Understanding and Assessing GDPR Compliance Risks

The main goal of GDPR is to standardize how companies approach data privacy and data security when processing EU citizens’ data. This is especially important as information sharing has become an essential part of every business we deal with. We rarely know where our data goes and how it is processed and/or protected. GDPR states that all of the Data Controllers (any company that processes EU citizens’ data) must have appropriate technical measures and security techniques in place to protect said data. The concept itself is simple, but in practice many companies still struggle with GDPR compliance.

The basics of GDPR compliance

There are four main requirements of GDPR – data control, privacy rights, governance, and data security. Organizations are also required to inform the authorities about any data breach that might affect EU citizens’ data. Failing to inform the authorities is punishable by heavy fines.

Another important point of GDPR is the requirement of “Privacy by design”. This approach implies that both data security and data privacy are a part of the entire data processing procedure. Data protection must be a part of the company’s daily operational process and not just an addition that was added in later and lacks effectiveness.

The very nature of GDPR dictates the risk-based approach to data protection for all of the companies under said regulation. GDPR’s main focus is the safeguarding of citizens’ data, however it can also help with assessing your risks as a company which can lead to a better understanding of your vulnerabilities and weak points.

GDPR compliance risks

GDPR as regulation is encompasses far more than just compliance – it’s also capable of affecting many other risks that companies deal with on a regular basis. Next, you’ll see some of the bigger GDPR compliance risks that must be given priority in this context:

Compliance

One of the main concerns for the majority of companies when it comes to GDPR compliance is the size of fines that are imposed for the compliance breach. Fines of up to up to €20 million (roughly $20,372,000), or 4% of worldwide turnover for the preceding financial year – whichever is higher can be levied on an organization.  This amount of fines would be devastating for a lot of businesses.

Legal 

GDPR is applicable to any company that processes EU citizen data – regardless of where they are physically located. It’s as important for EU organizations as it is for an company outside of the EU. This also raises the question of potential conflicts with the local regulations, as well as the so-called grey areas for GDPR – anti-money laundering regulations and similar ones. The problem of these regulations clashing should be investigated on a case-by-case basis at the earliest convenience.

Cybersecurity

Ideally, all companies should have appropriate data security levels to begin with. Unfortunately, that’s not always the case. Companies should pay close attention to their data security and privacy measures, updating and expanding them when necessary to cover GDPR and any local regulations. The same goes for disaster recovery plans and business continuity.  GDPR compliance needs to become interwoven with a lot of your business processes to work as intended.

Reputational 

Another part of GDPR compliance risks entails several new rights that were appointed to every EU citizen. This includes the right to find out what data the firm holds about you, the right to erase said data, the right to refuse to be subject to automated decision-making when it comes to your data, and so on. The implementation of technologies to make these rights work is a difficult process and should be started as early as possible to prevent compliance breaches.

Information Technology

GDPR requires privacy and security by design –  but also by default – and must be operationally demonstrable. Giving GDPR-related risks more priority within your company is recommended to prevent unexpected compliance breaches in the first place.

Risk assessment and GDPR

The entire process of a company enforcing their compliance to match GDPR requirements varies greatly, depending on a lot of factors. However, there are some important points that must be included in every risk assessment effort.

The first step of many is to understand both the type and the nature of personal data that the company is processing on a regular basis. This first step is similar to the one performed at the beginning of the data classification process, although this one is more specific and does not necessarily concern the entirety of data that the company has in its database.

After determining what personal data you have as a company and how it is processed – it’s time to start working on your data protection assessments, and you might have to perform privacy impact assessments, too. A Data Protection Impact Assessment (DPIA) can be valuable tool to shows you are in compliance with GDPR and avoid sanctions.  It is also mandatory where data processing “is likely to result in a high risk to the rights and freedoms of natural persons”.  DPIA is a process of assessing your methods of data processing to determine whether your methods create various GDPR compliance risks. Identifying privacy risks beforehand helps with figuring out a method to shore up your weak points without facing the consequences of a data breach if someone manages to find that specific weak spot before you do.

Additionally, compliance with GDPR also requires you to prove your accountability to various data protection authorities (DPA), both in the form of documented evidence of your security efforts and in the form of demonstrations. After all, even though security “by design” is one of the main cornerstones when it comes to GDPR, security “by default” is also required. You must prove that the privacy and security efforts that you’re making are part of your daily list of operations and not just a one-off effort in the first place.

Bringing it all Together

Summarizing everything above, your GDPR compliance efforts need a documented methodology – your own set of rules that defines how you’re performing risk assessments and other operations to ensure that your data protection priorities and practices meet the requirements.

Your GDPR compliance methodology should also include:

• Risk scale – showing the amount of damage that this particular risk might inflict.
• Baseline security criteria – a bare minimum of efforts required to protect your company from all these risks.
• Scenario-based risk management – plans to mitigate the consequences of an incident connected with one of your risks.
• Risk appetite – a level of risk that a company is accepting.

GDPR compliance is a sophisticated topic with a lot of nuances, and there’s a lot of areas when failure to comply might result in a compliance violation. Figuring out all of the potential compliance-related risks for your company and working on them with maximum priority is probably the most effective way of dealing with various GDPR compliance risks and their consequences.