The European Union’s high standards for data protection set strict requirements for companies when using personal data. It is important to acknowledge that GDPR compliance is not only important for compliance with the law and avoiding fines, but also for the value and reputation of the company.
There are many times more cases where a supervisory authority has issued a precept to terminate an activity or change a business model. This can sometimes have a greater impact than a GDPR fine. In addition, it must be considered that the persons affected by the incident may submit claims for damages to the company. For example, in the case of start-ups, which are often interested in attracting external investment, such risks can lead to serious consequences.
Investors are proactively looking at the level of existing risks in more and more detail. Also, in the case of a potential acquisition of a company, compliance withthe GDPR requirements and the assessment of the related risks are no longer left out of due diligence. Compliance with data protection regulations has become part of the assessment of investment risk and enterprise value. The composition of personal data, the established documentation, the service providers used and the locations of data processing, and even the capacity to manage incidents are looked at in detail.
So how can such risks be mitigated proactively?
Cleaning the kitchen side has turned out to be a big challenge. Delete unnecessary data, restrict access on a need-to-know basis, and implement security measures against external attacks. Every company must have an overview of what data is used for which purposes. Wise decisions must also be made when choosing service providers, because risks can also be realized through vendors and suppliers.
When implementing sufficient data protection principles and requirements, it is possible to avoid the most common mistakes in processing personal data already during the planning of activities.
Do not start collecting data if it is not entirely clear whether it is all needed. Excess data will not bring you closer to your goals, but in the event of an incident, it will increase the scope of the breach and its impact on the privacy of individuals. In the protection of personal data, the principle of privacy by design should be followed. It helps to build a product/service in a way that takes into account the principles of data protection already in the early stage. For example, in the case of certain web solutions, it is reasonable to avoid the creation of unnecessary data fields when collecting data, and to clearly distinguish between mandatory and voluntary data fields. Do not forget to ask for possible consents if you really need them. Automatic deletion or anonymization of personal data after it has ceased to be needed is also a good example of a privacy-friendly solution and also contributes significantly to reducing the impact in the event of a data leak.
Information security is one of the most important components of data protection. It must be implemented when we talk about the use of personal data of private individuals. The level of information security measures must also be chosen according to the risk level of processed data.
The use of personal data always carries risks, but it is important how these risks are addressed. EU case-studies clearly demonstrate that supervisory authorities consider the efforts of the company to a significant extent both before and during the resolution of an incident.
Today’s products and services often involve the processing of personal data, and therefore, in addition to the benefits of data, there are also associated obligations. Around the world, stronger data protection rules are being enacted, following the example of EU, and in international competition, both investors and customers perceive the protection of personal data as part of the value of products and services.
