Korea raises data breach fines to 10% of revenue
koreajoongangdaily.com
koreajoongangdaily.com
Minimizes money usage and does not require any security investments
It certainly feels much better being an proactive member of society rather than a self-serving arsehole though.
So, there is that.
Hmm, this is perhaps why we get socially-negative businesses that often have very friendly (and driven, and hard-working, and intelligent) internal cultures. Competency becomes a fault line. When it becomes obvious that a large fraction of humanity just doesn't give a shit, a small group of people who are competent and driven turn their efforts to taking advantage of people who don't give a shit. Thus creating industries like market-makers, cryptocurrency, advertising, and AI.
Not sure who “everybody else” is in your statement, but as someone who founded a healthcare tech platform (since sold) [1], I spent 20 years caring about the many millions of patient medical records we held and making sure my team cared too. In my mind it wasn’t optional.
I did it because:
* it’s the right thing to do
* for professional pride
* and so I could sleep at night
And, at least at the beginning, I believed a data breach could be the death knell of the company. Over time the laissez faire attitude to data protection, by the industry as a whole, made it seem like a breach would be survivable, but luckily we never tested that theory.
I still walked away from it a wealthy man. Being competent and caring about your customers (and being able to sleep at night) doesn’t have to mean failure like it seems everyone here thinks.
We're moving from a high trust society to a low trust society, I fear. It's a tough transition.
To defend against the threat OP talks about (intentionally under capitalized corporate entity to avoided liability), insurance should be required, and your cyber insurance underwriter will perform an audit as part of underwriting. It's effectively a bond against fuckery in this context.
(cyber consultant and practitioner)
I've worked with very profitable firms who care very little (and it shows in their systems and how they operate in this regard), and barely profitable firms who do everything right. What's the difference? Their culture, people, and internal incentives.
TLDR Security failures and data breach fines must be more expensive than the happy path and doing the right things. This encourages the happy path and doing the right thing, while discouraging doing not enough or nothing.
I think that still aligns the incentives, and University in this case has interest to make sure the data is stored properly.
If this is not possible no cloud storage would ever be possible to be liable for anything. Your Google drive got hacked? Your responsibility.
I might suggest a construct like this too.
What do you think how much it cost to do it perfect?
It’s the difference between being a professional and an amateur (or worse, a ‘cowboy’).
There is no capitalist incentive for the latter, and you will lose market share to firms that can undercut you because of their lower costs.
One assumes the rest of the world won’t be far behind, apart from the the corrupt land of the USA which is going backwards right now.
If (4% of your revenue * risk_of_breach_with_your_security < cost of outsourcing storage to a 3rd party cloud) {
Roll your own security solution
} Else {
Outsource to 3rd party
}
In my experience, putting proper compliance procedures in place, following industry best practice in relation to data management and data security actually leads to a more effective organisation, because it professionalises.
It’s the first step out of the ad-hoc phase of a startup and into the real world of creating a business with value. It also means as you scale up the personnel in the organisation, there are proper checks and balances in place.
When you come to sell your business, if it has a ton of existential risks attached to it, it will be worth less and may even not be sellable at all. So even from a cynical “all I care about is money” point-of-view, you want a business that is sound and isn’t storage for future law suits or fines.
Also, the cost of a fine due to a data breach isn’t the only thing to be concerned about. Gross negligence could lead loss of life, loss of property, loss of earnings, etc. and the buck stops with the executives — don’t think you can’t be completely fucked by the good ol’ law as it stands today.
Some businesses are more vulnerable than others, but that’s also why you scale the compliance architecture to the business.
As for the buck stopping with the executives: can you apply this to a case I've heard of? We have multiple data breaches of companies that scan IDs. We have the Experian breach. We have multiple LastPass breaches. Is there any executive at any of these companies that has been held accountable?
I've actually done the legwork on the ones I just mentioned and the answer is there have been no criminal or civil penalties to any individual in an executive role at any of those companies as a result of the data breaches. Maybe I'm missing one?
With my last company, managing medical records, I was always conscious that if we didn’t take our responsibility of managing medical data correctly it could lead to the death of one of my customer’s patients; or some other extreme circumstance that the executives could be held liable for.
That was my point about being professional, if you have proper processes in place and audits to prove it, you have protection. And only the most egregious cases would land.
It’s good business to protect yourself from a gross negligence or corporate manslaughter claim. It just so happens that it’s good for your customer too.
Presumably, the reason you don’t hear much about executives in the dock for these crimes is because most professional organisations put these processes in place.
Again, I was just stating that it isn’t just data-breach fines that should encourage executives to professionalise.
As far as I know, it was considered an act of god not something that resulted in punishment. Oh sure, they punished the hacker, but how about the people who were supposed to keep the data secure?
I’m not sure where I stand on punishing companies for getting hacked. I guess like the thread says, was it gross negligence? Back to searching the internet to find out…
Edit: definitely gross negligence.
> one of the first things he noticed was how lax security had been. “It was definitely unfit for purpose for storing this kind of information,” he says. He tells me that the patient records database was accessible via the internet; there was no firewall and, perhaps most egregiously, it was secured with a blank password, so anyone could just press enter and open it [2]
Edit: accountability? Maybe.
> the board announced that it had let the CEO, Ville Tapio, go. In April 2023, Tapio was found guilty of criminal negligence in his handling of patient data. His conviction was overturned on appeal in December 2025 [2]
[1]: https://www.bbc.com/news/articles/c62nzxqw45eo [2]: https://www.theguardian.com/technology/2026/jan/17/vastaamo-...
This is the default business mindset. Push every rule and regulation to the limit in the name of profit, if you can break a rule with minimal concequsnces then pay the fine and move on.
Stellantis has a recall out for >1M vehicles because they catch fire even when turned off. Unless that kind of fuckup is met with business threatening fines it will happen again.
It isn’t, it is how some people approach business. Not all.
Again, in my opinion this is just cynical and constantly - almost psychopathically - propagated here as though it’s some kind of virtue of business or the only way a business can be ‘pure’ and succeed.
It just isn’t.
And, if you want to sell B2B, you have to sort out your compliance, or you’re gonna sell nothing. So, for a very large number of businesses, this levelling up is non-negotiable if you want to succeed.
To rephrase the comment you replied to, if being a cowboy is more profitable (by whatever shady means) then that will generally be preferred by the market. Despite whatever sensibilities you or I might have there is no escaping that simple truth of capitalism.
https://www.dw.com/en/cyberattack-in-berlin-14-million-files...
This is literally the point of data breach laws like this. To provide a financial incentive to take this stuff seriously.
If you are hacked and you are seen to have not given a shit about compliance, or independent penetration tests, or proper documentation of process, with good internal controls enforcing your processes. Then you’re almost certainly vulnerable to a negligence claim.
However, if you have all that in place, and somehow something slipped through the net. And once aware you put in new controls to make sure it doesn’t happen again, then you’re very unlikely to have the book thrown at you.
You may still get a fine, but it would be much reduced.
It’s not hard to do this. Yes, compliance can be overdone, so you need key stakeholders to make sure it doesn’t turn into jobsworth heaven; but the actual implementation isn’t hard to do, and if done well, will improve the processes within the business.
It’s very much like an insurance policy. It has some ongoing cost, but it saves you from the one big cost.
This measure add similar incentive for data breaches.
Personal data needs to be much more of a liability than it currently is for anything to change. Business will respond when the bottom line is affected.
In the case of a university like the head of this thread, it isn’t going to be easy to avoid collecting and retaining data.
for instance, how many companies (including universities) store their own cash on prem? what if we treated PII like cash? limit amount and time kept outside the data "bank" (which would be a third party specialized for security and authenticating access).
They can try:
* various education campaigns
* force users/customers to adopt passkeys or other phishing resistant mfa
* add various alarms and alerts for unusual activity, resulting in lockout
The problem is that even after adopting all of the above, it's still not too hard to breach virtually all companies, and there is massive user opposition to the last two.
Lets say these are paper records, behind a locked door, with a security guard that they check id for it. If someone then breaks in at night time, cuts the cameras and knocks out the security guard and steals a filing cabinet, should that university then be fined 10% of revenue, which could mean the entire university shuts down because most businesses cannot survive that? We have to remember who is the original criminal here.
But to your point, the article doesn’t define what that means.
Calling "shell company" makes it sound like the University is the shareholder, but that's usually not what's happening IMHO. In general the entities are clearly defined and nothing crosses the client/contractor frame, the university just happens to be the sole client and the contractor will have the uni pay for their whole operation.
guess who holds the bag if capacity needs collapse
Sort of like EULA's a lot of the "value" is incredibly theoretical.
No judge will fall for that. You should have made backups. And you are responsible for the data of your clients.
Seagate will not in a million years sign anything like this when you buy a HDD.
If your supplier has these compliance audits in place and has the documentation to prove it, this isn’t “absolving”, it’s literally the diligence process.
But a “shell company”, as per your original comment, is not going to reach a compliance threshold to allow the diligence chain to succeed. Just from a business continuity point of view they would fail, but there are plenty of other areas that would be problematic from a compliance standpoint.
Courts are run by people, not AI, so judges can easily ignore the corporate entity once these laws are passed.
This is an example (I have nothing to do with this case)
except you can't in South Korea because PIPA (their data privacy/compliance framework) is as strict if not stricter than GDPR and comes with criminal liability in case you violate consent rules, so you can't just send other people's data to some third party shell company either
why do people always make these completely generic comments as if they've just on the toilet figured out the one simple trick every data framework covered over a decade ago
I'm not familiar with Korean law but that seems a rather high bar. I don't think we'll see many fines actually levied.
(I'm assuming here that 10% is high enough that nobody would call it a cost of doing business - I could be wrong)
Where is your source for this? It is entirely possible to make a secure computer system, though it does require effort. The article specifically mentions "up to" 10% and the fines applying to companies leaking data on purpose or through negligence. I doubt the fines will be nearly as high for a company that tries to secure a system (and thus prevents more leaks) rather than a company that does not try to secure a system (assuming that leaks will occur), if the same breach happens.
Computers are deterministic (excluding cases where practically impossible cosmic ray events occur), so while we have the power to ensure system security, we should ensure system security. Heck, even just encrypting consumer information and protecting just the keys to this data would already decrease the effectiveness of many data breaches.
You can’t. You don’t need source for that, just common sense.
Exploits are discovered every day, bugs happen, bad actors.
You can do the best system, shit still happen.
BTW you want a source ? Remember when the freaking CIA data got leaked ? Edward Snowden, ring a bell ?
If the cia couldn’t prevent it, I bet you can’t.
Trump or not, everyone think of them as highly secure.
Not someone who actually got hired.
Trying to paint the CIA as incompetent is ludicrous. I can’t believe you think otherwise.
You can make a system "more" secure than other systems, but you cannot make it truly secure.
For one, the lack of any secure computing systems.
Security costs money and as long as there aren't any penalties for negligence management will make the calculation to prioritize increased profitability over securing company data.
* Before Tax Revenue
* If the company is owned by another company, the revenue is the total of all companies owned by the highest level parent.
* Includes Worldwide Revenue
* Includes companies based in all other Countries.
I would have went for 20%, but if he above applies I wish the US would do the same.
So even though this is Korea, it is modern hypocrisy. Companies have to comply to more and more complicated regulation, while those who govern the states get a free pass.
If the Berlin incident remotely had happened to any private company - hell would have been loose.
Berlin reduced the IT budget especially regarding maintenance and security massively over the years. In fact, what came to light - CCC talk as a reference besides others - sounds so embarrassing, that all companies should get a bonus payment whenever they get hacked.
Basing it on revenue is sensible, since the goal is to make it hurt. But that would argue for a higher fraction. But the main thing is to introduce an incentive to take security more seriously.
Tying the fine to intent or gross negligence doesn't work for me, as a customer doesn't care why, they only care that the harm happened. Doesn't matter to me if you train everyone really well and one guy forgot his training just one time, or if you don't train at all.
I'm thinking:
(The following example is in "American" terms, I assume some other countries have similar ideas as SSN though)
- Name and address or name and phone number leak: $100 per customer affected.
- Email: $50 per customer affected, or $100 if tied to any other data.
- Social Security numbers: $2000 per customer affected
- Unsalted or plaintext passwords: $500 per customer affected.
- Cap is the greater of 200% of annual EBITDA, or 20% of revenue
Money goes to the government to be distributed DIRECTLY (tax-free) to the affected users.
This might bankrupt a couple of companies in particularly bad breaches, while companies are still getting used to it. Good! I hope it does and that business textbooks highlight those disasters, the way they do the Enron collapse.
My goals for this system are for businesses to properly price in the risk of holding (or even momentarily touching) sensitive data. SSNs, for instance should already (in a sane world) be radioactive for any business to even CONSIDER touching. To the extent any business feels the need to collect or hold it, frankly I'd say, think again. Credit reporting agencies are the worst offenders (and under my rules Equifax would already be gone), as they maintain databases with that as primary key, and force all their customers to deal in that key, instead of taking advantage of some 1990s technology like one-way hashing, or better yet, coming up with their own identifiers that could be replaced responsibly in the case of breaches.
Perhaps what would help is a progressive system, where you'd pay 20% the next time.
10% maximum mean nothing if it’s not enforced, you got to make examples.
Edit: "That'll be $23B. Cash or card?"