The digital age has brought about unprecedented connectivity, but it has also introduced new vulnerabilities. We’ve all seen headlines about major corporations and even governments falling victim to cyber-attacks, where the personal data of millions have been compromised. But have you considered how such an attack could impact you or your company directly?

The Business-Critical Importance of Secure Systems

Cyber-attacks like these serve as a stark reminder of the business-critical importance of maintaining secure systems, especially when it comes to handling sensitive employee data. Whether you’re a local business or a global enterprise, the way you manage and protect this information is paramount.

Recent high-profile cyber-attacks have highlighted a particular vulnerability: file transfer software. Hackers exploited this weak point to access and steal personal information from multiple companies, affecting tens of thousands of employees in one fell swoop.

What Does This Mean for Your Business?

Cyber attacks generally steal data for a purpose eg to sell on data or ransom the company the data is stolen from, however additional consequences affecting payroll can also be severe and immediate. Here are some of the key impacts:

• Delays in Payroll: Possible delays in employees receiving their pay cheques.

• Compliance Failures: Late payments of local taxes and social security, along with missed reporting deadlines to revenue authorities, can result in compliance issues.

• Late Payment of Liabilities: Payments to third parties, such as pension contributions and benefits providers, could be delayed.

• Data Protection Breaches: There’s a risk of violating data protection regulations.

• Loss of Trust: Employees may lose trust in their employer, leading to poor employee experience.

Responding to the Threat: Policies and Business Continuity

How a company responds to these cyber, legal, and security challenges is crucial. It’s essential to have prescribed policies and Business Continuity Plans (BCP) in place to respond quickly and effectively to such incidents.

Post-attack, payroll operations and other departments that handle employee data must ensure they have specified process and controls in place. Defined systems ensure business continuity and the continued capability to process accurate, timely, and compliant payrolls.

The Long-Term Impact of a Cyber-Attack

Beyond the immediate aftermath, the long-term impacts of a cyber-attack can be damaging:

• Reputational Damage: Both internally with your employees and externally with customers and stakeholders.

• Regulatory Scrutiny: Potential data regulation breaches could lead to formal reviews by governing bodies and significant penalties.

Key Questions Raised by Cyber-Attacks

Cyber-attacks raise several important questions that every business should consider:

1. Why Are We Seeing More Data Breaches?

The global cyber threat landscape has evolved significantly, especially during the pandemic. The shift to remote work opened new vulnerabilities, particularly at the connection point between home and office systems. Additionally, as businesses and individuals became more digitally connected, many lacked the necessary security awareness training.

2. Can Cyber-Attacks Be Prevented?

While it’s impossible to eliminate the risk entirely, early detection and response can minimise business impact and reputational damage. Implementing security controls, adopting a defence-in-depth approach, and staying vigilant can make your business a more difficult and less attractive target for attackers.

3. Should You Be Concerned About Employee Data Handling?

Absolutely. Whether payroll is managed in-house or outsourced, the responsibility to ensure accurate and timely employee payments remains with the employer. Additionally, it is the employer’s responsibility to ensure all local tax and social security liabilities are submitted on time.

Furthermore, in the event of a data breach, employees will look to their employer to manage the issue, regardless of who is at fault.

4. Is Payroll the Only Concern?

The short answer is, no. Employee data is used across multiple departments, not only HR and finance. Ensuring data is managed, used, and shared securely is a fundamental responsibility of the organisation.

In light of this, initial questions to consider in relation to your organisation’s employee data handling include:

• How could your organisation demonstrate that employee data is handled and managed appropriately at all levels (both internal and external)?

• How do you ensure your data governance policy remains current and has input from stakeholders who process, require, or handle employee data?

• How do you know that access rights on all systems holding employee-related data, segregation of duties for the systems, and processes associated with the use of employee data are—and remain—appropriate?

• Where third parties handle data on behalf of your organisation, how do you evaluate and monitor the protocols in place to ensure this data is securely maintained and accessed?

• Where relevant, have you reviewed payroll vendor service level agreements and key performance indicators?

• Have you reviewed your current payroll operating model to identify gaps and key changes required to ensure this is fit for purpose and effective?

• Have you reviewed the effectiveness of your payroll disaster recovery planning (does this need to be reviewed and amended)?

How Black Mountain Can Help

Now is the ideal time to review your payroll processes, controls, and business continuity plans to ensure they are fit for purpose and compliant with regulations.

By choosing Black Mountain as your outsourced provider our SOC2 accreditation is evidence of our commitment to maintaining a robust Cybersecurity Compliance Framework, and you gain peace of mind knowing that we conduct formal reviews of all policies and procedures every six months. This includes:

• Crisis Scenario Simulations: Regular tests to assess response capabilities over extended periods.

• Employee Data Handling Procedures: Ensuring compliance with cyber and data privacy considerations.

• Business Continuity and Disaster Recovery Planning: Developing and reviewing plans to ensure robust payroll operations.

• Payroll Compliance Reviews: Conducting thorough reviews to maintain compliance.

• External Vulnerability and Penetration Testing: Performed by third-party specialists to identify and mitigate risks.

• Due Diligence Portal: A platform for clients to stay informed about emerging threats and review our policies.

Additionally, consider the benefits of a Cyber Insurance policy to mitigate financial implications. Our independent brokers at Black Mountain Insurance Brokers are available to discuss this further.

Final Thoughts

 As cyber threats continue to evolve, the resilience of your payroll operations and the security of employee data are more critical than ever. Taking proactive steps now can protect your business from the far-reaching consequences of a cyber-attack.