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Five Things That Owners and Boards Need to Know About Privacy and Cybersecurity Compliance

Do you serve on a Board of Directors or serve in a similar advisory capacity for a company or organization? Do you own your own business? Here are five things you should know about privacy and cybersecurity compliance.

  1. Upholding Your Fiduciary Duties

As a fiduciary of an organization, you may already know that you have a duty of loyalty and duty of care, including the duty to keep investors and owners informed of the cybersecurity risks of the organization. You also have the duty to protect the organization from undue risk, balancing the organization’s ability to conduct its operations with appropriate levels of risk mitigation strategies.

  1. Basic Knowledge of Privacy and Cybersecurity Issues

To properly fulfill your fiduciary duties, you need to obtain and maintain a basic knowledge of cybersecurity and privacy issues and risks facing the organization. Lack of understanding is not an excuse, and it is expected that Boards familiarize themselves with the cybersecurity efforts in the organization, champion and drive the organization’s commitment to ensure adequate cybersecurity protections are established and maintained. Board members and owners are also strongly encouraged to engage in the organization’s training and awareness campaigns and gain additional awareness as it relates to advising organizations effectively.

  1. Maintain the Company’s Reputation and Public Perception

Privacy and cybersecurity compliance builds the foundation of trust and reinforces an organization’s reputation for honoring the privacy expectations of both customers and business partners. A company’s character and brand are driven by industry expectations, treatment of customer data, legal requirements and product development. Mishandling a security breach can have devastating effects on the organization’s reputation, financial, operational and other aspects of the business. Many companies do not recover from a data breach due to the lack of proper advance planning and proper oversight.

  1. Watchdogs

In the United States alone, there are several different government authorities that maintain varying levels and scopes of authority over organizations with respect to privacy and cybersecurity issues, including the Securities and Exchange Commission, Federal Trade Commission, Department of Justice, Federal Sentencing Commission, and State Attorneys General, to name a few. There are also non-governmental watchdogs, from privacy advocacy groups who lobby for stricter laws and regulations and plaintiffs’ attorneys who bring actions against organizations that fail to comply with laws and regulations as well as organizations’ own stated privacy practices.

  1. Board Personal Liability

Breaches of fiduciary duties can be a slippery slope: subjecting board members to personal liability if the failure to exercise a minimum level of care, such as ignoring cybersecurity risks of the organizations, delegating responsibility without oversight, and lack of proper skill or training to properly advise the organization in these matters. Penalties can range from debarment from eligibility to bid on future federal contracts, large fines and jail time for individuals.

What Owners and Board Members can Do Today:

  • Call your insurance provider:
    • Do you have a cyber insurance policy?
    • Understand what is covered and make sure that the coverage is appropriate for your business risks.
  • Meet with your technology experts to talk about current protections and risks that they are aware of. Understand where there may be gaps in current protections from a technology perspective and what recommendations the technology experts have to fill those gaps.
  • Consult with legal counsel to identify the laws and regulations that apply to your business related to privacy and cybersecurity compliance.
  • Assemble a cross-functional team of internal and external subject matter experts and professionals who handle critical data of the company to form a privacy steering committee. The Committee’s core responsible should be implementing and maintaining a compliance program that addresses the company’s privacy and cybersecurity risks.

Need conversation starters about privacy and cybersecurity for your board or organization? Contact Partner Allison Cole at aecole@bmdllc.com to discuss ways to address this important topic for your business.

A New Formation Solution – is the SSLC Right for Your Business?

In early January 2021, Ohio adopted Senate Bill 276 which established a Revised Limited Liability Company Act (“ORLLCA”) as Ohio Revised Code Chapter 1706, which effectively replaces the current Ohio Limited Liability Company Act (Ohio Revised Code Chapter 1706). The ORLLCA will become effective on January 1, 2022. One of the principal changes within the ORLLCA is the ability to establish “series LLCs”. Ohio becomes the 15th state to adopt a “series LLC” (“SLLC”). The below FAQs will help you better understand the mechanics and nuances of a series LLC.

Surprise! A Cautionary Tale for Out-Of-Network Billing: The No Surprises Act and the Impact on Healthcare Providers

SURPRISE! Congress passed The No Surprises Act at the end of 2020. Providers, particularly those billing as out-of-network providers, should start thinking about strategies to comply with this new law, set to take effect on January 1, 2022. In its most basic sense, the new law prohibits providers from billing patients for more than the in-network cost-sharing amount in most situations where surprise bills happen. It specifically applies to non-government payers and the amounts will be set through a process described in the new law. In particular, the established in-network cost-sharing amount must be billed for the following services:

Ohio Enacts Substantial Changes to Employment Discrimination Laws

In January, Governor Mike DeWine signed into law the Employment Law Uniformity Act, amending the employment protections in the Ohio Civil Rights Act in several significant ways. Such changes to the state’s anti-discrimination and anti-harassment laws have been considered and debated for years and finally made their way into Ohio law. What has changed for employment claims under the amended Ohio Civil Rights Act?

OHIO ADOPTS THE SERIES LLC: Implementation of Ohio’s Revised Limited Liability Company Act is Coming

On January 7, 2021, Ohio adopted S.B. 276. The new legislation establishes the Ohio Revised Limited Liability Company Act (“ORLLCA”) which effectively replaces the current Ohio LLC Act. ORLLCA will be fully effective as of January 2022. While the new law contains numerous changes to the existing LLC landscape, below is an overview of some of the key differences under the ORLLCA.

Will Federal Legislation Open Cannabis Acquisition Floodgate?

Are potential buyers quietly lobbying at federal and state levels to kick open the door to launch a new round of strategic acquisitions? Will presently pending federal legislation, the SAFE and MORE Acts, providing safe harbor for banks and re- or de-scheduling marijuana, be sufficient to mobilize into action major non-cannabis companies that previously shunned the cannabis industry due to the unknown implications of owning businesses whose activities are illegal under federal law?