October is National Cyber Security Awareness Month

Data security is crucial for all businesses. Customer and client information, payment information, personal files, bank account details—this information is often impossible to replace if lost and is extremely dangerous in the hands of criminals. Data lost due to disasters such as a flood or fire is devastating, but losing it to hackers or a malware infection can have far greater consequences. How you handle and protect your data is central to the security of your business and the privacy expectations of customers, employees and partners.

Protecting data, like any other security challenge, is about creating layers of protection. The idea of layering security is simple: You cannot and should not rely on just one security mechanism—such as a password—to protect something sensitive. If that security mechanism fails, you have nothing left to protect you.

When it comes to data security, there are a number of key procedural and technical layers you should consider.

Inventory your data.
You need to conduct a data inventory so you have a complete picture of all the data your business possesses or controls. It’s essential to get a complete inventory, so you don’t overlook some sensitive data that could be exposed.

Identify and protect your sensitive and valuable data.
Data classification is one of the most important steps in data security. Not all data is created equal, and few businesses have the time or resources to provide maximum protection to all their data. That’s why it’s important to classify your data based on how sensitive or valuable it is, so that you know what your most sensitive data is, where it is located and how well it’s protected.

Common data classifications include the following:

1. HIGHLY CONFIDENTIAL: This classification applies to the most sensitive business information that is intended strictly for use within your company. Its unauthorized disclosure could seriously and adversely impact your company, business partners, vendors and/or customers in the short and long term. It could include credit card transaction data, customer names and addresses, card magnetic stripe contents, passwords and PINs, employee payroll files, Social Security numbers and patient information (if you’re a health care business).
2. SENSITIVE: This classification applies to sensitive business information that is intended for use within your company; information that you would consider to be private should be included in this classification. Examples include employee performance evaluations, internal audit reports, various financial reports, product designs, partnership agreements, marketing plans and email marketing lists.
3. INTERNAL USE ONLY: This classification applies to sensitive information that is generally accessible by a wide audience and is intended for use only within your company. While its unauthorized disclosure to outsiders should be against policy and may be harmful, the unlawful disclosure of the information is not expected to negatively impact your company, employees, business partners, vendors and the like.

Control access to your data.
No matter what kind of data you have, you must control access to it. The more sensitive the data, the more restrictive the access. As a general rule, access to data should be on a need-to-know basis. Only individuals who have a specific need to access certain data should be allowed to do so.

Once you’ve classified your data, begin the process of assigning access privileges and rights—that means creating a list of who can access what data, under what circumstances, what they are and are not allowed to do with it and how they are required to protect it. As part of this process, a business should consider developing a straightforward plan and policy—a set of guidelines—about how each type of data should be handled and protected based on who needs access to it and the level of classification.

Secure your data.
In addition to administrative safeguards that determine who has access to what data, technical safeguards are essential. The two primary safeguards for data are passwords and encryption.

Passwords implemented to protect your most sensitive data should be the strongest they can reasonably be. That means passwords that are random, complex and long (at least 10 characters), that are changed regularly and that are closely guarded by those who know them. Employee training on the basics of secure passwords and their importance is a must.

Passwords alone may not be sufficient to protect sensitive data. Businesses may want to consider two-factor authentication, which often combines a password with another verification method, such as a personal identification number, or PIN. Some popular methods of two-factor identification include:

• Something the requestor individually knows as a secret, such as a password or a PIN.
• Something the requestor uniquely possesses, such as a passport, physical token or ID card.
• Something the requestor can uniquely provide as biometric data, such as a fingerprint or face geometry.

Encryption has been used to protect sensitive data and communications for decades, and today’s encryption is very affordable, easy to use and highly effective in protecting data from prying eyes.

Encryption encodes or scrambles information to such a degree that it is unreadable and unusable by anyone who does not have the key to unlock the data. The key is like a password, so it’s very important that the key is properly protected at all times.

Encryption is affordable for even the smallest business, and some encryption software is free. You can encrypt an entire hard drive, a specific folder on a drive or just a single document. You can also use encryption to protect data on a USB or thumb drive and on any other removable media.

Because not all levels of encryption are created equal, businesses should consider using a data encryption method that is certified by the Federal Information Processing Standard (FIPS), which means it has been certified for compliance with federal government security protocols.

Back up your data.
Just as critical as protecting your data is backing it up. In the event that your data is stolen by thieves or hackers, or even erased accidentally by an employee, you will at least have a copy to fall back on.

Put a policy in place that specifies what data is backed up and how it is backed up; how often it’s backed up; who is responsible for creating backups; where and how the backups are stored; and who has access to those backups.

Businesses have many affordable backup options, whether it’s backing up to an external drive in the office, or backing up online so that all data is stored at a remote and secure data center.

Remember, physical media such as a disc or drive used to store a data backup is vulnerable no matter where it is located, so make sure you guard any backups stored in your office or off-site, and make sure that your backup data storage systems are encrypted.

Plan for data loss or theft.
Every business has to plan for the unexpected, and that includes the loss or theft of data from your business. Not only can the loss or theft of data hurt your business, brand and customer confidence, it can also expose you to the often costly state and federal regulations that cover data protection and privacy. Data loss can also expose you to significant litigation risk.

That’s why it’s critical to understand exactly which data or security breach regulations affect your business and how prepared you are to respond to them. That should be the foundation of a data breach response plan that will make it easier to launch a rapid and coordinated response to any loss or theft of data.

At the very least, all employees and contractors should understand that they must immediately report any loss or theft of information to the appropriate company officer. And because data privacy and breach laws can be very broad and strict, no loss should be ignored. So even if you have sensitive data that just can’t be accounted for, such as an employee who doesn’t remember where he left a backup tape, it may still constitute a data breach and you should act accordingly. Keep in mind that you may need to report a breach to your customers, as well. Currently, 46 states and the District of Columbia have data breach notification laws dictating how businesses must alert their customers that a breach has occurred.

And just in case you don’t think a data breach could happen at your business, consider this: The Ponemon Institute conducted a survey in 2013 of businesses with less than $10 million in revenue and discovered that 55 percent of them experienced a data breach and 53 percent experienced multiple data breaches.

As you take a moment this month to reflect upon your organization's cyber security, go through our Cyber Risk Exposure Scorecard and see how your organization ranks. Then call your Marshall & Sterling representative to discuss your cyber insurance coverage and options.