This is standard practise
Snail mailing CDs/DVDs is standard practise in local authorities. The way it goes is:
1) Database backups are incredibly compressible, so use one from last night
2) Zip it down, and optionally password protect it
3) Whack it in a jiffy bag, write "With care - optical disks" on the back
4) Send it first class
5) Job's a good 'un
This is used for most data transfers of any size - If the bad guys want to intercept these, all they have to do is work out how to access the snail mail of the companies who wrote commonly used (by LAs) financial packages and grab anything with a disk in it. If they can't crack a pkzip password then they don't deserve to steal other people's hard-earned.
But wait - It gets worse.
There is a requirement for 24*365 access to some sensitive social services information that lists, for instance, adults who are a known danger to children and similar (schedule 1, section 48-kind of stuff for the knossers out there) - the kind of thing that the News of the World would pay dearly for - that can become unavailable due to planned network outages and similar.
What to do? If it becomes unavailable it potentially puts vulnerable children at risk, which is bad enough, but worse yet it would be a breach of SLA which would cost whichever outsourcer is involved yer actual money, which is totally unacceptable.
The answer is, incredibly, to set up a local copy at the office that maintains access to this information. At worst this involves putting a copy of the entire social services database, together with the necessary front ends, on a laptop... Unencrypted! In my experience they do secure the laptop - With that criminals nemesis, the Kensington laptop cable lock. Ha!
However, it doesn't stop there. Local Authorities are perennially strapped for cash, so they are always tempted by the lowest bid, come contract renewal time. What they don't tell their ratepayers is that the way the outsourcer achieves this low cost is to send as much of the contract as possible overseas, principally to India, but East Europe is making a late run here as well.
This is serious. Local Authorities hold as much or more information on their residents as was on the disks that the revenue just mislaid, except for the very few sane ratepayers who conduct ALL financial transactions with their LA in cash. They keep ALL payment information, including verification codes, on their (unencrypted) databases, many of which are maintained from overseas locations famous for their selling of "private" financial data.
The problem with this is that the ratepayer has no option but to deal with their LA. You might decide to bank with, say, Barclays, and accept the risk that their Indian operations represent. You may like the low prices charged by, say, 3 Mobile, and again accept the risk. The point is that you have a choice and can take your business elsewhere if you object to offshoring for any reason. Try that with your local council and see where it gets you. You are required to either pay in cash, or take whatever risk the council has decided that you will accept.
The Inland Revenues loss is big, flashy, and newsworthy. However, don't forget that it was mislaid inside the IRs (outsourced, naturally) "private" postal service, thus is unlikely to have ended up in the hands of fraudsters. Think instead about how many people's personal and financial details are either put at risk by "least cost" thinking, or by being made available to technicians in far away lands of which we know little, except that some of them are so bent that when they die they have to be screwed into the ground.
Posted as AC for obvious reasons.