The impact of data protection regulatory reforms strengthens the argument for tech-savvy NEDs in the boardroom, says Ogier partner Sara Johns.
Sara, who has spoken at industry seminars on NED roles and the EU GDPR reforms in the last fortnight, says that there is a need for increased awareness and understanding on boards of tech-related issues and processes. "The data protection reforms, cyber security issues and the general trend towards increased automation of administrative tasks are three of the main strategic issues across all sectors today," said Sara. "Each of those issues requires engagement at boardroom level, and that means that directors need to ask themselves real questions about whether they have the necessary knowledge and experience to address those issues – if not, they should seriously consider recruiting a NED with some technical insight. "This week's seminar on the GDPR which comes into force in just over a year demonstrated that businesses still have significant questions about how it will impact them.
The reforms, which affect any firm that wants to trade into the EU, set new restrictions on the control of data, new responsibilities to keep it safe from hackers, create the much-discussed "right to be forgotten" and new obligations to disclose data breaches. The most serious penalties for non-compliance are for fines of up to 20 million euros, or 4% of global turnover. Sara said: "Our financial and digital sectors both rely on seamless and rapid flows of information across jurisdictional borders. “And while a lot of the shock and horror has reasonably focused on the fines of up to 4% of global turnover, firms should also be mindful of the new requirements to disclose data breaches to regulators and to those individuals whose data has been affected, and the knock-on reputational damage that could flow from that. “These are strategic issues that merit consideration and discussion at boardroom level – as a result, boards need to have or recruit the necessary expertise. Given the importance of data protection reforms, cyber security and automation, the value of tech-savvy NEDs has never been higher."