Incident Response Plans: Be Prepared for a Data Breach

As plan fiduciaries, sponsors are ultimately responsible for data protection. That’s true even when day-to-day cybersecurity is delegated to the third-party administrator (TPA) handling benefits administration.

That’s why it’s important for sponsors of plans with outsourced administration to oversee cybersecurity and create an incident response plan.

Interested in discussing your incident response plan, or creating one? Get in touch.

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Key Aspects of Cybersecurity Oversight

Thorough oversight of outsourced cybersecurity includes these steps:

  • Review contract language — and revise it if necessary. Every contract with a TPA or recordkeeper should have unambiguous language about cybersecurity. The contract should clarify that the vendor is responsible for any data-breach incidents that occur on its watch. That responsibility should encompass assuming all of the costs associated with the breach.
  • Conduct routine audits. The purpose of these audits is to validate that the vendor(s) is performing adequate security functions. Such audits are especially important when a contract states the vendor has that responsibility.
  • Test responses to cybersecurity incidents. This testing should be routine. One of the most important aspects of how a vendor handles an incident is its response time. An incident that takes a long time to fix could affect the plan’s ability to pay pension checks or other benefits on time.

It’s also important for plan sponsors with outsourced administration to have an incident-response plan they can follow in the event of an actual data breach.

What to Include in an Incident Response Plan When You've Outsourced to a TPA

You'll need an incident response plan even if you've outsourced all of your administration tasks to a TPA. To develop a meaningful incident response plan in this scenario, address all of the following:

  • Identify critical business processes and alternative processing methods. Alternatives may be needed if incident resolution is prolonged. Some incidents can take weeks or months to fully remediate.
  • Maintain a list of contact names and phone numbers for all vendors. Be sure to keep it current as vendor contacts may come and go frequently.
  • Map how data and other information move among various entities. This is important because an incident at one vendor could infiltrate another vendor. And, if the infiltrated vendor is not alerted, the vendor could blame (and may sue) the plan sponsor.
  • Outline incident response steps. Document resolutions and outcomes.
  • Create a comprehensive communications plan. Participants, business partners, law enforcement, government agencies and the media will direct questions to the plan sponsor — not to the outsourced vendor. The communications component of the incident response plan is a guide for when and how to release information to stakeholders.
  • Define roles and responsibilities. This is a crucial part of the incident response plan. It identifies who will do what if data is breached.
Key Components of Breach Communications
Correspondence Templates
Participant Notices
Phone Calls
Incident Report
Website FAQs
Social Media Posts
Press Release
Cyber Liability Insurance Claims

Be Prepared — and Avoid Finger-Pointing

Monitoring outsourced cybersecurity gives you confidence that your plan data is being adequately protected.

Creating an incident response plan helps ensure you’ll be prepared to respond if plan data is breached. If you’ve outsourced functions to more than one vendor, having an incident response plan will help avoid finger-pointing among vendors in the event of a breach.

Optimize Your Incident Response Plan. Contact Us

Find out more about Segal’s cybersecurity services and get in touch to discuss how best to develop your incident response plan.

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Stuart Lerner

Stuart Lerner

SVP, Administration and Technology Consulting Practice Leader

Amy S. Timmons

Amy S. Timmons

VP and Senior Consultant, Administration and Technology Consulting