Offshore outsourcing increases data privacy risks and the
complexity of managing those risks. Outsourcing exposes the
business to risks that include unauthorized disclosure,
inappropriate modification, or loss of private information.
Security breaches can be harder to detect and deal with from a
regulatory standpoint (Vijayan, 2004). Privacy laws and legal
systems are different in other countries, so it is important to
make sure that privacy issues are addressed in the contract when
outsourcing. It’s important a company ensures that the offshore
vendor has the ability to 1) comply with government regulations,
and 2) provide sufficient “transparency” showing it does comply
and is accountable during audits (Davison, 2004).
Companies are still liable for the confidentiality and privacy of
their customers’ information regardless of if they outsource
services to third parties. The AICPA Trust Services Criteria (TSC)
has control criteria that are used in attestation engagements to
evaluate and report on controls over information and systems
that include confidentiality and privacy (
Trust Services and
Information Integrity
, n.d.).
• Confidentiality – information designated as confidential is
protected to meet the entity’s objectives.
• Privacy – personal information is collected, used, retained,
disclosed, and disposed of to meet the entity's objectives.
There are several federal laws that govern consumer privacy
regulations and data privacy in the U.S. to include (Lutkevich,
2020):
• The Privacy Act of 1974
• The Health Insurance Portability Accountability Act of 1966
(HIPPA)
• Fair Credit Reporting Act (FCRA) of 1970
• The Financial Modernization Act of 1999
There are also state and local laws concerning privacy. I believe it
is an organization’s utmost responsibility to maintain its
customer’s personal information. Consumers do business with
businesses with an understanding that their personal
information (name, address, banking info, etc.) is protected.
Data breaches erode consumer trust in a business’s ability to
protect its personal information and the likelihood of doing
business in the future. With identity theft and other cyber crimes
on the rise, it is important to maintain consumer trust.
Lutkevich, B. (2020, February 12). consumer privacy (customer privacy). Data
Management.
https://www.techtarget.com/searchdatamanagement/definition/consumer-privacy
Trust Services and Information Integrity. (n.d.). AICPA.
https://us.aicpa.org/interestareas/frc/assuranceadvisoryservices/trustdataintegritytas
kforce
Vijayan, J. (2004, February 20). Offshore outsourcing poses privacy perils.
Computerworld. https://www.computerworld.com/article/2574317/offshore-
outsourcing-poses-privacy-perils.html
