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Know Your Compliance Risks: From GDPR to ePrivacy
The General Data Protection Regulation (GDPR) went into effect at the end of May, and while many organizations have already complied with the regulation, many others don't think it applies to them. In the weeks and months ahead, organizations will continue their ongoing efforts to comply, but there is also the looming ePrivacy regulation, which will complement GDPR, that will require attention.
To ascertain the background and risks as they relate to GDPR and also to learn more about the pending ePrivacy regulations, I reached out to Greg Sparrow, SVP at CompliancePoint, which provides customer engagement and enterprise preference management solutions.
What where the issues before GDPR went live that caused the creation of these regulations?
The GDPR exists for a myriad of reasons. The Data Protection Directive (DPD) existed as guidance for the EU member states to create their own regulation, which led to confusion for all involved, including the member states, consumers, and organizations to comply.
But technology and the economy are always evolving. Organizations have realized the profit potential of people's personal data and the information they can derive from it. Further, regulators wanted consumers to have more insight into how organizations were processing their data and have some input into the processing. Finally, regulators wanted to ensure that organizations have reasonable safeguards around the personal data, especially given the recent uptick in data breaches that have resulted in millions of consumer records being exposed.
What is needed to be done to comply with GDPR?
This regulation applies to the processing of EU personal data of employees and consumers, regardless of whether or not the organization has a physical presence in the EU. Companies need to comply with:
- Data subject rights
- Privacy principles
- Security controls
- Breach response
- Technical and security controls
- Ongoing monitoring, etc.
What are the perceived risks, financial and otherwise?
Yes, there are large financial penalties for violating the GDPR. The fines can be up to 4% of global revenue or 20 million euro, whichever is greater. Further, consumer trust in the organization and stock price may plummet. Organizations want to ensure they are complying to keep hard earned consumer trust and to avoid financial penalties. Once you are in the eye of the regulators, you will be hard-pressed to get out of the spotlight.
How do you mitigate those risks?
To mitigate risks, organizations must be transparent with consumers about how they are processing their personal data. Organizations need to comply with the GDPR by developing governance, operational, and technological controls for all areas of the GDPR, including data breach response, data subject rights requests, data protection impact assessments, privacy by design and by default, etc.
Finally, organizations should work with their supervisory authorities to receive guidance and have a working relationship instead of just hearing from the supervisory authority if an issue arises.
Are there ongoing efforts required or was this a one-time solution?
Yes, there are ongoing requirements to comply. The GDPR is not "set it and forget it." There are ongoing obligations to ensure you meet the principles, rights, and security requirements and that you demonstrate a monitoring and enforcement program that ensures your compliance program is meeting the requirements set out by the GDPR.
For example, data subjects will continue to test organizations by exercising their rights under the GDPR. Data breaches will continue to occur, and organizations must be capable of demonstrating they can meet their obligations with each of these by fulfilling these requests and managing their breach response procedures effectively.
I've read about ePrivacy. Where does that fit?
The ePrivacy regulation, when finalized, will complement the GDPR. Its goal will be to protect consumers' communications -- i.e. email, messages via over the top providers, and other electronic messages. It will also have requirements around cookies and how organizations can market to people in the EU.
There is no set date on when the ePrivacy regulation will be finalized, but organizations should be prepared to implement additional safeguards and technological changes that will be required as a result of the regulation.
Are there potential conflicts with regulations of other nations or states that those complying with GDPR should know about?
There will also be conflicts with other laws around the world, and organizations will need to ensure they work with their legal counsel and consultants to remain aware of the laws and how to comply operationally as these laws are continually evolving.
There is a California regulation that has been passed that is being called the mini-GDPR and provides rights to consumers about how organizations sell and share their personal data for marketing. This needs to be accounted for and complied with, and some of the provisions may conflict with the GDPR.
While the GDPR has exceptions to compliance if it conflicts an EU member state regulation, this is not applicable to U.S.-based regulations and is difficult to meet. Lastly, the GDPR provides individual EU member states the ability to create their own data protection laws, which may be more stringent than the GDPR.