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CS Professional · Artificial Intelligence, Data Analytics and Cyber Security - Laws and Practice · Softwares and Software Security

A company holds sensitive personal data in its software and suffers a breach because it did not maintain reasonable security practices. Which statement best reflects the IT Act position on body corporate liability for such failure?

A body corporate that is negligent in implementing and maintaining reasonable security practices for sensitive personal data, causing wrongful loss or wrongful gain, may be liable to pay compensation to the affected person. No prior criminal conviction is needed.

  1. AThe body corporate may be liable to pay compensation to the affected person if negligent in implementing and maintaining reasonable security practicesCorrect
  2. BLiability arises only if the company's directors are convicted in a criminal court first
  3. CNo liability arises if the data is stored in software rather than paper records
  4. DLiability is limited to a warning from CERT-In with no compensation

Explanation

The Act provides that a body corporate possessing, dealing with or handling sensitive personal data that is negligent in maintaining reasonable security practices, causing wrongful loss or gain, is liable to pay compensation. It does not require prior criminal conviction, and electronic storage is exactly what the provision covers.

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