A woman in Pakistan recently struck fear among IT executives who outsource. She had obtained sensitive patient documents from the University of California, San Francisco, Medical Center through a medical transcription subcontractor that she worked for, and she threatened to post the files on the Internet unless she was paid more money.

The story didn't sit well with John Golden, CIO at CNA Financial Corp., a $12.3 billion insurance company in Chicago that outsources a small portion of its billing functions to India. Golden's team implemented a slew of physical, technical and contractual security precautions to protect customer data, such as sending only necessary bits of customer information, backing up files in a centralized server at the home office and putting tough restrictions on employee turnover at the outsourcing facility. But there's always a horror story to make him wonder.

By Stacy Collett at Computerworld.

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