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Digital vulnerabilities like cyber-attacks and data breaches proliferate rapidly in the hyper-connected world that is created today. These vulnerabilities can compromise sensitive data like personal information, financial data, and intellectual property and can potentially threaten businesses of all sizes and in all sectors. Hence, it has become important to inform all stakeholders about any breach or attack to ensure they can be well-prepared for the consequences of such an incident.  

The non-reporting of reporting can result in heavy fines in many parts of the world. Data breaches caused by malicious acts are crimes and need proper investigation. Organisations may face significant penalties for failing to report the event. Failing to report data breach incidents can result in huge financial setbacks and legal complications. To understand why transparency is vital and understanding the regulatory framework that governs data breaches is the first step. 

The Current Indian Regulatory Framework on Data Breach Disclosure

A data breach essentially, is the unauthorised processing or accidental disclosure of personal data, which may occur through its acquisition, sharing, use, alteration, destruction, or loss of access. Such incidents can compromise the affected data’s confidentiality, integrity, or availability. In India, the Information Technology Act of 2000 and the Digital Personal Data Protection Act of 2023 are the primary legislation that tackles cybercrimes like data breaches. 

• Under the DPDP Act, neither materiality thresholds nor express timelines have been prescribed for the reporting requirement. Data Fiduciaries are required to report incidents of personal data breach, regardless of their sensitivity or impact on the Data Principal. 
• The IT (Indian Computer Emergency Response Team and Manner of Performing Functions and Duties) Rules, 2013, the IT (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011, along with the Cyber Security Directions, under section 70B(6) of the IT Act, 2000, relating to information security practices, procedure, prevention, response and reporting of cyber incidents for Safe & Trusted Internet prescribed in 2022 impose mandatory notification requirements on service providers, intermediaries, data centres and corporate entities, upon the occurrence of certain cybersecurity incidents. 
• These laws and regulations obligate companies to report any breach and any incident to regulators such as the CERT-In and the Data Protection Board.

The Consequences of Non-Disclosure

A non-disclosure of a data breach has a manifold of consequences. They are as follows:

• Legal and financial penalties are the immediate consequence of a data breach in India. The DPDP Act prescribes a fine of up to Rs 250 Crore from the affected parties, along with suits of a civil nature and regulatory scrutiny. Non-compliance can also attract action from CERT-In, leading to more reputational damage.
• In the long term, failure to disclose data breaches can erode customer trust as they are less likely to engage with a brand that is deemed unreliable. Investor confidence may potentially waver due to concerns about governance and security, leading to stock price drops or reduced funding opportunities. Brand reputation can be significantly tarnished, and companies may struggle with retaining and attracting customers and employees. This can affect long-term profitability and growth.
• Companies such as BigBasket and Jio in 2020 and Haldiram in 2022 have suffered from data breaches recently. Poor transparency and delay in disclosures led to significant reputational damage, legal scrutiny, and regulatory actions for the companies.

Measures for Improvement: Building Corporate Reputation via Transparency

Transparency is critical when disclosing data breaches. It enhances trust and loyalty for a company when the priority is data privacy for stakeholders. Ensuring transparency mitigates backlash. It demonstrates a company’s willingness to cooperate with authorities. A farsighted approach instils confidence in all stakeholders in showcasing a company's resilience and commitment to governance. These measures can be further improved upon by:

• Offering actionable steps for companies to establish robust data breach policies, including regular audits, prompt notifications, and clear communication strategies. 
• Highlighting the importance of cooperation with regulatory bodies and how to ensure compliance with the DPDP Act and other relevant laws. 
• Sharing best public communications practices post-breach to manage reputational and legal risks.

Conclusion

Maintaining transparency when a data breach happens is more than a legal obligation. It is a good strategy to retain a corporate reputation. Companies can mitigate the potential risks (legal, financial and reputational) by informing stakeholders and cooperating with regulatory bodies proactively. In an era where digital vulnerabilities are ever-present, clear communication and compliance with data protection laws such as the DPDP Act build trust, enhance corporate governance, and secure long-term business success. Proactive measures, including audits, breach policies, and effective public communication, are critical in reinforcing resilience and fostering stakeholder confidence in the face of cyber threats.

References

• https://www.meity.gov.in/writereaddata/files/Digital%20Personal%20Data%20Protection%20Act%202023.pdf 
• https://www.cert-in.org.in/PDF/CERT-In_Directions_70B_28.04.2022.pdf 
• https://chawdamrunal.medium.com/the-dark-side-of-covering-up-data-breaches-why-transparency-is-crucial-fe9ed10aac27 
• https://www.dlapiperdataprotection.com/index.html?t=breach-notification&c=IN

Introduction

The information of hundreds of thousands of Indians who received the COVID vaccine was Leaked in a significant data breach and posted on a Telegram channel. Numerous reports claim that sensitive information, including a person’s phone number, gender, ID card details, and date of birth, leaked over Telegram. It could be obtained by typing a person’s name into a Telegram bot.

What really happened?

The records pertaining to the mobile number registered in the CoWin portal are accessible on the Malayalam news website channel. It is also feasible to determine which vaccination was given and where it was given.

According to The Report, the list of individuals whose data was exposed includes BJP Tamil Nadu president K Annamalai, Congress MP Karti Chidambaram, and former BJP union minister for health Harsh Vardhan. Telangana’s minister of information and communication technology, Kalvakuntla Taraka Rama Rao, is also on the list.

MEITY stated in response to the data leak, “It is old data, we are still confirming it. We have requested a report on the matter.

After the media Report, the bot was disabled, but experts said the incident raised severe issues because the information might be used for identity theft, phishing emails, con games, and extortion calls. The Indian Computer Emergency Response Team (CERT-In), the government’s nodal body, has opened an investigation into the situation

The central government declared the data breach reports regarding the repository of beneficiaries against Covid to be “mischievous in nature” on Monday and claimed the ‘bot’ that purportedly accessed the confidential data was not directly accessing the CoWIN database.

According to the first complaint by CERT-In, the government’s cybersecurity division, the government claimed the bot might be displaying information from “previously stolen data.” Reports.

The health ministry refuted the claim, asserting that no bots could access the information without first verifying with a one-time password.

“It is made clear that all of these rumours are false and malicious. The health ministry’s CoWIN interface is entirely secure and has sufficient data privacy protections. The security of the data on the CoWIN portal is being ensured in every way possible, according to a statement from the health ministry.

Meity said the CoWin program or database was not directly compromised, and the shared information appeared to be taken from a previous intrusion. But the hack again highlights the growing danger of cyber assaults, particularly on official websites.‍

Recent cases of data leak

Dominos India 2021– Dominos India, a division of Jubilant FoodWorks, faced a cyberattack on May 22, 2021, which led to the disclosure of information from 180 million orders. The breach exposed order information, email addresses, phone numbers, and credit card information. Although Jubilant FoodWorks acknowledged a security breach, it refuted any illegal access to financial data.

Air India – A cyberattack that affected Air India in May 2021 exposed the personal information of about 4.5 million customers globally. Personal information recorded between August 26, 2011, and February 3, 2021, including names, dates of birth, contact information, passport information, ticket details, frequent flyer information from Star Alliance and Air India, and credit card information, were exposed in the breach.

Bigbasket – BigBasket, an online supermarket, had a data breach in November 2020, compromising the personal information of approximately 20 million consumers. Email IDs, password hashes, PINs, phone numbers, addresses, dates of birth, localities, and IP addresses were among the information released from an insecure database containing over 15 GB of customer data. BigBasket admitted to the incident and reported it to the Bengaluru Cyber Crime Department.

Unacademy – Unacademy, an online learning platform, experienced a data breach in May 2020, compromising the email addresses of approximately 11 million subscribers. While no sensitive information, such as financial data or passwords, was compromised, user data, including IDs, passwords, date joined, last login date, email IDs, names, and user credentials, was. The breach was detected when user accounts were uncovered for sale on the dark web.

2022 Card Data- Cybersecurity researchers from AI-driven Singapore-based CloudSEK found a threat actor offering a database of 1.2 million cards for free on a Dark Web forum for crimes on October 12, 2022. This came after a second problem involving 7.9 million cardholder records that were reported on the BidenCash website. This comprised information pertaining to State Bank of India (SBI) clients. And other well-known companies were among those targeted in high-profile data breach cases that have surfaced in recent years.

Conclusion

Data breach cases are increasing daily, and attackers are mainly attacking the healthcare sectors and health details as they can easily find personal details. This recent CoWIN case has compromised thousands of people’s data. The All-India Institute of Medical Sciences’ systems were compromised by hackers a few months ago. Over 95% of adults have had their vaccinations, according to the most recent data, even if the precise number of persons impacted by the CoWin privacy breach could not be determined.

A report by MarketsandMarkets in 2024 showed that the global AI market size is estimated to grow from USD 214.6 billion in 2024 to USD 1,339.1 billion in 2030, at a CAGR of 35.7%. AI has become an enabler of productivity and innovation. A Forbes Advisor survey conducted in 2023 reported that 56% of businesses use AI to optimise their operations and drive efficiency. Further, 51% use AI for cybersecurity and fraud management, 47% employ AI-powered digital assistants to enhance productivity and 46% use AI to manage customer relationships.

AI has revolutionised business functions. According to a Forbes survey, 40% of businesses rely on AI for inventory management, 35% harness AI for content production and optimisation and 33% deploy AI-driven product recommendation systems for enhanced customer engagement.  This blog addresses the opportunities and challenges posed by integrating AI into operational efficiency.

Artificial Intelligence and its resultant Operational Efficiency

AI has exemplary optimisation or efficiency capabilities and is widely used to do repetitive tasks. These tasks include payroll processing, data entry, inventory management, patient registration, invoicing, claims processing, and others. AI use has been incorporated into such tasks as it can uncover complex patterns using NLP, machine learning, and deep learning beyond human capabilities. It has also shown promise in improving the decision-making process for businesses in time-critical, high-pressure situations. 

AI-driven efficiency is visible in industries such as the manufacturing industry for predictive maintenance, in the healthcare industry for streamlining diagnostics and in logistics for route optimisation. Some of the most common real-world examples of AI increasing operational efficiency are self-driving cars (Tesla), facial recognition (Apple Face ID), language translation (Google Translate), and medical diagnosis (IBM Watson Health)

Harnessing AI has advantages as it helps optimise the supply chain, extend product life cycles, and ultimately conserve resources and cut operational costs. 

Policy Implications for AI Deployment 

Some of the policy implications for development for AI deployment are as follows:

1. Develop clear and adaptable regulatory frameworks for the ongoing and future developments in AI. The frameworks need to ensure that innovation is not hindered while managing the potential risks. 
2. As AI systems rely on high-quality data that is accessible and interoperable to function effectively and without proper data governance, these systems may produce results that are biased, inaccurate and unreliable. Therefore, it is necessary to ensure data privacy as it is essential to maintain trust and prevent harm to individuals and organisations.
3. Policy developers need to focus on creating policies that upskill the workforce which complements AI development and therefore job displacement. 
4. To ensure cross-border applicability and efficiency of standardising AI policies, the policy-makers need to ensure that international cooperation is achieved when developing the policies.

Addressing Challenges and Risks 

Some of the main challenges that emerge with the development of AI are algorithmic bias, cybersecurity threats and the dependence on exclusive AI solutions or where the company retains exclusive control over the source codes. Some policy approaches that can be taken to mitigate these challenges are:

1. Having a robust accountability mechanism. 
2. Establishing identity and access management policies that have technical controls like authentication and authorisation mechanisms. 
3. Ensure that the learning data that AI systems use follows ethical considerations such as data privacy, fairness in decision-making, transparency, and the interpretability of AI models.

Conclusion 

AI can contribute and provide opportunities to drive operational efficiency in businesses. It can be an optimiser for productivity and costs and foster innovation for different industries. But this power of AI comes with its own considerations and therefore, it must be balanced with proactive policies that address the challenges that emerge such as the need for data governance, algorithmic bias and risks associated with cybersecurity. A solution to overcome these challenges is establishing an adaptable regulatory framework, fostering workforce upskilling and promoting international collaborations. As businesses integrate AI into core functions, it becomes necessary to leverage its potential while safeguarding fairness, transparency, and trust. AI is not just an efficiency tool, it has become a stimulant for organisations operating in a rapidly evolving digital world.

References

• https://indianexpress.com/article/technology/artificial-intelligence/ai-indian-businesses-long-term-gain-operational-efficiency-9717072/ 
• https://www.marketsandmarkets.com/Market-Reports/artificial-intelligence-market-74851580.html
• https://www.forbes.com/councils/forbestechcouncil/2024/08/06/smart-automation-ais-impact-on-operational-efficiency/ 
• https://www.processexcellencenetwork.com/ai/articles/ai-operational-excellence 
• https://www.leewayhertz.com/ai-for-operational-efficiency/ 
• https://www.forbes.com/councils/forbestechcouncil/2024/11/04/bringing-ai-to-the-enterprise-challenges-and-considerations/  

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