Customs brokers are an important link in the supply chain and act as liaisons between the importers, exporters and the Government and Customs Authorities. Since they undertake the responsibility of submitting the stipulated documents and information to Customs and ensuring clearance of imported goods, they are in possession of all the trade and commercial information related to the consignment, including sensitive information such as bank details and personal data, underlining the importance of data security.
Considering the sensitivity of the data, it is of utmost importance that the data is safeguarded against unauthorized access and to prevent misuse of data.
Apart from the typical data security-related risks arising during the normal course of business, customs brokers now also have to contend with cyberattacks.
In the recent past, hackers have targeted prominent market-leading customs brokers, including Livingston International and Daniel B. Hastings. Other targets in the transport and logistics sector include Expeditors, a global freight forwarder, and the Canadian trucking company Manitoulin.
The potential consequences of data breaches can be extremely serious, with both legal and commercial ramifications.
The legal implications arise from the spate of legislations introduced by Governments the world over, intended to protect data privacy, whereunder the onus of security is on the customs broker, as well as the claims for damages from the aggrieved parties.
The commercial implications include operational disruptions and delays, and the associated additional costs, besides the loss of revenue and business.
Besides the pecuniary losses, the loss of reputation stemming from the customs brokers’ inability to protect against cyberattacks can result in a loss of customer trust and an inability to comply with government regulations, which will further erode the customs brokers’ goodwill and deter potential customers from contracting them.
How customs brokers can ensure security of information
It is therefore vital for Customs brokers to put in place robust security systems to ensure the safety of internal and customer data, failing which the fallout can have a debilitating impact on the businesses of all parties involved.
As data security increasingly takes center stage, governments are strengthening legislation related thereto, which also aims to clarify the roles and responsibilities of the diverse entities that handle third-party data as a part of their dealings. In the US at least 45 states and Puerto Rico introduced or considered more than 250 bills or resolutions that deal primarily with cybersecurity.
Due to the growing awareness of the impact of data breaches at the vendor’s end, and with importers demanding that transport intermediaries deploy robust information security systems, it is utlimately end customer expectations in terms of data security that are increasing,
Data Security Best Practices
To improve data security levels, Customs brokers can identify and implement relevant best practices prevalent in the logistics and supply chain industry.
The most effective of these best practices are explained below:
1. Encryption – Encrypting data helps protect the confidentiality of data and also enables regulation of access thereto. This is a fundamental tool to ensure the security of data and is now being widely adopted across the logistics and shipping industry. Encryption of data ensures that the data can be safely transmitted, without the risk of unauthorized persons accessing it.
Vessels plying piracy-prone waters could use data encryption for sharing information such as their location and cargo, which will make it difficult for pirates to pinpoint the vessel’s location and launch attacks, thus facilitating safe passage.
2. Access controls – Access controls refer to the process of formulating policies governing access to data, including specifying the level of data that can be accessed by individual employees.
3. Regular audits – As a matter of standard practice, organizations should conduct regular security audits, to test for cyber weaknesses and potential loopholes that could be exploited by hackers.
4. Employee training – Regardless of the level of sophistication of data security technology deployed by an organization, since it is humans who will operate the systems and execute processes, it is necessary to train employees in the importance of data security, standard protocols, and actions to avoid. If employees are unaware or lackadaisical about data security, it is probable that during the course of their daily work, they will expose the organization to the risk of cyberattacks. Organizations therefore expend considerable resources to ensure cyber security training for their staff.
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