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The top six corporate email risks

Posted by Deborah on October 27, 2007 in Email security, Email policy, Email compliance

We all know that email is a great business tool. It’s fast, cheap, universal and easy to deploy. However, companies that make use of email are confronted with a number of risks. So what are the email risks that companies face? Red Earth Software has identified the following top 6 email risks:

#1 Legal liability; In most cases the employer is held responsible for all the information transmitted on or from their systems. Consequently inappropriate emails sent on the company network can result in multi-million dollar penalties. In the last few years there have been several high profile lawsuits such as the case against a global oil company filed by four female employees. The employees alleged that sexually harassing emails sent through the company email system caused a threatening work environment. One of the sexually offensive messages was a sheet entitled ‘25 reasons why beer is better than women’. The company settled the case for no less than 2.2 million dollars.

#2 Regulatory compliancy; this now affects many companies across several industries. New and existing regulations are forcing companies to keep a record of their emails and to protect their client’s privacy. The Health Insurance Portability and Accountability Act requires health care institutions to keep a record of their email communications and secure confidentiality of information. In the new IRS regulation Circular 230, the IRS requires tax advisors to add an email disclaimer to any emails including tax advice, expressly stating that the opinion cannot be relied upon for penalty purposes. The U.S. Securities and Exchange Commission and Gramm-Leach-Bliley Act impose similar duties on financial institutions. Steep penalties can apply to those organizations that do not comply with their industry’s regulations. In a case lasting from 2000 until 2005, a well-known financial institution was recently forced to pay 20 million dollars in penalties by the Securities and Exchange Commission for not diligently searching for email back-up tapes and over-writing multiple back-up tapes.

#3 Lost productivity; Employees sending personal emails and sifting through spam mail can cause major loss of productivity. To give you an example, if each employee takes 5 seconds to view a spam mail, based on an average salary of 25 dollars per hour, this will cost the employer 3 cents per spam mail. If every employee received 25 spam mails per day, spam would cost a company with 100 users no less than 20,000 dollars per year. In addition to spam and personal emails, viruses can also lead to network downtime and lost productivity.

#4 Confidentiality breaches; Most confidentiality breaches occur from within the company. These breaches can be accidental, but they can also be intentional. Some years ago, a well-known software company filed a lawsuit against one of their former employees who had used the company’s email system to send out confidential information to their competitor, his new employer. The trade secrets included product design specifications, sales data and information regarding a prospective contract for which both companies were competing. The employee and competitor were both charged with trade secret theft.

#5 Damage to your company’s reputation; A badly written email, or an email containing unprofessional remarks will cause the recipient to gain a bad impression of the company that the sender is representing. A UK law firm had to find this out the hard way when two of their employees originated the ‘Claire Swire’ email, a sexually explicit email that ended up being read by over 10 million people around the world. Especially since the company in question was a law firm, and the employees were attorneys, this email caused severe damage of reputation.

#6 Increasing bandwidth and storage needs; Not only is the use of attachments growing, their size is increasing as well. According to the Radicati Group, attachments make up more than 85% of all email data. Large attachments use up bandwidth and storage space. Although the cost of storage space has decreased over the years, the larger the message store, the more management it requires and the longer it takes to restore messages after a mail server failure.

Next week we will be discussing what you can do to protect yourself against these email risks.