Directors and Officers: Data Protection Responsibilities

Data protection has become increasingly important in recent years – businesses have moved many of their operations to the digital world, and so ensuring this information stays safe is essential to guarding against any breaches of private details. But while in many cases this process has helped to improve efficiency, storage and access, in others it has led to data becoming compromised because companies have failed to handle the information appropriately.

Initially this may not sound like a serious issue, but the fact is that the consequences of taking inadequate measures to protect people’s personal details can be extensive and far-reaching. In this week’s Knowledge Centre post we’ll take a look at the problems that can arise if your firm is found guilty of poor data practice – something which will demonstrate how essential it is to ensure that your directors and officers insurance policies cover data protection risks.

Data Protection Regulations:

By law, companies that collect and store people’s private details have to ensure that the information is kept safe and secure – under no circumstances should it be seen by someone without the relevant clearance. Not only does this help to guard against criminal behaviour such as fraud and identity theft, but it also means that consumers’ details aren’t unnecessarily exposed to people who have no reason to view them.

The consequences of failing to keep private data safe in a legal sense are the risk of prosecution, and there is also the threat that the Information Commissioner’s Office (ICO) will enforce fines and other measures. These financial penalties can run into hundreds of thousands of pounds, and as such can have a significantly damaging impact on a business’s budget.

By taking the necessary measures and avoiding data breaches it is possible to prevent falling foul of the ICO, but in case of any accidents it is important to have the relevant insurance policies in place to avoid the extensive costs involved.


One of the key things every business needs if it’s going to secure the loyalty of its customers is their trust – and that means living up to their expectations. At the core of this is the fact that companies have to ensure they protect their consumers’ details – no one wants their information bandied about, and so they like to be guaranteed that their data will be kept secure. Indeed, many people are likely to fear that their passwords and bank account numbers will fall into the wrong hands if a business’s virtual networks are compromised by criminals.

Even if it turns out that there are not any directly damaging consequences from a data breach, customers may lose faith in the company that they trusted their details with. As a result of this, the risk is that the firm sees its profits dip and consumers turn their backs and look elsewhere.

In this respect, insurance policies can help businesses cover the costs associated with trying to rebuild their reputations as they bring in experts to devise strategies to win over the public and reassure people that their mistakes will not be repeated.

How to minimise the risk of data breaches:

While investing in insurance is essential due to the ongoing risk of data breaches, there are ways to minimise your company’s chances of falling foul of virtual criminals. The first is to promote good practice among staff – employees need to realise the importance keeping the information that they handle secure, and if they’re aware of this then the likelihood is that they won’t be irresponsible when dealing with data. This can involve everything from workplace policies to reminders posted on noticeboards and desk, as these can serve to ensure that data security is at the front of everyone’s mind when they’re processing information.

In addition to guaranteeing employees understand the importance of data protection, there is software available that acts as a virtual safeguard and helps to keep hackers at bay. Such resources can help to improve a business’s chances of preventing data breaches and avoiding the costs associated with these incidents.

Next Steps

Adler Insurance

Content creator for the Adler Insurance Group.

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