Sophie Ashcroft, Partner, and Miranda Joseph, Senior Knowledge Lawyer, Stevens & Bolton, outline how ransomware incidents can trigger rapid regulatory duties, high-value contract claims and insurance disputes – and what to have in place to respond.
Ransomware attacks have become one of the most pressing threats to businesses worldwide, and for data centres (the backbone of digital infrastructure) the stakes are even higher. These facilities hold vast amounts of sensitive information and provide critical services to clients who expect uninterrupted access and security.
When a ransomware incident strikes, the fallout is not limited to technical disruption; it can trigger a cascade of legal, regulatory, contractual and reputational consequences that may prove just as damaging as the attack itself.
The legal risks
Data centres operate under service agreements that often include uptime guarantees and data security obligations. A ransomware attack that disrupts operations or compromises client data can trigger breach of contract claims. Clients may seek damages for business interruption, reputational harm, or regulatory penalties they incur as a result of the breach.
These contractual risks are compounded by statutory obligations. Under UK law, data centres processing personal data are subject to the UK GDPR, Data Protection Act 2018, and the Privacy and Electronic Communications (EC Directive) Regulations 2003. Furthermore, The Data (Use and Access) Act 2025 received Royal Assent on 19 June 2025. It amends UK data protection legislation and is being brought into force in phases.
A ransomware attack that results in unauthorised access or loss of personal data constitutes a ‘personal data breach’, requiring notification to the ICO within 72 hours. Failure to comply can lead to fines of up to £17.5 million or 4% of annual global turnover. The fine can be combined with the ICO’s other corrective powers.
Legal exposure is not limited to clients and regulators. Affected individuals may also bring claims for misuse of private information or even negligence. Collective actions in the UK are becoming more common and are of a particular risk where large volumes of personal data are compromised. The reputational and financial impact of such litigation can be severe.
While cyber insurance is a key risk management tool, insurance coverage disputes frequently arise. Insurers may challenge claims on grounds such as inadequate security measures or failure to comply with policy conditions. Litigation over coverage can compound the costs of an already expensive incident.
How data centres can protect themselves
While no organisation can eliminate cyber risk entirely, proactive measures can significantly reduce exposure. For data centres, prevention and preparedness are critical, not only to safeguard operations but also to mitigate legal and regulatory consequences. The following steps outline practical strategies to strengthen your defences and protect against the fallout of a ransomware attack:
- Robust cybersecurity framework
Regular vulnerability assessments and testing are essential. Implementing layered security measures, including firewalls, potential encryption o personal data, intrusion detection systems, and endpoint protection, are recommended for maximum security. Cybersecurity should not be treated as a one-off investment but as an ongoing process. - Incident response planning
A ransomware attack demands swift, coordinated action. Data centres should maintain a detailed incident response plan, tested through regular simulations. The plan should cover technical containment, legal notification obligations, and communication strategies for clients and regulators. - Contractual risk management
Review and update client contracts to ensure liability caps, force majeure provisions, and clear definitions of security obligations. Consider including clauses that allocate responsibility for cyber incidents and outline cooperation in response efforts. - Regulatory compliance
Ensure compliance with UK GDPR and other applicable regulations. This includes maintaining records of processing activities, implementing encryption and pseudonymisation to reduce the risks your processing poses where appropriate, and training staff on data protection principles. Compliance is not only a legal requirement but also a strong defence in the event of regulatory scrutiny. - Cyber insurance
Invest in comprehensive cyber insurance, but do not assume coverage is automatic. Understand policy terms, exclusions, and notification requirements. Engage with brokers and legal advisers to ensure the policy aligns with your risk profile. - Employee training
Human error remains a leading cause of ransomware incidents. Regular training on phishing awareness and secure handling of data can significantly reduce risk. A well-informed workforce is a critical line of defence. - Legal preparedness
Engage with your legal team early, both for preventative advice and to respond effectively if an attack occurs. Early legal input can help manage regulatory notifications, preserve privilege in investigations, and mitigate litigation risk.
Conclusion
For data centres, the question is not whether ransomware will pose a threat, but when. The legal consequences of an attack can be as damaging as the technical fallout. By investing in robust security, contractual safeguards, regulatory compliance, and ensuring your contracts, insurance policies, and other documentation are in order, data centres can reduce exposure and demonstrate resilience in the face of this growing risk.
