Data is one of the most important assets a company has in today’s digital age. The rise of the data economy (social media, e-commerce, and other online platforms) has also led to many cases of cyber-attacks. The phenomenon highlights the critical issues of data privacy, data security and compliance and how they can be managed. This terse article, therefore, looks at the issue of data privacy and the related matters in an accounting environment.
Data Privacy
Data or information privacy is typically associated with the proper handling of personal data. It also extends to other confidential data including financial data. Data privacy governs how data is collected, shared and used. Data privacy also addresses the proper storage, access, retention and the security of sensitive data.
Data security
Data security is the process of protecting digital information or corporate data throughout its entire life cycle from theft or unauthorized access by malicious insiders and external attackers. Data security deals with hardware, software, storage devices, and user devices; access and administrative controls and organizations’ policies and procedures. Data security uses tools and technologies that enhance visibility of a company’s data and how it is being used. These tools can protect data through processes like data masking, encryption, and redaction of sensitive information. The process also helps organizations streamline their auditing procedures and comply with increasingly stringent data protection regulations. It is worth noting that, data security has many overlaps with data privacy but the primary difference is that data privacy mainly focuses on confidentiality while data security on the other hand, deals with protecting sensitive data from a malicious activity.
Data Compliance
Data compliance refers to regulations which a business must follow in order to ensure sensitive and confidential data under its control are protected against loss, theft and misuse. Data security and data compliance both aim at minimizing and managing the risks businesses are exposed to with regard to sensitive data. Data compliance ensures businesses are protected against data breaches by requiring them to put in place the necessary security measures. Researches also establish that customers become loyal to a brand when they are guaranteed the security of their sensitive data.
Data Privacy & Security Solutions
There are several technologies and standard practices that organizations can adopt to improve data security and compliance. In respect of that, Governance, Risk and Compliance (GRC) framework to deal with the issues. Governance creates controls and policies to ensure compliance and data protection throughout an organization. Risk involves assessing potential cybersecurity threats and ensuring that an organization is prepared for them. Compliance ensures an organization’s practices are in line with regulatory and industry standards when processing, accessing, and using data. Indeed, a robust data security management and strategy process enables an organization to protect its information against cyber-attacks.
-Accounting Software
Accounting software plays a crucial role in ensuring data privacy and security for businesses. An accounting software worth its salt and designed for protecting sensitive financial data and mitigating the risk of data breaches must provide for encryption, access controls, multi-factor authentication and data breach notifications. It must also comply with regular security updates. An accounting software should also provide for comprehensive audit trails and activity logs to monitor user activity and track changes made within the system. Prudent requires that when a business is selecting an accounting software solution, it must prioritize these security features to maintain a robust defense against the ever-evolving cyber threats. A combination of several techniques can help an organization to improve and maintain their security strategy.
-Vulnerability Assessments and Audits
Data lives on a computer which means it is constantly susceptible to online vulnerabilities. Audit trails can assist in maintaining regulatory compliance and providing evidence in the event of a data breach or other security incidents. Routine assessments and auditing of computer software ensures prevention of data breaches or detection of system vulnerabilities and the need for upgrades/updates.
-Use the Principle of Least Privilege (PoLP)
A great way to control access to sensitive data is by using the principle of least privilege. New accounts or employees must be given the least privileges to access data and such privileges or protocols increased with time, seniority, or necessity. This is at the backdrop of the fact that allowing all employees to access sensitive data at wholesale increases the risk of insider threats and theft of data if a cyber-attacker compromises their accounts.
-Data Masking
Data masking is to create a synthetic version of an organizational data which can be used for software testing, training and other purposes that do not require the real data. Data masking retains the data type but changes the values. Data can be modified in a number of ways, including encryption, character shuffling or word substitution. The main intention is to protect data while providing a functional alternative when needed. Whichever method you choose to use; you must change the values to prevent them from being reverse-engineered.
–Keep Software Up-to-Date
Computer systems become more vulnerable to breaches when software programs are not updated routinely. Outdated software is prone to vulnerabilities which cybercriminals can easily exploit to their advantage and access sensitive data of an organization and its clients. To prevent this occurrence, an organization must be proactive to ensure all software, including operating systems, applications, and firmware, is regularly updated with a modern version. Some of the usual software updates include bug fixes, vulnerability checks, and enhancements that will protect data security.
-Data Discovery and Classification
Modern IT (Information Technology) environments store data on servers, endpoints, and cloud systems. Visibility over data flows is an important first step in understanding what data is at risk of being stolen or misused. To properly protect data, organizations need to know the type of data, where its stored and what it is used for. Indeed, data detection is the basis for knowing what data you have while data classification allows you to create scalable security solutions by identifying which data is sensitive and needs to be secured. Data detection and classification solutions, therefore, enable tagging files on endpoints, file servers and cloud storage systems. Data detection and classification helps to visualize data across the enterprise so that appropriate security policies can be applied.
Data Privacy/ Security & Compliance Challenges
Despite stringent efforts aim at ensuring data privacy and security are on the rise, challenges and risks are far from being abated. Some of the persisting risks of much concern to businesses and individuals include:
Legacy systems: Some organizations rely on legacy systems that may be outdated or difficult to secure, thereby making adequate data security and compliance standards more difficult. Efforts at upgrading these systems can be costly and time-consuming while a new system also requires staff training so they can use it effectively.
Increasingly sophisticated cyber-attacks: Technology is developing at a rapid rate. Unfortunately, cyber criminals are becoming more adept at launching sophisticated attacks on firms. They can bypass what is considered a robust and impregnable security measures, hence, making the protection against breaches and data theft more challenging.
Limited resources: Resource issues plague many organizations especially Small and Medium Scale Enterprises (SMEs). The need for digital transformation means more investment in Information Technology (IT) infrastructure and additional training for staff. Economic headwinds make it difficult for organizations to allocate resources to cope with the ever changing cyber-security landscape and its vulnerabilities.
Human error: Despite best efforts, the risk of human error remains a common cause of data breaches. Phishing scams (through fictitious emails), social engineering by psychological manipulation and personalized scams make it difficult for employees to spot fraudulent activities.
Conclusion
Data privacy, security as well as compliance require a collaborative role from organizations, their employees and customers. Nonetheless, much of the burden lies on organizations who stand to lose the most in case of data breaches or cyber-attacks. Accountants and auditors as strategic partners in business are indeed exposed to confidential data from their clients and need to have adequate data privacy, security and compliance systems in place to combat cyber-attacks and unauthorized access. This way, they can win the trust of their stakeholders in the performance of their duties.
BERNARD BEMPONG
Bernard is a Chartered Accountant with over 14 years of professional and industry experience in Financial Services Sector and Management Consultancy. He is the Managing Partner of J.S Morlu (Ghana) an international consulting firm providing Accounting, Tax, Auditing, IT Solutions and Business Advisory Services to both private businesses and government.
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