How many ‘news’ articles / blogs / ads have you seen with titles like; “You could be fined up to 4% of your global revenue under GDPR!” a.k.a “Be afraid and give us lots of money you clueless sap.“
I’m seeing it from every online cybersecurity publication, lawyers, cybersecurity vendors / consultants, and increasingly from cyber insurance vendors. I’m even getting spammed from people I KNOW!
It’s more than a little irritating …frankly, it borders on unprofessional.
I can understand lawyers jumping on the bandwagon. The GDPR was written by lawyers, and if you don’t get a lawyer’s input to how GDPR will affect your business, you deserve a 4% fine. Yes, privacy lawyers are expensive, and yes, it’s bloody annoying to spend this money on something that adds absolutely nothing to the bottom line, but do it anyway. At the very least, piggy-back of a business partner that has spoken to a lawyer!
And no, asking your contacts on LinkedIn is not the same thing.
For cyber insurance vendors, I can fully appreciated how tough it’s been to find something to pin a marketing budgets on. Ambivalence towards cybersecurity is legendary. But what I cannot condone is using GDPR’s fine structure to scare organisations into buying a policy that will likely be completely inappropriate. Even choosing the right cyber insurance requires significant due diligence.
As for cybersecurity vendors, I’ve already addressed/redressed them in GDPR and Cybersecurity, a Very Limited Partnership. They simply have no right to bring up a 4% fine in a sales pitch when the maximum fine for data breach is 2%, not 4.
There is a lot more than fines in the GDPR of which you should be aware, but first…
About the Fines…
…borrowing heavily from my previous blog;
It can be assumed that if the maximum fine for ANY infringement, no matter how egregious, is 4% of the annual revenue from the previous year (in the case of an undertaking). That 4% is what the EU considers the maximum for a fine to qualify as “effective, proportionate and dissuasive” (per Article 83(1)). Therefore, a fine of €20,000,000 (for example) would be reserved for any organisation with revenue over €1,000,000,000 annually. Yes, that’s 1 BILLION.
It must follow that if 4% is the maximum, then fines will go down the less egregious the offence. Everything you need to determine the level of ‘egregiousness’ is contained in the 11 lines of Article 83(2)(a) – (k). Words like ‘intentional’, ‘negligent’, ‘degree’, and ‘manner’ are bandied around, all of which can be answered by you.
In this spreadsheet, I have taken a stab at adding specific questions to each of the (a) – (k) line items. Answer them all truthfully and you’ll get an indication of what I consider to be an appropriate fine based on your annual revenue: GDPR Fine Worksheet. Note: This is based on data breaches only (2% fine structure), and is not based on anything resembling known fact or precedent.
Frankly, it’s not the fines you should be worrying about, as I get the feeling you have to REALLY screw up before they’ll even be considered in the first place.
Worry about the ‘Corrective Powers’
What no-one seems to be writing about are the other so-called ‘corrective powers’ as detailed in Article 58(2) that each member state’s supervisory body will wield. Some of these are far worse than fines, and from what I know of GDPR, far more likely to be put into effect first.
Article 58(2) starts out very reasonably; 58(2)(a), (b) and (c) are:
(a) to issue warnings to a controller or processor that intended processing operations are likely to infringe provisions of this Regulation; [i.e. be careful]
(b) to issue reprimands to a controller or a processor where processing operations have infringed provisions of this Regulation; [i.e. smack on the wrist]
(c) to order the controller or the processor to comply with the data subject’s requests to exercise his or her rights pursuant to this Regulation; [i.e. now do it properly, we’re watching]
..then it gets a little more punitive in (d) and (e):
(d) to order the controller or processor to bring processing operations into compliance with the provisions of this Regulation, where appropriate, in a specified manner and within a specified period; [i.e. now do it properly, or else]
(e) to order the controller to communicate a personal data breach to the data subject; [i.e. tell everyone with whom you do business that you f*&%ed up]
…then there’s the stuff that could put you out of business (assuming personal data is central to it) from (f) through (h):
(f) to impose a temporary or definitive limitation including a ban on processing; [i.e. stop everything you’re doing with personal data, now]
(g) to order the rectification or erasure of personal data or restriction of processing pursuant to Articles 16, 17 and 18 and the notification of such actions to recipients to whom the personal data have been disclosed pursuant to Article 17(2) and Article 19; [i.e. you can’t do what you do with personal data the way you were doing it]
(h) to withdraw a certification or to order the certification body to withdraw a certification issued pursuant to Articles 42 and 43, or to order the certification body not to issue certification if the requirements for the certification are not or are no longer met; [i.e. good luck getting anyone in the EU to do business with you]
…and NOW the fines:
(i) to impose an administrative fine pursuant to Article 83, in addition to, or instead of measures referred to in this paragraph, depending on the circumstances of each individual case; [i.e. not only can we stop you doing business, but we can also fine you]
…and finally, back to the potentially out of business:
(j) to order the suspension of data flows to a recipient in a third country or to an international organisation. [i.e. specific to cross-border, but you’re screwed if this is relevant]
Now ask yourself; can a cybersecurity vendor help you in a scenario where the data is safe but you’re just not allowed to use it? Could cyber insurance replace your ENTIRE business and customer base?
Clearly not, so the only people you SHOULD be talking to right now are privacy experts. Not ones who passed a 75 question multiple choice exam to achieve a Certified Information Privacy Professional (CIPP) acronym, and/or the Certified GDPR Practitioner course, a lawyer. And not just any lawyer, a lawyer who specialises in privacy.
I’m not disparaging the CIPP/E or EU GDPR P certifications, they are actually very good foundations for anyone wanting to ask a true expert the right questions. And if, as per Recital 13; “…this Regulation includes a derogation for organisations with fewer than 250 employees with regard to record-keeping.”, you are small enough not to have to worry about validation of your practices, maybe someone with these certs is good enough.
It’s up to you, you’re the ones betting your businesses on it.
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