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Another Financial Data Breach?

By November 24, 2012

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Data Breach

According to the Payments Association of South Africa, there has been another data breech at a financial firm. It's a familiar tale, of a bank deciding to outsource a service that involves customer data, and the data becoming exposed.

However, it's not a question of these outsources being unreliable. The real point is that these data breaches are REPORTED more often in outsourced firms than when they were managed in-house. Times are changing, but generally an outsourcer in the financial world does a lot more checking, often through third parties, to ensure data security. Not every financial firm performs the same checks internally.

Outsourcers also have a higher standard of reporting, often laid out in their contracts. A financial firm may not report on something they consider too trivial to mention to a client. I've worked in financial institutions that have chosen NOT to report a minor breach, and I've seen the same institution report that SAME breach when it is reported by a third party. Knowing that many firms are affected, and that one of them will inevitably report even an inconsequential security breach to their clients creates pressure to immediately report ANY security violation to the public.

Since outsourcers hire staff and managers from the same industry, tools and procedures from the same industry, and are held accountable for the same regulations, why do you see more about breaches from outsourcers than from financial companies. I believe this is because the outsourcer is forced to report issues, look for more issues, and is under more intense inspection. And that's something that may be a big hidden benefit of outsourcing these functions.

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