness and confidence to respond to a GDPR data breach is very low
- Only 18% of organizations were highly confident in their ability to communicate a reportable data breach to the relevant regulator(s) within 72 hours of awareness
- Nearly half (49%) of Chinese respondents and more than a third (36%) of Japanese respondents subject to GDPR are still not familiar with this regulation.
"The number of data breaches occurring under GDPR should give pause," said Mark Schreiber, partner and co-leader of McDermott's Global Privacy and Cybersecurity Practice. "Companies would benefit from conducting risk assessments and engaging forensic professionals who can identify vulnerabilities and recommend improved processes and remediation. If done under litigation or attorney privilege, organizations can further safeguard themselves."
"The reporting requirement is one of the most difficult aspects for companies to get right. Over-reporting and under-reporting to regulators are both disadvantageous, and mandatory reporting to data subjects can increase the likelihood of class action litigation," said Ashley Winton. A partner at McDermott, Ashley is also a Ponemon Institute fellow and Chairman of the UK Data Protection Forum.
Although companies report making significant investments in compliance, there are still risks around their ability to prevent – and then also respond to – data breaches. Almost half of the respondents experienced at least one personal data breach that was required to be reported under the GDPR. Less than that (39% of US companies and 45% of EU companies) reported a personal data breach to a Regulator.
Approximately one third of companies obtained cyber risk insurance; 43% of those respondents said their insurance policy covers GDPR fines or penalties. Ten percent were unsure of what their organization's cyber policy covered.
Looking beyond the US and EU, Chinese and Japanese respondents lag in their GDPR efforts. Only 29% of the Chinese respondents and 32% of Japanese ones stated that they were fully compliant with the GDPR, more than 10% lower than Western companies. Although Japanese respondents rely heavily on external cybersecurity services to investigate data breaches, significantly fewer Chinese respondents did so and only 41% of these are conducted through litigation or under the protection of lawyer-client privilege.
"As revealed in our first study one year ago, The Race to GDPR, GDPR compliance is a challenge, particularly with information and the companies that possess it so frequently crisscrossing national borders and an uptick in varying local regulations – whether that's China's Cybersecurity Law or the new California Privacy Act," said Dr. Larry Ponemon, chairman and founder of the Ponemon Institute.
"What we learned this year is that countries and regions are now very much at different points in their compliance awareness and execution journeys. With enforcement activity just beginning, it is more important than ever for companies to work hand in glove with external cybersecurity services and legal counsel and understand that these issues will continue well into the foreseeable future," he added.
Additional findings include:
- A surprisingly high percentage of respondents (85%) reported appointing a GDPR Data Protection Officer and 54% of non-EU respondents appointed an EU Representative. Most of these appointments were internal rather than an external individual or company. At play are complex GDPR provisions that mandate this position in some, but not all, situations.
- More than half of the US company respondents apply GDPR data subject rights to both US and EU employees. Fifty-one percent of US companies surveyed say they give their US and EU employees the same rights under GDPR. Only 43% of EU companies apply GDPR data rights to both US and EU employees.