TECHNICAL CONTROLS

A classic error, says Al Smith, an engineering director for IBM data privacy offerings, is cloning data from production systems to send for development, quality testing, or some other purpose without vetting the recipient's standards for handling sensitive data. Smith says companies should use data sanitized of sensitive information unless there's a compelling case for using real data. It's also an example of an information security best practice a company should implement when offshoring data--and then apply to all its operations, if it isn't already.

When giving scrubbed data to an offshore partner, be sure it can't be easily mapped back to the real data--such as a simple pattern of changing characters by one (A is B, B is C, etc.). Completely false data should be used when possible.

Additional technical controls that deserve close scrutiny--and could be required depending on regulations--are access controls, logging, and encryption. In most cases, the strategy will closely follow a company's domestic policies, unless those are weak. Controls should be applied around data to provide assurance of who has access to the data, assurance that data isn't compromised, and reports on actions taken against data.

Companies must decide whether to encrypt offshore data. Consider whether the need is for file-based encryption, transport, or database protection. With all, the key areas to discuss with an outsourcer are the encryption algorithm, how the keys are stored, and the audit trail. One caveat: Make sure you're aware of encryption laws. The U.S. Commerce Department regulates the export of encryption. And the Chinese government, for example, demands a way to access encrypted data if needed.

Assess how a vendor enforces access controls within operating systems, applications, and databases, and how it ensures that these controls are working properly and are updated as employees change jobs or leave the company. Outsourcers can face turnover of 25% or more annually, so a client company might learn something by evaluating how this is done.

Before Offshore
IDENTIFY THE DATA
Step one in an offshore data privacy strategy is assessing what data outsourced workers need access to, and what policies and regulations govern it.

EXAMINE ACCESS LEVELS
Limit data and access to data sent offshore, grant only the access absolutely required for the business process, and set up a process to review.

VERIFY CONTROLS
Write controls into a contract, but regularly test to ensure that data privacy objectives are being achieved.

REASSESS PROCESSES
Did the review of offshore practices reveal changes needed in-house?

Access control can be complex and burdensome if it isn't set up to be flexible enough for inevitable business requirement changes. Systems that allow group permissions to assets can be invaluable--applying group permissions and assigning individuals to groups. Access control should be managed by a team that doesn't have direct access to the data or system.

Almost as important as these protections is the audit trail that proper logging provides. Centralized logging is part of PCI, in U.S. audits for the Sarbanes-Oxley and Gramm-Leach-Bliley acts, and in just about any information security strategy. The theory is that actions affecting sensitive data or systems should be logged, then stored in a secure, centralized location away from where the action happens.

When introducing centralized logging across countries, don't overlook time-zone management. Logs will appear out of order unless you set all systems to the same time zone, such as UTC. Some centralized logging software also can apply an offset as logs come in.

Depending on the environment and strategy, there are numerous acceptable ways to achieve these objectives, from off-the-shelf products for control, encryption, and logging requirements, to piecing together multiple solutions. Offshore firms will enforce most any control requested, as long as the client pays. The best value will come with those companies that have a high-quality base control system they apply as a standard.

The reality should be that, if sensitive data is stored in the United States, Canada, China, or England, it should be protected and treated the same. Retailer TJX's data-loss debacle happened within the United States. So while the recourses and risks vary from country to country, different technical controls generally aren't required.

That doesn't mean companies should let down their guard in assessing offshore outsourcers' security. In fact, information security pros should should tap into the fear, uncertainty, and doubt surrounding outsourcing; use it to insist on proper controls and standards; and bring those practices in-house where their own are lacking. The reality is that a Social Security number is a Social Security number, no matter where you store it or where the access threat comes from.