How to Ensure Data Privacy Compliance?

In this article, you’ll learn about the importance of data privacy compliance, take a closer look at privacy compliance laws, and find out how to design a data privacy compliance strategy for your business.

When it comes to business success, the crucial importance to leverage data for insights, product development, and personalization comes with the responsibility to safeguard said data. Privacy compliance protects sensitive data, prevents legal penalties, and maintains business reputation. However, the most important part of data handling is not to comply with various data protection laws or avoid penalties – in actuality, it’s essential to maintain the trust that fuels growth, innovation, and customer loyalty. All these reasons mean that privacy can’t be treated as an addendum. Instead, it must be integrated into business strategies. To stay competitive while minimizing risks, it’s essential to embed data privacy compliance within any initiative your business may come up with.

What Is Data Privacy Compliance?

Data privacy compliance includes the practices, policies, and procedures implemented by organizations to ensure they adhere to all legal regulations and standards that govern the collection, processing, transmission, and handling of sensitive or confidential data.

For some businesses, complying with data privacy regulations is compulsory. At the same time, data privacy compliance goes beyond simply complying with legal requirements, such as HIPAA, GDPR, or CCPA. By pursuing compliance, companies foster a culture of responsibility toward customer trust and ensure the ethical use of their personal data, thus creating positive consumer experience while fulfilling their obligation to secure valuable information, all of which contributes to long-term organizational success in today’s ever-evolving digital landscape.

Why Is Data Privacy Compliance Important?

First, data privacy compliance is critical for avoiding legal repercussions. Non-compliance can result in hefty fines and penalties, which vary from law to law, but their cost tends to outweigh the investment in compliance.

Beyond the legal and financial implications, data privacy compliance is essential for fostering a culture of trust and business integrity both within the organization and with its customers. It encourages a mindset where every business decision takes into consideration its potential impact on privacy. In today’s digital age with its constant collection and analysis of personal data, ensuring the privacy and security of this data is paramount. Failure to prioritize data privacy, on the other hand, can create a loss in consumer trust, harming the business and derailing long-term success.  

Finally, becoming compliant with data privacy regulations encourages stronger data governance. The need to implement stricter protocols around the data lifecycle, develop strong security controls, and establish more proactive, forward-thinking policies on collecting, processing, and storing personal data has the potential to improve overall operational efficiency, which can be a powerful advantage in today’s competitive market.

Data Privacy Compliance Regulatory Landscape

Privacy compliance laws concern the legal and regulatory obligations organizations have when it comes to collecting, processing, or storing personal information. These laws aim to balance privacy protection with legitimate data use and are ever-adapting to evolving technology and data practices. Failing to comply with these requirements can result in data breaches, regulatory investigations, legal penalties, and significant fines.

Understanding the complex and multi-faceted regulatory landscape for data privacy compliance is crucial for developing an effective compliance strategy. This wide range of regulations includes laws at the international, national, and state levels:

• International data privacy compliance laws provide a baseline for data protection practices around the world and include the OECD Privacy Guidelines, the APEC Privacy Framework, etc.
• National data protection laws can vary significantly from one country to another, which presents a challenge for organizations that operate across borders to maintain compliance.
• State and region-level data privacy regulations within most countries further complicate the compliance landscape, especially for businesses that have their presence in multiple states or regions.

Navigating this complex data privacy compliance landscape requires a deep understanding of the various laws and regulations that apply to your organization. To enhance your data compliance procedures, you must first recognize the compliance rules that are applicable in your particular case.

Here are some of the most significant data privacy regulations we will focus on in our article:

General Data Protection Regulation (GDPR) – European Union

GDPR is one of the most comprehensive and stringent international data protection laws, which applies to any organization that processes the personal data of EU residents, regardless of where the company is located.

Key provisions:

• Organizations must obtain explicit consent before collecting or processing personal data.
• Individuals have the right to access their personal data held by an organization.
• Individuals can request the deletion of their personal data (under certain conditions).
• Companies must notify regulators of a data breach within 72 hours.

Companies can be fined for non-compliance, with fines potentially reaching up to €20 million or 4% of global annual revenue, whichever is higher.

If you want to explore the topic of GDPR compliance further, do not worry, we’ve got you covered.

California Consumer Privacy Act (CCPA) – United States

CCPA is a state-level California privacy law that focuses on consumer privacy rights and grants residents of the state significant rights regarding their personal data.

Key provisions:

• Organizations must disclose what personal data they collect and how it is used.
• Businesses must collect and retain only reasonably necessary data.
• Consumers can request access to their data and ask for it to be deleted.
• Before sharing, selling, or disclosing personal data to other parties, businesses must establish contractual obligations to protect data. Consumers have the right to opt-out of such sale.

Companies can be fined for violations, and individuals can sue in the event of a data breach.

Personal Information Protection and Electronic Documents Act (PIPEDA) – Canada

PIPEDA regulates the collection, use, and disclosure of personal information by private-sector organizations in Canada. It applies to any Canadian-based private enterprise that collects consumer data, as well as international companies that target Canadian customers.

Key provisions:

• Organizations must obtain meaningful consent for the collection, use, or disclosure of personal information.
• Companies are responsible for personal data they acquire, even when it’s transferred to third parties.
• Individuals have the right to access and correct their personal data.

Non-compliant organizations may face legal action and potential fines.

General Data Protection Law (LGPD) – Brazil

LGPD is the primary data protection law in Brazil, which is modeled after the GDPR and regulates both the public and private sector, applying to any organization that processes personal data in Brazil.

Key provisions:

• Companies are required to provide legal justification for data processing.
• Individuals l have the right to know for what purpose their data is being collected, as well as request its alteration, deletion, or transfer.
• Similar to the GDPR requirements, organizations must appoint a data protection officer to oversee data protection activities.

Companies that fail to comply with the regulation will be subject to pay up to 2% of their total annual revenue in Brazil or up to $50 million Brazilian reals.

What Are the Challenges of Privacy Compliance?

Data compliance, with all its complexity, can be tough for companies of all sizes. Hybrid and distributed work environments add further complexity to maintaining compliance. Some of the most critical challenges in data compliance include the following:

1. Having large amounts of data to handle

   Companies collect and process vast amounts of data, and identifying personal data stored in their system can be rather time-consuming and difficult. With data coming from a variety of sources like loT, social media, and various transactions, it can present quite a challenge to organize and store information in a structured way. Moreover, since large datasets are constantly updated or modified, making sure that the new data complies with regulations can also be complicated.

2. Determining applicable regulations

   Many businesses that collect and process large amounts of data as part of their everyday operation struggle with data identification and classification. Even more, juggling too many processes can easily become overwhelming and chaotic. And while managers understand the importance of proper employee training, development of business-specific data privacy policies, and employee activity monitoring, all these aspects of data privacy compliance are easier said than done.

3. Staying within the budget

   Compliance itself is rather expensive since it requires a significant amount of resources for employee training and technology updates. Damage costs due to noncompliance can also be quite high. It’s common among inexperienced businesses to make the mistake of underestimating the budget. Quite often organizations end up spending way more than they intended to during the planning stage, with monitoring tools, outdated and manual systems, external consultants, and internal pressure becoming a proven recipe for a budget disaster.

4. Keeping up with evolving regulations

   Data protection laws, such as GDPR or CCPA we’ve covered earlier in this article, constantly evolve to stay in line with the latest developments. Therefore, it’s crucial for companies to stay up to date with all the changes if they want to stay compliant. The fact that some companies have operations in several countries further complicates things, since they need to abide by the local regulations in addition to the international ones, and that further complicates compliance.

What Are the Best Practices for Data Privacy Compliance?

To help you safeguard your organization’s sensitive data and strengthen customer trust, we’ve compiled a list of the most significant best practices and actionable insights for data privacy compliance.

1. Establish a comprehensive data privacy compliance strategy

   A strong data privacy compliance framework can justly be considered the cornerstone of protecting personal information and ensuring that your organization adheres to GDPR, CCPA, and other regulations. A well-defined strategy provides clear guidelines for managing sensitive data and ensures that data privacy practices are systematic and consistent across your organization, minimizing the risk of non-compliance.

   First, we recommend that you design (and regularly update) data privacy policies for your business that detail how data is collected, used, stored, and utilized. To do that, it’s important to carry out data mapping, which is essentially the process where you identify and catalog all data assets, their sources, and how they flow through your organization. We also advise that you conduct periodic risk assessments in order to identify potential vulnerabilities and ensure  compliance with data protection laws.

2. Leverage data privacy compliance software

   Managing data privacy manually is challenging, especially in a complex regulatory landscape. Data privacy compliance tools automate many aspects of compliance, from monitoring data access to generating reports for audits. These solutions, together with employee monitoring software and threat detection tools, offer real-time insights into your data practices and help reduce human errors.

   Continuous automated monitoring of data usage and user behavior helps detect anomalies and potential breaches in real time. It also aids in generating compliance reports and maintaining necessary documentation for audits and regulatory reviews. Overall, these tools facilitate compliance and enhance overall data governance.

3. Implement data minimization practices

   Data minimization is one of the core principles of many data privacy regulations, which essentially requires organizations to collect only the data that is strictly necessary for specific purposes, thus helping prevent over-collection and potential misuse of sensitive information. Reducing the amount of data collected and retained helps significantly decrease the risks associated with data breaches and non-compliance. Data minimization ensures you’re not collecting unnecessary or excessive personal information, which can also improve customer trust.

   We advise that you limit data collection, opting to only collect personal data that’s essential for its specific purpose. You could also minimize data retention period, possessing it for only as long as needed to fulfill the purpose of its collection. Finally, it would be wise to review and assess your data on a regular basis to ensure its necessity and relevance.

4. Obtain customer consent for data usage

   Customer consent is a cornerstone of data privacy. In order to comply with privacy regulations, it’s essential that you obtain informed, voluntary consent of the individuals before collecting and processing their sensitive data. Customer consent also helps build trust and ensure compliance with regulations such as GDPR and CCPA.

5. Implement strong data encryption practices

   When it comes to protecting sensitive information from unauthorized access, a fundamental practice is data encryption. Converting data into an unreadable format (cipher text) for storage and transmission, encryption ensures that it remains secure even if it’s intercepted.

   To maximize security, we suggest that you implement strong encryption algorithms, such as AES-256, and regularly update encryption keys to prevent unauthorized access.

6. Understand industry-specific regulations

   There are unique data protection requirements applicable for different industries. For example, if you are in the U.S. healthcare business, you must comply with HIPAA, which sets stringent rules for handling patient data. Or, let’s say, you operate in the financial sector, you must then adhere to such regulations as GLBA or PCI DSS. You need to have an understanding of all the industry-specific requirements in order to integrate them into your company data privacy framework.

7. Take into account risks associated with remote workforce

   Remote employees have brought additional challenges for businesses in terms of protecting sensitive data. Organizations must secure remote access to corporate networks, implement strong identity and access management (IAM) systems, and monitor remote employees to ensure they adhere to data privacy policies.

8. Conduct routine data assessments

   Since data compliance legislation and consumer data standards are constantly changing and evolving, regular data assessments are crucial to establish your company’s current stand on data protection, improve compliance and security, and optimize data protection practices.

How to Create a Data Privacy Compliance Strategy?

In today’s digital world adherence to privacy laws is more than a simple regulatory obligation, it’s a competitive differentiator. Now that we’ve got the basics of data privacy compliance covered, it’s not hard to understand that designing a privacy compliance strategy is easier said than done.

Here are the main steps to help navigate you on the journey of building data privacy compliance strategy for your organization:

Step 1. Understanding the applicable obligations

Complying with privacy laws, as you could’ve gathered from the plethora of information we’ve already shared with you, is a rather complex process. This can be explained by the fact that the organization’s obligation to adhere to privacy regulations boils down to the type of data processed, the location of business operations, and the type of industry the company falls under, among many others. There are also certain cases when the organization may be liable to several regulations at once.

Step 2. Conducting a risk assessment

Once you are aware which privacy regulations are applicable to your business, it’s crucial to understand which components of data are not compliant with said regulations.

A thorough risk assessment should cover the following areas:

• A list of where the data is stored
• A log of users and stakeholders who can access it
• A list of third-party vendors privy to sensitive information
• A detailed historical log of data breaches
• A list of assigned impact scores on each risk based on industry benchmarks
• A list of vulnerability tests and gaps found using the test.

Step 3. Informing the workforce

Everybody on the workforce should be on the same page regarding the company’s strategy. An agreement on the budget, technology, timeline, stakeholders, and other factors should be reached prior to the implementation of the data privacy compliance strategy.

Employees should understand and agree to the privacy protection practices. It is advisable to develop an employee training plan with detailed learning modules.

The adopted changes regarding data privacy should be clearly communicated to existing and potential customers.

Step 4. Creating a written privacy policy

Privacy policy is a written document that serves as a legal declaration to customers and stakeholders about the organization’s practices regarding data privacy. It goes without saying that such policies should be thorough, transparent, and customized to the particular requirements of the business. Depending on the type of data the organization handles, applicable regulations, and company size, policy building can take up to a few months.

Step 5. Implementing the strategy

Once the foundation has been laid out, the implementation phase begins, which entails the introduction of the best suitable monitoring tools and security programs to comply with the data privacy laws. These may include setting up access controls, using data loss prevention software, setting up multi-factor authentication (MFA), encrypting data, practicing data minimization, and so on.

Step 6. Ensuring continuous compliance

Managing a data privacy compliance strategy is not a one-time activity, since privacy regulations are complex and ever-changing. As the business scales and grows, its data privacy requirements and processes will be changing. To manage the continuously changing privacy laws, it’s advisable to develop a continuous compliance management system.