15 June 2014

TOC: The Implications of Consumer Privacy...

Operational Risks are pervasive in most every business both large and small. A small business can learn a tremendous amount from those failures by large corporate enterprises. Privacy laws in the United States are for all business owners whether they be a sole practitioner or a soon to be corporation with a $100 Billion valuation.  Operational Risk Management (ORM) is present in any serious business that makes important "Trust Decisions" on a minute-by-minute basis.

Consumer privacy and the risks associated with the protection of personal identifiable information of clients, members and customers is at stake. Learning the lessons from the organizations who have made changes and are working on a daily basis to comply with the regulatory frameworks, can be a very beneficial lesson to all.

Beyond the cost of a breach of data, Operational Risk Management (ORM) professionals understand that human behavior is the reason behind many of these incidents. Employees and supply chain insiders not clandestine hackers or malicious code sent from afar can be the major threat. So what can a Chief Privacy Officer or CISO do to mitigate the risks of employees and their behavior? All of the education and awareness campaigns may help, but the "Trust Decision" process itself is the place to begin.

Information Governance and the steps that are utilized to ingest or acquire and process that information is also paramount.  Hayley Tsukayama from the Washington Post highlights part of the issue:
Facebook came under fire Thursday from privacy advocates who say that changes to its ad network mark an unprecedented expansion of its ability to collect users' personal data. The advocates are also criticizing the Federal Trade Commission for allowing Facebook to make the changes and argue that the network's size gives it too much knowledge about its users.
Whether you are in the business of "Social Networking" like Facebook or you are the regional health care system in your state, the privacy of information of the consumer is at stake. Where that stolen information ends up in many cases, is in the hands of "Transnational Criminal Organizations" where it becomes of the lifeblood of their business operations to perpetuate their fraud schemes. These schemes are impacting the economic security of major organizations in the private sector and so the U.S. government (USG) has ramped up in the past 3 years to address the threat. Combined with other factors associated with legitimate business operations, organized digital crime syndicates have infiltrated the country and is costing the United States billions of dollars per year.

Here are several actions USG will be taking as the TOC strategy continues to be enabled:


  • Implement a new Executive Order to prohibit the transactions and block the assets under U.S. jurisdiction of TOC networks and their associates that threaten critical U.S. interests.
  • Prevent or disrupt criminal involvement in emerging and strategic markets.
  • Increase awareness and provide incentives and alternatives for the private sector to reduce facilita- tion of TOC.
  • Develop a mechanism that would make unclassified data on TOC available to private sector partners.
  • Implement the Administration’s joint strategic plan on intellectual property enforcement to target, investigate, and prosecute intellectual property crimes committed by TOC.
  • Enhance domestic and foreign capabilities to combat the increasing involvement of TOC networks in cybercrime and build international capacity to forensically exploit and judicially process digital evidence.
  • Use authorities under the USA PATRIOT Act to designate foreign jurisdictions, institutions, or classes of transactions as ‘‘primary money-laundering concerns,” allowing for the introduction of various restrictive measures on financial dealings by U.S. persons with those entities.
  • Identify foreign kleptocrats who have corrupt relationships with TOC networks and target their assets for freezing, forfeiture, and repatriation to victimized governments.
  • Work with Congress to enact legislation to require disclosure of beneficial ownership information of legal entities at the time of company formation in order to enhance transparency for law enforce- ment and other purposes.
  • Support the work of the Financial Action Task Force, which sets and enforces global standards to combat both money laundering and the financing of terrorism.

The FTC is continuously working with companies like Facebook. The White House NSC is working on strategies that have a nexus with stealing consumers information to exploit the financial system. Yet all of this will be for nothing, if the private sector does not work in concert with government. Public-Private partnerships are in full swing and are making some progress.

In addition, nation state industrial intellectual property theft and economic espionage has eroded our global competitive advantage in several industry segments.  Ellen Nakashima explains:
A Washington think tank has estimated the likely annual cost of cybercrime and economic espionage to the world economy at more than $445 billion — or almost 1 percent of global income. 
The estimate by the Center for Strategic and International Studies is lower than the eye-popping $1 trillion figure cited by President Obama, but it nonetheless puts cybercrime in the ranks of drug trafficking in terms of worldwide economic harm. 
“This is a global problem and we aren’t doing enough to manage risk,” said James A. Lewis, CSIS senior fellow and co-author of the report, released Monday.
Changing peoples behavior inside your own business will require substantial oversight and continuous education. Remain vigilant at the risk of your organizations own peril!

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