What is Data Privacy?
Data Privacy or Information privacy is a part of the data protection area that deals with the proper handling of data focusing on compliance with data protection regulations.
Data Privacy is centred around how data should be collected, stored, managed, and shared with any third parties, as well as compliance with the applicable privacy laws (such as California Consumer Privacy Act- CCPA or General Data Protection Regulation GDPR).
Along with Data Security, Data Privacy creates a Data Protection area with protected usable data as an output.
However, Data Privacy is not just about the proper handling of data but also about the public expectation of privacy, centring around the individual as a key figure.
Elements of Data Privacy
Data Privacy or Information privacy encompasses 3 elements:
- Right of an individual to be left alone and have control over their personal data
- Procedures for proper handling, processing, collecting, and sharing of personal data
- Compliance with data protection laws
Why is Data Privacy important?
Data protection laws around the world aim to give back individuals control over the data, empowering them to know how their data is being used, by whom and why, giving them control over how their personal data is being processed and used.
In 2019, 73% of customers said trust in companies matters more than it did a year ago, and we can just assume that the numbers have gone up. Read 100 Data Privacy and Data Security statistics for more insight.
That is why organizations need to learn how to process personal data while protecting privacy preferences of individuals. This is what individuals expect from organizations. This is their vision of privacy.
The importance of Data Privacy was further enhanced with the introduction of the General Data Protection Regulation.
According to Gartner’s predictions for the future of privacy, privacy is today what “organic” or “cruelty-free” was in the past decade.
From the business perspective, protecting personal data and putting an emphasis on data privacy can have multiple positive impacts on the organization.
From meeting customers’ expectations to achieving competitive advantages in the form of a higher quality of data, improved customer experience, and greater investor appeal and brand.
Are there any legal definitions of Data Privacy?
Although the GDPR was not the first privacy law, it was the most comprehensive and groundbreaking data protection law that reflected the new digital era in the way data is created and managed in modern everyday business processes.
Nevertheless, GDPR nor other data protection bills like the US Health Insurance Portability and Accountability Act (HIPAA), California Consumer Privacy Act (CCPA), or the Children’s Online Privacy Protection Act (COPPA), gave a strict definition of what Data Privacy is.
1. Data Privacy is not the same as Data Security
To properly protect data and comply with data protection laws, you need both Data Privacy and Data Security. Even though these two terms can look similar, their distinctions are clearer once you start to dissect them.
Data Privacy definition
Data Privacy focuses on the rights of individuals, the purpose of data collection and processing, privacy preferences, and the way organizations govern personal data of data subjects.
It focuses on how to collect, process, share, archive, and delete the data in accordance with the law.
Data Security definition
Data Security includes a set of standards and different safeguards and measures that an organization is taking in order to prevent any third party from unauthorized access to digital data, or any intentional or unintentional alteration, deletion or disclosure of data.
It focuses on the protection of data from malicious attacks and prevents the exploitation of stolen data (data breach or cyber-attack). It includes Access control, Encryption, Network security, etc.
What is more important for your organization?
Imagine that your company introduces elaborate data security methods using all the necessary means and available measures to protect data, but has failed to collect that data on a valid lawful base.
No matter the measures of securing your data, this would be a violation of data privacy.
This example shows us that data security can exist without data privacy, but not the other way around.
2. Importance of Data Privacy and Transparency
In this age of data economy, true company value lies in the collected customer’s data. This means data is an asset worthy of protecting and keeping.
What companies keep forgetting is that the personal data of individuals processed by the companies are only borrowed.
Privacy laws enable individuals to exercise their rights, such as the right to be forgotten, and in certain circumstances, individuals can take back ownership of their data.
In order for companies to keep the data and keep the trust, they will have to demonstrate transparency by openly communicating what data they collect, for what purposes, who is a data processor, and so on.
If you want to read more about how data breach affects the customer relationship or how to (re)connect with customers and build trust [numbers & research], we recommend:
3. Privacy is the right to be left alone
Why is privacy so important? You have nothing to hide, right?
Well, privacy is your right to be left alone, and while it might not be challenged at this moment, it should still be protected.
You should be able to exercise your right to privacy when you want it and if you want it.
This has been recognized by governments worldwide and resulted in numerous data protection laws.
GDPR is set out to shape Europe’s digital future and therefore prescribes huge fines in order to protect the privacy of an individual and control the data traffic of its citizens, violation of GDPR rights can result in huge fines.
In the adjustment period, the regulatory authorities were very moderate when proposing GDPR fines, but trends show that they have started to prepare organizations for more considerable fines.
4. Consequences of non-compliance
With the development of technology, there is an increasing number of intrusive ways to collect and process personal information.
Very soon, it will become incredibly risky for companies to navigate through data privacy laws unprepared. Companies will be at risk of fines and lawsuits, while their reputation and customer loyalty will be put to test.
In 2019 Facebook has set aside$3 billion to $5 billion for ongoing inquiries regarding multiple data breaches and mishandling of data (a practice we don’t recommend).
The right approach is taking proactive steps and measures, like implementing appropriate data safeguards or implementing data protection software that will help you guide your privacy program and automate processes.
Although initially, this can require a certain investment of resources and money, a potential data breach can cost your company more than you think.
According to the Cost of a Data Breach Report 2020, conducted by the Ponemon Institute, the average total cost of a data breach is USD 3.86 million:
This can be a valid argument for creating urgency for organizations to start investing in their privacy program and compliance since they will be accountable for the consequences and the costs of the breach.
5. There are more and more privacy regulations worldwide
GDPR is not the first privacy law, but many data privacy laws before GDPR were outdated, given that both technology and the way we communicate and share our data have changed greatly in just a few years.
General Data Protection Regulation marked the first serious intent to control the excessive exploitation of personal data and to fine both data processors and data controllers appropriately.
Most importantly, GDPR has given data subjects the power to regain control over their privacy.
After the GDPR, the US Congress passed similar laws, and more soon to follow. You can read more about this in our article 7 Data Privacy Trends for 2020
In the years to come data protection laws will continuely evolve, as will data privacy.
Organizations should take this into consideration when creating their business plans, strategy, and marketing activities. Not only because of fines but also because this is what individuals will expect.
There are also numerous benefits from aligning with data protection laws, from competitive advantage to digitalization.
The percentage of organizations saying they receive significant business benefits from privacy has grown from 40% in 2019, to over 70% in 2020. Benefits vary from operational efficiency, agility, innovation, investor appeal, and brand value.
Worldwide trends in Data Privacy
A long list of data privacy law initiatives is indicating that there is an accelerating change in the way companies and individuals are recognizing the value and importance of protecting user data.
Thriving businesses have already started to form their future data privacy and data protection strategies.
The Big Four each have had their own struggles with positioning themselves as trustworthy companies. However, they have one thing in common. They have recognized the importance of data privacy.
Apple’s CEO, Tim Cook, is repeatedly giving passionate speeches about data privacy initiatives provoking, comprehensive U.S. data-privacy law focused on minimizing data collection, data security, and informing users.
No matter the motives of companies, one thing cannot be overlooked, IAPP research indicates that by 2022, half of our planet’s population will have its personal information covered under local privacy regulations in line with the GDPR.
Companies will need to be able to demonstrate compliance and show transparency in the way they handle data.
How can you achieve your compliance goals faster?
We are exchanging more data than ever, and in ways, we haven’t before. The technology is changing and this requires data privacy solutions to follow that change.
Data Protection laws grant individuals certain rights (right to data portability, right to be informed, the right to rectification …), and companies are obligated to fulfill these rights within the statutory deadline (yes, there are always exemptions).
Data privacy software can help you achieve and demonstrate compliance by automating and operationalizing data privacy principles. Privacy software tracks your statutory deadlines for each data subject request and helps you understand your customers better.
This article was originally posted on Data Privacy Manager.
