In the final post of a three-part series, I’ll address the ultimate issue behind “thinking before you share” as a follow-up to posts asking “Can They Use My Data, and If So, For What?” and “Can I Get My Data Back?”, which begs the question: Is My Data Secure?
This is a simple question without an easy answer. Whether a vendor’s data security practices are appropriate depends on a lot of different factors – and we could devote an entire blog to analyzing each of them. The general principle is to ensure the breadth and depth of the vendor’s security obligations are aligned with the sensitivity of the data.
If the vendor will access or store protected health information (which is regulated by HIPAA), personally identifiable information or financial information (which is regulated by a variety of federal and state laws), or highly sensitive proprietary information or trade secrets, you will need a robust set of data security provisions in your agreement with the vendor. For example, the agreement should address (among other things):
Additionally, the agreement should specify the vendor’s obligations in the event of a breach (both in terms of reporting/investigating the breach and in terms of paying for the downstream costs/expenses associated with notifying the impacted individuals), and your rights during the agreement to audit the vendor’s compliance with the security requirements. You may also need to enter into additional contracts, such as a business associate agreement, to comply with applicable laws such as HIPAA.
On the other end of the spectrum, if the vendor will only receive public information of little or no sensitivity, a basic security provision (such as language that requires the vendor to implement and maintain commercially reasonable physical, technical and administrative security measures) may be sufficient. But be careful to think about the long-term: when thinking about the sensitivity of your data, don’t just look at the data you plan to provide the vendor on Day 1: make sure you take into account your plans over time, particularly if they involve moving increasingly sensitive information into the vendor’s software as your business grows.