© Copyright Acquisition International 2026 - All Rights Reserved.

Article Image - Spiders in the Web: The Risks of Online Crime to Businesses
Posted 2nd June 2016

Spiders in the Web: The Risks of Online Crime to Businesses

Running a business means taking risks. The biggest risk an entrepreneur can take is not to think about risks at all.

Mouse Scroll AnimationScroll to keep reading

Let us help promote your business to a wider following.

Spiders in the Web: The Risks of Online Crime to Businesses
Image

Spiders in the Web: The Risks of Online Crime to Businesses

Running a business means taking risks. The biggest risk an entrepreneur can take is not to think about risks at all. It is therefore wise to identify the risks that (the board of) a company is exposed to in order to control them where possible: risk management. This article will focus on one particular type of risk, digital risk.

Firms’ IT systems can be breached both from the inside and from the outside. For example, breaches can come from a network attack (hacking, distributed denial of service, DDoS), viruses (Trojan horse, time bombs, worms), cybercrime, human error, a failure of the IT provider or power failure. The consequences for an enterprise can be serious – inaccessibility of the network, loss or theft of (part of) the computer system, data destruction, data manipulation, leaking of confidential information or personal data and related privacy issues. What are the legal options to manage these consequences and to ensure the continuity, security and privacy of the network and information systems of the company?

Contracts and liability

Regarding digital risks, most business owners will immediately think of the security of the software and the quality of the hardware. However, you can limit digital risks and manage any potential negative effects in advance by means of good information and communications technology (ICT) contracts.

Entering a contract

For the different digital services (such as maintenance and operation of the network system, data processing and data storage) the company will conclude contracts with different ICT suppliers (providers, cloud servers, big software providers, such as Microsoft, Apple and Google). These contracts are often standardized. However, an enterprise does not have to accept such standard contracts unreservedly and it is advisable to negotiate the contents of such contracts. The contract has to provide clarity for both parties on several basic things: Who is responsible for what? Who has the power to do what? And what are the rights and duties of the parties involved in the service chain? Here, it is vital to observe the liability for claims of clients or third parties.

Besides negotiating the agreement, the use of your own General Terms & Conditions is highly advisable. Make sure that the General Terms are declared applicable correctly. If this turns out to be difficult, try to explicitly exclude specific provisions of your counterparty’s General Terms in the agreement, as they often contain far-reaching exemption clauses. Also, check whether the General Terms of the provider contain a unilateral changes clause and make sure that the General Terms can only be changed with your permission or include in any case a notification obligation on the part of the provider in the event of a change in service. Finally, it is important to make clear arrangements in a choice of law and choice of forum clause with regard to the applicable law and the competent court.

During the contract: Service level agreement and security

The performance of the contract can be implemented via a service level agreement (SLA), which is rather common practice in ICT. An SLA includes, among other things, agreements on the level of quality and availability of the services (technical and functional specifications).

An important risk which has to be considered in the SLA is the security of the ICT systems and the data of the enterprise, especially if work is performed in different locations or in the cloud. Therefore, make agreements on the improvement of the network protection not just by firewalls but also by means of encrypting and masking data. Authentication systems can provide the enterprise with extra protection against undesirable external factors, for instance, by the use of login codes, (changing) passwords and digital certificates. Also, define who will be responsible in the event of security breaches and thus for the damage of the enterprise, clients or third parties.

In addition, it is advisable to include a notification obligation on the part of the provider in the event of security breaches and other data leaks. You can also include in the agreement a back-up obligation on the part of the ICT provider, so that there will be an alternative besides your own back-ups.

An enterprise should of course also ensure the data privacy of clients and third parties in the network and information systems. The entrepreneur is responsible for correct storage and processing of personal data. Therefore, it is important to include in the agreement with the ICT provider who is or will remain the owner of the data, who has access to the data and/ or is allowed to use it. A (mutual) confidentiality clause and a penalty clause can be included in the agreement and serve as a means for the compliance with these agreements. A prohibition to transfer personal data to third parties may also be necessary.

After the termination of the agreement

To ensure the continuity of the enterprise, clear agreements must be made regarding the termination of the agreement and what will happen with the data and systems in the event of bankruptcy or the takeover of a supplier. Thus, for instance, make sure to avoid a “vendor lock-in”, by which the enterprise is not able to switch to another supplier because the data cannot be transferred (easily) to the new provider. Conversely, it is also important to determine what will happen to the data and systems if the enterprise does not comply with agreements, has outstanding bills, goes bankrupt or is otherwise in default. The enterprise is well-advised to include an obligation on the part of the provider to return the data in the event of the termination of the agreement.

International regulations

Obviously, all agreements must be in accordance with national and international laws and regulations. This may be rather complex if the enterprise contracts with foreign parties or the data will be stored on a (cloud) provider’s system, which is physically located abroad. The enterprise is thus well-advised to investigate who the contracting partners in the service chain are and where the data will be physically stored. By including investigative or monitoring powers, the enterprise can investigate whether the supplier complies with the applicable legislations so that the enterprise can also comply with its legal obligations.

Besides, the nationality of the persons whose data are digitally processed is relevant. For example, on grounds of the current European Data Protection Regulations, businesses from non-EU Member States have to provide an “adequate level of protection” for the storage and processing of personal data of EU inhabitants. A Thai business processing data of Italian customers in the US is also subject to this Regulation, even though there is no physical relationship with Europe. In this case there is a problem because due to the so-called “USA Freedom Act” (formerly, Patriot Act), the United States does not comply with the European regulations. Until recently, transfer of personal data was permitted if an American company committed itself to comply with the “Safe Harbor Privacy Principles”. On October 6, 2015, the European Court of Justice decided however, that the United States (American ICT service providers) could not provide an adequate level of protection for personal data. Currently, the European Union and the United States are working on finding a solution for this.

Meanwhile, for the protection of the privacy of EU-citizens, the European Parliament has drawn up a General Data Protection Regulation containing stricter rules and higher fines. It is expected to become effective in 2017.

Conclusion

Entrepreneurs do almost everything digitally, but the risks of digital business operations are often not fully taken into account. With this article, we have tried to create greater awareness of digital risks and offer suggestions to manage them. Your outside corporate counsel, who knows your business like no other person, will be able to provide advice so that you will be aware of potential risks and be able to cover them legally, if desired. Then you, as entrepreneur, will be able to confidently use all the opportunities provided by the digital work environment.

Company: Russell Advocaten
Name: Reinier W.L. Russell,
LL.M.
Email: reinier.russell@russell.nl
Web: www.russell.nl
Address: Reimersbeek 2
1082 AG, Amsterdam /
P.O. Box 87400
1080 JK Amsterdam
Phone: +31 20 301 55 55

Categories: Legal, Strategy


You Might Also Like
Read Full PostRead - Eye Icon
NLRB Micro-Union Decision Causes Untold Harm to Retail
Leadership
30/04/2015NLRB Micro-Union Decision Causes Untold Harm to Retail

The National Labor Relations Board’s decision to recognize a micro-union of workers in just a single department at a Macy’s store in Massachusetts rather than the entire store violates longstanding precedents on union organizing, said the NRF.

Read Full PostRead - Eye Icon
13 Rules to Trade ETH with Credit Card in 2023
Finance
22/02/202313 Rules to Trade ETH with Credit Card in 2023

Ethereum — the world’s second-largest cryptocurrency — is often traded with a credit card. Today, there are many cryptocurrency exchanges that support credit card payments and there are even a few which specialize in Ethereum.

Read Full PostRead - Eye Icon
Navigating Regulatory Divergence in Cross-Border Retirement Plan Integration
Finance
29/07/2025Navigating Regulatory Divergence in Cross-Border Retirement Plan Integration

When companies grow internationally or merge with foreign entities, aligning retirement plans becomes a high-stakes challenge. Each country has its own tax codes, eligibility rules, vesting timelines and reporting requirements, which makes it challenging to cr

Read Full PostRead - Eye Icon
Corporate Immigration and the Diversified Economic Age
Innovation
30/11/2015Corporate Immigration and the Diversified Economic Age

Anu Gupta has filed thousands of visa and green card petitions in the past 20 years, advising more than 10,000 individuals, entrepreneurs and corporate employers on immigration matters.

Read Full PostRead - Eye Icon
The Growth of the Aviation Industry: A Sector Soaring High
Leadership
03/12/2015The Growth of the Aviation Industry: A Sector Soaring High

Lee and Li is the largest law firm in Taiwan providing a full range of legal services to clients. Senior Counsellor Patricia Lin and Associate Partner Mark Yu talk us through the firm’s work and how they have maintained their place at the top of Taiwan’s l

Read Full PostRead - Eye Icon
How To Choose A Specialty Chemicals Supplier 
Innovation
02/05/2023How To Choose A Specialty Chemicals Supplier 

Chemicals are vital components in most industries like construction, electronics, healthcare, textile, and even automotive. These chemicals are helpful in different ways, hence the need to select an appropriate supplier. 

Read Full PostRead - Eye Icon
Charter to Buy Time Warner for $55 Billion
Finance
27/05/2015Charter to Buy Time Warner for $55 Billion

Charter Communications and Time Warner Cable announced that they have a definitive agreement for Charter to buy with Time Warner Cable.

Read Full PostRead - Eye Icon
Africa on the Rise
Legal
04/05/2016Africa on the Rise

Mrs. UWIMANA Gisèle is a holder of Master’s Degree in Law (LLM) and Bachelor’s Degree in Law (LLB) and active collaborator of the Law Firm as she joined Rwanda Bar Association in 2011.

Read Full PostRead - Eye Icon
Most Outstanding Corporate Catering Services Provider 2021 – Australia
Leadership
10/05/2022Most Outstanding Corporate Catering Services Provider 2021 – Australia

We catch up with the founder of Catering HQ, Steve Sidd, to discuss with him the nitty gritty of operating in the modern catering industry. With so many catering and hospitality companies offering similar – if not the same – menu items and services, Cateri



Our Trusted Brands

Acquisition International is a flagship brand of AI Global Media. AI Global Media is a B2B enterprise and are committed to creating engaging content allowing businesses to market their services to a larger global audience. We have a number of unique brands, each of which serves a specific industry or region. Each brand covers the latest news in its sector and publishes a digital magazine and newsletter which is read by a global audience.

Arrow