What is a breach of confidentiality?

What is a breach of confidentiality?

A breach of confidentiality occurs when information given in confidence is disclosed to a third party without consent. Most confidentiality breaches happen accidentally.

Regardless, those affected can still face financial losses and reputational damage as a result.

To recoup their money, they may take legal action against your firm. Professional indemnity insurance is designed to cover against such instances.

In this guide, we explain exactly what a breach of confidentiality is. We also look at how to best prevent breaches from occurring in your organisation.

Breach of confidentiality definition

Confidentiality breaches refer to unauthorised access, use or disclosure of confidential information. This can be either accidental or intentional. Such breaches may lead to the security or integrity of a client being compromised. They can also result in financial and reputational damage. 

Why is confidentiality important?

In business, it is vital that confidentiality is taken seriously. Having a confidentiality policy can help your business protect private personal information. If an organisation fails to properly deal with confidential information, breaches can occur. This can lead to a loss of trust and integrity in the eyes of clients and the public as a whole. It can also lead to the termination of contracts and costly legal action being taken against you.

What is considered confidential information?

Confidential information is personal data shared with a person or organisation. This data is usually shared for a designated purpose. For example, a private medical consultant may have access to personal medical records or your chosen bank may store personal financial transaction data.

Yet it’s a misconception that confidential information refers only to identifiable data. It can also include business plans, intellectual property and judicial records.

Breach of confidentiality examples

Confidentiality is a highly important aspect of running any organisation. It forms the trust needed to attract and retain customers and helps to create the foundations for good working relationships. Yet confidentiality breaches are not uncommon. Below we list some common breach of confidentiality examples.

  • A company laptop containing sensitive client data is stolen
  • An employee shares confidential information about a client with family or friends
  • An employee discloses information they deem not to be of a confidential nature. This can include leaking news of redundancies or bankruptcies before they are announced.
  • An employee emails an attachment containing a client's business intentions to a competitor
  • An employee talks about confidential information somewhere they can be overheard
  • A recruiter sends an individual’s CV to employers before getting permission
  • A personal trainer emails a personalised training plan to the wrong client
  • An employee leaves a device containing confidential information, unlocked or open to others.

Breaches of confidentiality claims cost UK organisations millions of pounds each year. However, it is not only large companies that have to be aware of breaches of confidentiality. Increasingly, smaller businesses and freelancers are at risk. Remember - maintaining confidentiality is not only a contractual requirement. Ethics must also be considered. After all, confidentiality breaches can destroy business relationships very quickly.

What are the consequences of breaching confidentiality?

Even the smallest breach of confidentiality can have grave consequences. For an employee, consequences could include HR reprimands or full termination of employment. Individuals can even be subject to a civil lawsuit if the harmed third party opts to press charges.

A breach of confidentiality could also result in legal action. In turn, heavy compensation pay-outs for an organisation could follow. Companies could also suffer reputational damage as a result of breaching confidentiality. This can affect both attracting new business and retaining existing clients. For this reason, recovering from a public confidentiality breach can be seriously expensive. In many cases, it requires a strong PR strategy or rebrand campaign.

How to prevent breaches of confidentiality

Organisations that store any data given in confidence need to protect themselves, as well as their clients. To do this, confidentiality policies need to be put in place. Below we list the best ways to help organisations avoid breaches.

  • Improve training

Organisations should insist all employees receive the correct confidentiality training upon recruitment. This should include stressing the importance of locking computers and not discussing clients in public places. If you work with freelancers, it’s also important they understand your confidentiality policies. This may involve freelance training sessions and the use of freelance non-disclosure agreements.

  • Use contract law

Organisations should require each staff member to sign an employee non-disclosure agreement (NDA). NDAs can help protect both the organisation and the client in the event of a breach. Additionally, NDAs make it very clear what information can and cannot be shared.

  • Limit access to sensitive data

Organisations should restrict access to sensitive data. Confidential information should be kept on a need-to-know basis. Staff who do not need access to data to complete daily tasks should not be granted access. The fewer people that have access to sensitive data, the less likely a breach is to occur.

  • Use passwords and encryption

Data should be protected using passwords and encryption. This can reduce the risk of cybercrime and prevent a third party from accessing data if a company device is lost or stolen.

  • Get the right business insurance

Business insurance will not prevent breaches from occurring. However, professional indemnity insurance can protect your business should a costly breach occur. Cyber insurance can also be a good option for organisations that store a lot of sensitive data on the cloud.

For organisations and employees alike, understanding confidentiality is a basic professional responsibility. For this reason, ensuring policies are functional and up-to-date is an essential part of modern management.

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