EU to fine companies up to 4% of turnover for 'data negligence'
Companies are scrambling to prevent damaging cyber attacks such as those suffered by TalkTalk, Ashley Madison and Apple, according to the head of cyber and national security programmes at techUK. With data breaches becoming more sophisticated, the European Union has tightened legislation and will now fine companies up to 4% of turnover for "data negligence." The growing cyber security industry is worth around $75bn annually, and a survey by cyber security firm FireEye revealed more than half of US consumers felt negatively about a company that had been hacked.

The Apple iPhone was thought to be safe from cyber attack. Not any more. First to reveal its vulnerabilities was the FBI, which in April paid $1.3m to an unknown source for a hacking tool to break into an iPhone. Then in August, the US tech giant has found itself hit by a text message scam believed to have originated from a private Israeli security company.



These are just the security breaches we know about. Such is the avalanche of new cyber threats facing big brands like Apple that they are paying hackers millions of dollars to search for chinks in their digital armour. Yet even these huge sums are a pittance compared with the growing global industry for formal cyber security services, valued at $75bn per year.

Keeping on top of cyber crime threats has jumped to the top of boardroom agendas at most companies over the past year and a half, says Talal Rajab, head of cyber and national security programmes at techUK.

The reasons are not hard to guess. Cyber attacks are now a virtual constant for large companies. US security firm Symantec estimates more than half a billion personal records were lost or stolen last year. Nor do cyber crooks need to be super-geeks any more; off-the-shelf criminal software is now widely available on the dark web, according to Rajab.

Media attention and the consequent brand damage that security breaches cause also push companies to act. Along with Apple, TalkTalk, HSBC and extramarital online hook-up service Ashley Madison are among other recent high-profile victims of hacker attacks. A study by cyber security firm FireEye found more than half (54%) of US consumers felt more negatively towards companies that had suffered data breaches.

Regulators are beginning to crack the whip. In May the EU published a reform of data protection rules that could see companies fined up to €20m, or 4% of global turnover, if they are found guilty of data negligence. “That’s a real tangible punishment for companies if they come across an attack and they aren’t adequately protected,” says Rajab.

Corporate executives may be increasingly aware that they need to act on cyber security, but that doesn’t necessarily mean that they know what to do. Most don’t, says Andrew Rogoyski, UK head of cyber security at IT services firm CGI.

“People have been working in general security for many years, but the really high demand for cyber security has only taken off in the last five years, which doesn’t really give the education and jobs system time to react,” he states.

The skills shortage is exacerbated by the maverick character of many cyber experts and the lack of career progression for them in large corporations. “Typically, they are called in to do a job, but then there’s nowhere for them to go,” says Rogoyski. As a consequence, many end up leaving in-house roles in preference for external advisory firms.

CGI has close to 200 specialists working solely on cyber advisory work, making it one of the largest such teams in the UK. The cyber services industry is a boom market, populated by giant IT services companies, global defence firms and software manufacturers right through to small, highly specialist start-ups.

Asked how much companies typically spend on cyber protection, Rogoyski says it differs from company to company depending on their size and vulnerability. Banks, utilities and retailers with a strong online presence tend to prioritise the issue most, he says. As a general rule of thumb, 5% of a company’s IT spend goes on IT security. “In truth, you only really know when you’ve spent too little,” he adds.

Norway-based certification firm DNV GL is one of those looking to increase its foothold in the market. The company, which employs about 40 cyber specialists across its international operations, has just opened a new office in Peterborough, offering product testing and advisory services.

The company hopes to exploit the need by business to show that it is taking cyber security seriously by offering independent verification of companies’ data protection practices, especially those in critical infrastructure sectors such as energy or oil and gas. Despite its youth, the cyber security field is already awash with industry standards, says DNV GL’s head of operational excellence, Matthew Freeman.

One of the challenges that large companies will face is integrating an array of new technologies with older, more bespoke systems. The wider a company’s net, the bigger the possible holes.



As long as there are cyber criminals, even the most accredited company can’t be complacent. Not only will a company’s internal systems be evolving continuously, so too will the potential threats, says Freeman: “What you absolutely can’t do is do an assessment now and assume that it will remain current without checking it.”

