The Complete Breakdown of the Upcoming Regulation Changes
Many companies have been slow to become GDPR compliant. With potential fines of up to 4% of a company’s global revenues for noncompliance, it is critical that American organizations with operations in the EU understand the implications of GDPR and how they can navigate this new legislation.
May 25, 2018. It’s an important date for many organizations because it’s the day the European Union’s General Data Protection Regulation (GDPR) takes effect. The GDPR is focused on the protection of an individual’s sensitive personal information by companies that have that information.
If you are not aware of the date and only marginally familiar with the regulation, you are not alone. However, please do not take solace in having company. This very important legislation not only ratchets up the responsibilities of companies to properly manage the sensitive personal information for EU data subjects but also ratchets up the potential penalties for those companies that do not live up to those responsibilities.
These comments may seem to focus on companies outside of the EU, but they also apply to some of it. Many companies have concluded that there is nothing very new about the GDPR as it relates to its predecessor, the EU Data Protection Directive, and are assuming that their current approach to data privacy governance will satisfy the new regulation. As a result, they have been slow to focus on the GDPR’s requirements and impact.
Unfortunately, that is not the case. Many changes are significant and could require both governance and control modifications. Outlined below are some of the areas that are different and the topics on which organizations should focus.
Does the GDPR Apply to Me?
Ultimately, you will want a legal opinion on this. For U.S.-based organizations, a simple place to start is to identify whether the Federal Trade Commission (FTC) has jurisdiction over you. The FTC’s responsibility for consumer protection makes it the governmental agency that will help the EU enforce the GDPR in the United States. But it is not solely about consumers per se; it is about what the GDPR calls a data subject; this term is defined as a living individual to whom personal data relates. Personal data, in turn, is any information related to a data subject that can be used to directly or indirectly identify the person.
Much has been written about what constitutes the relevant data types, but the nuance of the GDPR is that it expands traditional data identifiers (name, address, national ID number) to include information about your online persona (email address, IP address, browsing history) and special category identifiers (religion, biometric data, political opinion/affiliation, etc.). If you are an organization that processes, stores and/or transmits this personal data across EU borders, the GDPR applies to you.
Areas for Particular Immediate Attention
Vendor management, incident response and data management are three major areas of immediate focus:
- Like many other regulations and information security frameworks, the GDPR emphasizes an organization’s responsibility for the way its third-party partners handle the sensitive data they share. You will likely need to ask more of and different things from your partners.
- Timetables for notification of breaches that impact GDPR-regulated data are stricter – incident-response plans need to be updated to ensure they capture and deliver these new requirements.
- The right for data subjects to get access to all the information an organization has on them and ensure that it is valid was already in force under the EU Data Protection Directive. The GDPR puts additional emphasis on those governance principles but has added the “right to be forgotten,” which essentially gives data subjects the power to tell the organization to remove all the information it has about them. How ready and capable are you for that request?
How Should I Prepare?
No matter where your organization is on the spectrum of GDPR preparation, it is wise to do the following:
- For most companies, the management disciplines affected by the GDPR include at least risk, compliance, legal and IT functions. Preparation should include ensuring there is a voice (and ongoing operational responsibility) from each of these groups – and all other stakeholders in your firm.
- If you are not sure which data types you process is regulated by the GDPR, seek outside assistance, as this is a critical component of the new regulation.
- Invest in obtaining clarity on where this sensitive data is being processed and stored. Know the applications that leverage it and make sure you know what you share with third parties and where in the world (literally) it is being transmitted. This is a non-trivial activity; organizations are always surprised by the ways in which supposedly locked-down data has leaked. If you don’t have a clear inventory of where the data is and where it’s going, it’s unlikely you’ll be able to prove to yourself and others that you are properly managing the sensitive information in your possession.
- Direct attention to your data-retention policies. Less is typically better, but many companies practice a save-everything-forever approach. There will be a logical conflict between the two ends of the retention spectrum, but spend the time to make a conscious decision on what the right balance is for your organization. Make an informed business decision about retention, and then make sure you execute it.
- Install an effective governance process around data management. The GDPR is not an event; the responsible management of sensitive information requires continuous activity and oversight. Build a program and nurture it.
For additional information on the GDPR, read Protiviti’s paper, “Preparing for the General Data Protection Regulation – The Clock Starts Ticking Now,” available at www.protiviti.com.