Who Takes the Fall When a Company Gets Hacked?

Yahoo is trying to pass the buck, but data breach responsibility starts at the top.

Who should be held responsible when a company’s systems get breached? Historically, the CIO, the CISO, or both have shouldered the lion’s share of data breach responsibility; well over half of security decision-makers expect to lose their jobs if a hack happens at their organizations. However, breaches don’t happen in vacuums, and CIOs and CISOs don’t operate in them, either. Many CIOs report directly to the CEO, and some security experts feel that CISOs should be elevated to the same reporting level.

Whatever the reporting structure, the bottom line is the same: the responsibility for everything that happens within the organization, positive or negative, ultimately falls on the CEO and the board of directors. This includes data breach responsibility. This has been reflected in the numerous CEO firings (or “resignations”) that have followed bad breaches over the past few years, including those at Target, Sony Pictures, and the Democratic National Committee.

Apparently, Yahoo didn’t get the memo about this. After years of poor cyber security practices caught up with them, resulting in multiple breaches affecting over a billion user accounts, putting its acquisition by Verizon into question, and making the Yahoo brand name synonymous with the phrase “data breach,” the company decided to fire … its General Counsel, Ron Bell. Shockingly, CEO Marissa Mayer remains in place, albeit with a pay cut.

In Yahoo’s case, the CISO and the rest of the security staff couldn’t be fired. Fearing that a major security incident would eventually happen, they’d run for the hills. The New York Times reported that former CISO Alex Stamos and his team had spent years warning Mayer of potential security issues, but Mayer insisted on putting “the user experience” ahead of cyber security and even cut the team’s budget.

Preventing Breaches Is Everyone’s Responsibility

Cyber security isn’t just an IT issue. It impacts every individual and department in an organization, from the board of directors all the way down to minimum-wage clerical and retail employees. The overwhelming majority of data breaches originate inside an organization, either because a negligent or untrained employee makes a mistake or a malicious insider decides to strike back against the company. No cyber security policy is complete unless it addresses the human factor behind data breaches by promoting a culture of cyber security awareness. This culture must start at the top of the organization; if the board, the CEO, and the rest of the C-suite do not take security seriously, front-line employees certainly won’t.

Yahoo’s firing of Ron Bell has shaken up the legal community and is causing much debate over where data breach responsibility ultimately lies. While this may serve to light a fire under organizations with questionable cyber security practices, the focus should not be on whose heads will roll if a breach happens; it should be on implementing proactive cyber security and compliance measures to prevent hacks from happening in the first place.

As for Yahoo, the company is now looking at a possible worldwide class-action lawsuit alleging security issues dating back as far as 2003. Should the suit proceed, we’ll see what the courts have to say about data breach responsibility.