Dissident republican paramilitaries used medical records at a Belfast hospital in an intelligence gathering operation, the police have said.
Mr Orde gave details of the operation to the Policing Board
It is alleged the Real IRA was using records at the Royal Victoria Hospital to target members of the Policing Board, district policing partnerships, politicians and police officers.
Five people have been arrested.
The hospital said one of its employees was being questioned by police about a "serious breach of patient confidentiality".
The man had access to password-guarded records and will be dismissed if the allegations are proven, the hospital said.
Chief Constable Hugh Orde gave some details of the arrest operation after meeting the Policing Board in Belfast on Wednesday.
Security sources later told the BBC that the Real IRA was gathering information on a number of people, including Policing Board chairman Professor Desmond Rea.
In a statement, the hospital said the alleged breach was "unprecedented and deeply regretted".
William McKee, chief executive of the Royal Group of Hospitals, said: "If these allegations are true, then we are outraged that our computer records system, designed to assist staff in the treatment of patients, has been violated in this way.
"It breaches every standard of integrity in patient care. It's a kick in the teeth for the 6,500 staff who work to such high, exacting standards.
"We are very concerned for the patients at the centre of this investigation, and we are deeply sorry for the distress this is causing them and their families."
If there has been access to patient files and details
extracted, which include members of the Policing Board and DPPs, it
suggests a sinister motive
The police have begun warning those who they believe were being targeted.
Mr Orde said it was a substantial operation which had been "very professionally executed and carried out".
"We have five people in custody, they are currently being interviewed," he said.
"We are looking at material that has been recovered to make sure that if people are being targeted, they are being properly warned so we can look after them and their safety."
More then half a million people each year are treated at the Royal Group of Hospitals, with records held for eight years.
The Royal said hundreds of clinical and clerical support staff had access to the records.
Professor Desmond Rea said it was an "extremely worrying development, not least for those who are directly affected, but for everyone who wants to live in a normal, peaceful and civil society".
Policing Board member Alex Attwood of the SDLP said the allegations of a Real IRA "spy ring" operating in the hospital was a matter of serious
He said: "If there has been access to patient files and details
extracted which include members of the Policing Board and DPPs, this only
suggests a sinister motive."
The Real IRA is opposed to the Northern Ireland peace process and the 1998 Good Friday Agreement.
The Royal has set up a helpline for concerned patients which is available 0900 - 1700 BST Monday - Friday. The number is 028 90635858.