Quest, Customs Breaches Show Risks Of Farming Out Data

By Ben Kochman (June 21, 2019, 8:19 PM EDT) -- Data breaches revealed this month by blood-testing giant Quest Diagnostics Inc. and the U.S. Customs and Border Protection agency illustrate the legal and reputational risks of relying on vulnerable third-party vendors to handle sensitive information.

Such cases are likely to draw attention to how contracts struck with third-party vendors address the issue of data security. Clauses in such arrangements explicitly mentioning the threat of cyberattacks are becoming common, industry attorneys say, particularly as regulatory regimes like Europe's General Data Protection Regulation and California's upcoming privacy law require that companies hold vendors to higher security standards.

If the data in play is considered sensitive...

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