Top 3 Risks Of Hosting Your Business Data Offshore

Data Security

Deciding on the right cloud technology partner to suit your business is something to be carefully considered. Australian companies can be enticed by the low-cost option of using offshore providers, but do you know the risks and legal implications when your data is hosted outside of the Country?

 
Read on to discover our top 3 risks of hosting your data outside of Australia.

 
 

1. PRIVACY LAWS & LICENSES

 

According to Australia’s privacy laws, you are obligated to advise all your clients about what you do with their data and protect it from any unauthorised access. Did you know the latest amendments by the Attorney-General to Australia‚Äôs Privacy Act states the maximum penalty for serious or repeated privacy breaches is $10 million?

 
If your I.T. company is storing your data overseas, it is essentially a ‘resident’ in that country. This means your clients’ data falls under that country’s privacy and confidentiality laws that may differ substantially from those of Australia.

 
For example, under the USA’s Patriot Act, cloud hosting companies might not only be forced to provide their data to the government but also to do so in secret. This Act is clearly in conflict with the privacy law obligations placed on Australian companies.

 
To be compliant with Australian standards and even to maintain some critical industry licenses, ASIC has mandated that licensees need to have the technological resources to enable you to:

 

  1. comply with all of your obligations under the law;
  2. maintain client records and data integrity;
  3. protect confidential and other information; and
  4. meet your current and anticipated future operational needs.

 
Failures to meet these obligations will result in consequences including the usual assortment of fines, penalties, enforceable undertakings, licensing conditions, or a license suspension or cancellation.

 
In any case, it is essential to understand and consider exactly where your data will be hosted when you select your cloud provider.

 
 

2. CORRUPTION & THEFT

 

In addition to conflicting laws, some of the low-cost offshore locations have a higher percentage of data theft because of the broader spread of corruption and organised crime. For instance according to the Cyber Security Strategy discussion paper, in Australia, the estimated cost to the economy due to malicious cyber activity is $29b compared to the $109b in the U.S. as detailed in The Council Of Economic Advisers.

 
Another point to consider is that some locations are also subject to severe weather and natural disasters, resulting in data loss or lengthy periods of downtime.

 
 

3. LOW-QUALITY TECHNOLOGY & RESOURCES

 

With any business partnership you engage in, firstly you want to ensure the business can be trusted and secondly, they have the resources to deliver what you need. Using an offshore provider can make it difficult to assess the standard of technology and human resources that are being used to protect your critical data.

 
Many professional services firms use a variety of technological resources, ranging from phones, laptops, and desktop computers to sophisticated networks and customised I.T. systems.

 
The problem with an increased reliance on information technology is the increased reliance on securing that information.

ASIC Regulartory Guide 104.95/96 states to meet compliance standards, you need to review the adequacy of your technological resources, considering regularly:

 

  • your I.T. system security;
  • the currency of your hardware and software;
  • the quality and relevance of the applications you use;
  • your disaster recovery systems and business resumption capacity;
  • the number of users;
  • the ongoing viability of software and other service providers;
  • the response times of your I.T. systems;
  • the downtimes of your I.T. systems;
  • your use of legacy I.T. systems; and
  • complaints (e.g. from staff, clients or service providers) about your I.T. systems.

 
If you are using an offshore provider and you have no idea of the technology resources being used to host your sensitive data, then you are potentially exposed to 1 if not all 3 of these risks.

 
 

THE BENEFITS OF STAYING IN AUSTRALIA

 

The benefits of choosing a local cloud provider are extensive.

 

  • Access to data & systems while complying with Australian Standards & Compliance regulations.
  • Reduced risk of being affected by foreign natural disasters.
  • Reliable infrastructure.
  • Transparent affordable pricing.
  • And the list goes on.

 
Australia is a stable country with premium technology and laws that safeguard businesses. It is for this reason many large Australian companies are mandating that all company data must remain onshore. Not only will the data be in safer hands, but it will also be bound by the Australian Privacy Act, and hosted by a company that is required to meet the same compliance legislation.

 
FocusNet Technology provides secure and reliable cloud solutions with all our infrastructure housed in state-of-the-art facilities in Perth, Melbourne, and Sydney. We highly value our clients’ trust and remain committed to the safe and professional management of every I.T. system.

 
If you would like to learn more, please feel free to give one of our consultants a call to discuss our ‘homegrown’ cloud solutions.