Australia's First OAIC Breach Forecasts Grim GDPR Outcome

By Rich Campagna, Chief Marketing Officer, Bitglass

The first breach under the Office of the Australian Information Commissioner's (OAIC) Privacy Amendment Bill was made public on March 16. While this breach means bad press for the offending party, shipping company Svitzer Australia, more frightening is the grim outcome it forecasts for organizations subject to GDPR regulations, which go into effect on May 25, 2018.

In the Svitzer case, 60,000 emails containing sensitive personal information on more than 400 employees were "auto-forwarded" to external accounts, a not uncommon way for employees to "get access" to their work emails from outside of the office. While the details of why these auto-forwarding rules were set up, and whether the intent was malicious or benign, in many cases, the objective is to avoid IT management of the user's device while still gaining access to sensitive data.

Another common scheme to bypass unwanted IT controls is to set up sharing of one's cloud file sharing drive to a personal email account. Both of these challenges are easily solved with Cloud Access Security Brokers (CASBs), which can secure employee devices without taking management control (helping to avoid auto-forwarding outcomes), and control the flow of data into/out-of cloud apps (including external sharing control).

The outcome in this case is bad press for Svitzer, causing loss of goodwill and perhaps some customers. It could have been worse, however. Under the Australian scheme, when OAIC if notified of the breach, which Svitzer has apparently done, the breach is made public but there are no direct financial penalties. If Svitzer hadn't notified, they would have been subject to fines of "up to $1.8 million." Penalties initially start with public apologies and compensation payments to the victims, with continued examples of non-notification ratcheting up fines to a maximum of $1.8 million.

What does all of this have to do with GDPR? Simple. With the upcoming GDPR enforcement deadline, some organizations are scrambling to reach compliance, while others are taking a wait-and-see approach. Once we pass the deadline, there WILL be companies with similarly simple issues that have a breach. The difference is in the penalties with GDPR. Rather than starting with simple fixes such as apologies and victim compensation, GDPR comes with severe penalties of up to €20 million or 4% of annual revenue, whichever is greater. Depending on the size and health of the organization, penalties like this could be terminal.

My prediction? We'll quickly see the first examples, like Svitzer, and before the end of 2018, we'll see the first bankruptcy as a result of GDPR fines and loss of business.