CEO's pay should be linked to security performance, says government committee

New report recommends that CEOs be held directly accountable for data breaches

CEOs' compensation - including salary, bonuses and stock options - should be linked to their companies' cyber security performance, according to a new report from the Culture, Media and Sport committee.

The report comes after an inquiry into cyber security and data breaches, which was initiated following last year's massive TalkTalk hack.

As part of the committee's recommendations, it suggested a laundry list of requirements for companies to minimise and respond to data breaches.

This included general company-wide policies, such as reporting cyber security and data protection strategies to the Information Comissioner's Office (ICO), as well as including cyber security in their annual bottom-line reporting alongside social and environmental reporting.

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However, the recommendations also included measures designed to make CEOs and IT decision makers more accountable in the wake of data breaches, as well as recommending that those who trade in stolen personal data should be sentenced to up to two years in jail.

The report advised that while CEOs should lead crisis response in the wake of a breach, full responsibility a breach should reside with whoever handles it day-to-day, who can be "fully sanctioned" if the company has not adequately protected itself.

It also recommended that CEOs' financial earnings be directly linked to their companies' security, "to ensure this issue receives sufficient CEO attention".

"Today's report by the Culture, Media and Sport Committee highlights the importance of good cyber-security practices for businesses of all sizes that have an online presence or service," said Talal Rajab, techUK's head of cyber and national security.

"To maintain user confidence in digital services, and the growth of the UK's digital economy, companies must have appropriate cyber-security policies and processes in place."

In addition to penalties for not preventing breaches, the report also advocated that the ICO should institute a series of escalating fines for companies that fail to disclose data breaches.

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It was also noted that the ICO's current maximum fine of 500,000 "may not be a significant deterrent" for larger organisations. However, this is set to change anyway once the European General Data Protection Regulation comes into force in 2018.

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