I would like to make a wager on this law being ignored the first time Samsung or another chaebol violates it and is facing a fine equal to 10% of revenue. I can almost guarantee it, it’s a high enough fine to turn some low-margin businesses from profitable to unprofitable for the year and there’s no such thing as a secure computer system. The only way to guarantee compliance is to not store any data which isn’t exactly reasonable for some business models.

Maybe those specific business models shouldn't exist, if they consistently risk harm to 3rd parties.

You legally have to hold transactions for years yk as a business

Then secure your database? This stuff isn’t rocket science. You don’t even have to hold historical transactions online. It’s quite difficult for hackers to access a hard drive sitting in a drawer.

Probably a law targeted at foreign companies

there’s no such thing as a secure computer system

Where is your source for this? It is entirely possible to make a secure computer system, though it does require effort. The article specifically mentions "up to" 10% and the fines applying to companies leaking data on purpose or through negligence. I doubt the fines will be nearly as high for a company that tries to secure a system (and thus prevents more leaks) rather than a company that does not try to secure a system (assuming that leaks will occur), if the same breach happens.

Computers are deterministic (excluding cases where practically impossible cosmic ray events occur), so while we have the power to ensure system security, we should ensure system security. Heck, even just encrypting consumer information and protecting just the keys to this data would already decrease the effectiveness of many data breaches.

Where is your source for this? It is entirely possible to make a secure computer system

You can’t. You don’t need source for that, just common sense.

Exploits are discovered every day, bugs happen, bad actors.

You can do the best system, shit still happen.

BTW you want a source ? Remember when the freaking CIA data got leaked ? Edward Snowden, ring a bell ?

If the cia couldn’t prevent it, I bet you can’t.

Sounds great if all the following is true.

* Before Tax Revenue

* If the company is owned by another company, the revenue is the total of all companies owned by the highest level parent.

* Includes Worldwide Revenue

* Includes companies based in all other Countries.

I would have went for 20%, but if he above applies I wish the US would do the same.

You can just do what my university did, hire a small shell firm with 3 employees to hold all your data, and when it got hacked they just went bankrupt and we switched to a new shell firm with similar form and function.

Minimizes money usage and does not require any security investments

Or … and hear me out on this one … care?

Sounds like something that costs money, if a university doesn't care I don't think most companies will.

Yes, being competent requires effort.

It certainly feels much better being an proactive member of society rather than a self-serving arsehole though.

So, there is that.

It feels better only as long as everybody else cares too. Being the only one competent in a room of imbeciles is a terrible feeling.

Hmm, this is perhaps why we get socially-negative businesses that often have very friendly (and driven, and hard-working, and intelligent) internal cultures. Competency becomes a fault line. When it becomes obvious that a large fraction of humanity just doesn't give a shit, a small group of people who are competent and driven turn their efforts to taking advantage of people who don't give a shit. Thus creating industries like market-makers, cryptocurrency, advertising, and AI.

It feels better only as long as everybody else cares too.

Not sure who “everybody else” is in your statement, but as someone who founded a healthcare tech platform (since sold) [1], I spent 20 years caring about the many millions of patient medical records we held and making sure my team cared too. In my mind it wasn’t optional.

I did it because:

* it’s the right thing to do

* for professional pride

* and so I could sleep at night

And, at least at the beginning, I believed a data breach could be the death knell of the company. Over time the laissez faire attitude to data protection, by the industry as a whole, made it seem like a breach would be survivable, but luckily we never tested that theory.

I still walked away from it a wealthy man. Being competent and caring about your customers (and being able to sleep at night) doesn’t have to mean failure like it seems everyone here thinks.

[1] https://www.meddbase.com/

People don't think caring about your customers leads to failure, but it's a lot harder than not caring, and it does seem to be the case that it is mandatory to not care if you're going to be chasing massive valuations.

We're moving from a high trust society to a low trust society, I fear. It's a tough transition.

Caring is orthogonal to profits and shareholder value. The one who cares the least wins unless economic incentives change this math, which is what these financial penalties work towards. Humans are tricky.

To defend against the threat OP talks about (intentionally under capitalized corporate entity to avoided liability), insurance should be required, and your cyber insurance underwriter will perform an audit as part of underwriting. It's effectively a bond against fuckery in this context.

(cyber consultant and practitioner)

That's not what orthogonal means. Saying they are orthogonal means that you can care and be profitable.

You can care and be profitable, but it is usually cheaper to not unless regulatory mechanisms exist to internalize this potential externality. Can't rely on humans to do the right thing, some will not unless they feel pain for doing the wrong thing. Ergo, we build systems (legal, regulatory, technical, people) to encourage the desired target outcome(s).

I've worked with very profitable firms who care very little (and it shows in their systems and how they operate in this regard), and barely profitable firms who do everything right. What's the difference? Their culture, people, and internal incentives.

TLDR Security failures and data breach fines must be more expensive than the happy path and doing the right things. This encourages the happy path and doing the right thing, while discouraging doing not enough or nothing.

Why the middle man? Can't we make the law so that the University is still liable for the data beach because it's "their" data (collected/stored on their behalf) that is breached?

I think that still aligns the incentives, and University in this case has interest to make sure the data is stored properly.

Lets be honest here, this is a business risk which is crazy high. As stupid as this is, I care but i can't guarantee it.

I might suggest a construct like this too.

What do you think how much it cost to do it perfect?

Perfect isn’t required. The bar is “gross negligence”. Perfect is impossible, but proper compliance procedures, proper process, and a commitment to following industry best practice will always see you on the right side of the negligence bar, even if something slipped through the net.

It’s the difference between being a professional and an amateur (or worse, a ‘cowboy’).

Again this is not priced in. Every rational(in terms of revenue) business would rather be a highly profitable "amateur" compared to a barely profitable "professional".

There is no capitalist incentive for the latter, and you will lose market share to firms that can undercut you because of their lower costs.

4% of revenue in the EU, 4% of revenue in the UK, and 10% of revenue in Korea should be enough of an incentive to start caring about how you deal with your customer’s privacy and personal data.

One assumes the rest of the world won’t be far behind, apart from the the corrupt land of the USA which is going backwards right now.

So we get to a very easy formula for companies to do in the EU and UK:

If (4% of your revenue * risk_of_breach_with_your_security < cost of outsourcing storage to a 3rd party cloud) {

Roll your own security solution

} Else {

Outsource to 3rd party

}

Your replies here suggest a level of cynicism that is, well, … , it ain’t pretty.

In my experience, putting proper compliance procedures in place, following industry best practice in relation to data management and data security actually leads to a more effective organisation, because it professionalises.

It’s the first step out of the ad-hoc phase of a startup and into the real world of creating a business with value. It also means as you scale up the personnel in the organisation, there are proper checks and balances in place.

When you come to sell your business, if it has a ton of existential risks attached to it, it will be worth less and may even not be sellable at all. So even from a cynical “all I care about is money” point-of-view, you want a business that is sound and isn’t storage for future law suits or fines.

Also, the cost of a fine due to a data breach isn’t the only thing to be concerned about. Gross negligence could lead loss of life, loss of property, loss of earnings, etc. and the buck stops with the executives — don’t think you can’t be completely fucked by the good ol’ law as it stands today.

Some businesses are more vulnerable than others, but that’s also why you scale the compliance architecture to the business.

Some hard to swallow pills for tech companies in 2026: data not collected in the first place cannot leak.

In the abstract, yes.

In the case of a university like the head of this thread, it isn’t going to be easy to avoid collecting and retaining data.

How much to care is reasonable? Do you live in a windowless underground security bunker? Should most businesses be held to that standard?

Lets say these are paper records, behind a locked door, with a security guard that they check id for it. If someone then breaks in at night time, cuts the cameras and knocks out the security guard and steals a filing cabinet, should that university then be fined 10% of revenue, which could mean the entire university shuts down because most businesses cannot survive that? We have to remember who is the original criminal here.

Perhaps they should read https://en.wikipedia.org/wiki/Piercing_the_corporate_veil

That's legal?

That's like blaming Seagate when your harddisk fails.

No judge will fall for that. You should have made backups. And you are responsible for the data of your clients.

Not really, the shell company is the owner of the data and is responsible for the security of it by contract, that's the whole point.

Seagate will not in a million years sign anything like this when you buy a HDD.

That’s not how it works. Especially with compliance schemes like ISO27001, Hippa, etc. they require an audit chain through the supply line. Obviously it depends on what data you’re managing to whether your customers care about whether you’re audited, or not, but if you’re selling enterprise software then this is all part of your compliance process. You can’t offload that responsibility, you have to make sure your suppliers comply too.

Maybe it's different in the US, but in the EU you can get certified to be able to handle certain data securely, for example getting SOC/ISO/ESC certifications. When you then are looking for storage solutions you can in practice absolve yourself from liability/gross negligence if you choose a provider that has these certifications. So when an org needs cheap solutions, they find the cheapest compliant provider and hands are clean.

You can't just absolve yourself of responsibility by saying "I hired a contractor". You are still responsible for doing your due diligence in picking your contractor.

There are specific laws called Piercing the Veil that can easily be passed to close this type of loophole.

Courts are run by people, not AI, so judges can easily ignore the corporate entity once these laws are passed.

Piercing the corporate veil is difficult to do in practice unless they've gotten very sloppy.

"through intent or gross negligence"

I'm not familiar with Korean law but that seems a rather high bar. I don't think we'll see many fines actually levied.

It's childish of me I know, but if this actually goes through I will feel a twinge of delight at the refutation of all the HN commenters who have argued that such enforcement is unrealistic.

This feels like a really odd way to incentivize data breaches and/or not reporting data breaches.

Um, I think it does the opposite of what you are suggesting - this aims to reduce data breaches and incentivize people to prevent these breaches.

I'm assuming the intent is to protect customers.

Tying the fine to intent or gross negligence doesn't work for me, as a customer doesn't care why, they only care that the harm happened. Doesn't matter to me if you train everyone really well and one guy forgot his training just one time, or if you don't train at all.

I'm thinking:

(The following example is in "American" terms, I assume some other countries have similar ideas as SSN though)

- Name and address or name and phone number leak: $100 per customer affected.

- Email: $50 per customer affected, or $100 if tied to any other data.

- Social Security numbers: $2000 per customer affected

- Unsalted or plaintext passwords: $500 per customer affected.

- Cap is the greater of 200% of annual EBITDA, or 20% of revenue

Money goes to the government to be distributed DIRECTLY (tax-free) to the affected users.

This might bankrupt a couple of companies in particularly bad breaches, while companies are still getting used to it. Good! I hope it does and that business textbooks highlight those disasters, the way they do the Enron collapse.

My goals for this system are for businesses to properly price in the risk of holding (or even momentarily touching) sensitive data. SSNs, for instance should already (in a sane world) be radioactive for any business to even CONSIDER touching. To the extent any business feels the need to collect or hold it, frankly I'd say, think again. Credit reporting agencies are the worst offenders (and under my rules Equifax would already be gone), as they maintain databases with that as primary key, and force all their customers to deal in that key, instead of taking advantage of some 1990s technology like one-way hashing, or better yet, coming up with their own identifiers that could be replaced responsibly in the case of breaches.