Conducting DPIAs – Proactive Risk Management or Compliance Obligation?
A Data Protection Impact Assessment - DPIA - is a critical tool in identifying and mitigating risks associated with personal data processing activities. It is mandatory where data processing is likely to result in a high risk to individuals’ rights and freedoms.
DPIAs help organisations ensure obligatory compliance and safeguard personal data, but correctly performed, they can also be leveraged as proactive risk management. Yet, performing a DPIA effectively presents numerous challenges. These range from understanding regulatory requirements, obtaining stakeholder cooperation, identifying the risks and implementing mitigation strategies to dealing with technological and operational complexities.
How shall the organisation tackle these challenges? Some key takeaways are to:
- identify business stakeholders on various levels within the business
- keep the company’s ROPA (Records of Processing Activities) updated
- establish a privacy program with adherent policies, processes and risk management strategies
Let’s dive into the details.
Understanding the Legal and Regulatory Requirements
Although the GDPR provides a structured approach to DPIAs, organisations often struggle to determine when a DPIA is mandatory. GDPR requires DPIAs for processing activities that pose a high risk to individuals, but the definition of “high risk” can be subjective; the lack of clearly defined thresholds makes it difficult. Screening questions may guide in the decision but can at the same time be a blunt instrument not catching nuances that are in fact of decisive nature.
Adding to the complexity, data protection laws as well as case law / judicial practice continuously evolve to keep up with emerging technologies. Organisations must therefore monitor updates as failure to adapt to changing legal standards can lead to incorrect decisions, resulting in non-compliance.
Identifying and Engaging Stakeholders
A DPIA requires input from various departments, including Privacy Office, IT, compliance – and not least the responsible business operations. Coordinating these teams and ensuring active participation can be challenging. Often, departments operate in silos, leading to fragmented risk assessments.
Some stakeholders may resist DPIA processes due to concerns about additional workload, perceived bureaucracy, fear of revealing compliance gaps and fear of data privacy standing in the way of business goals and development. Overcoming this resistance requires strong internal voices and demonstrating the value of DPIAs in protecting business interests as well as promoting how data privacy compliance can actively enhance business reputation and by that increase business revenue.
One important aspect of stakeholder engagement is that many employees lack awareness of DPIA requirements and do not fully understand their role in the process. This lack of knowledge can lead to incomplete or inaccurate assessments and the fact that important information that may impact risk is omitted. Organisations need to provide continuous training to ensure that stakeholders are well-informed.
Data Mapping and Identifying Processing Activities
Organisations often lack a complete understanding of the personal data they process. Without an up-to-date data inventory, the so-called ROPA, it becomes difficult to assess risks accurately and identify high-risk activities that might fall within the scope for DPIAs.
Identifying all data processing activities, data flows, and dependencies is a complex and time-consuming task, further complicated by unstructured data storage and matrix organisations. Data privacy management software may ease the task and facilitate processes.
Clearly defining the purpose of data processing is crucial for a DPIA. However, organisations often struggle to identify purposes in compliance with principles such as purpose limitation and data minimisation. This uncertainty increases regulatory risk.
Risk Identification and Assessment
Assessing risks associated with data processing often involves a degree of subjective judgement. Different stakeholders may have varying perceptions of risk leading to inconsistencies in evaluation. Standardised risk assessment frameworks can help but may not account for all aspects.
In addition, many organisations struggle to quantify privacy risks in a meaningful way. Unlike financial or operational risks, privacy risks are harder to measure due to their qualitative nature. As guidance moving forward, the Swedish data protection authority, Integritetsskyddsmyndigheten (IMY), has recently published their new DPIA guidelines in which the proposed approach is to categorise probability and severity on a four-grade scale and then describe the risks in running text, as the reasoning behind the assessment risks being lost using traditional combined numerical risk matrix methods.
New technologies, such as artificial intelligence, introduce unique privacy risks, requiring continuous adaptation and closer cooperation with other disciplines. Organisations have the challenge of balancing the need for innovation and operational efficiency with data protection requirements. Implementing strict privacy measures may slow down business processes, leading to tensions between Privacy Office and business leaders.
Implementing Risk Mitigation Measures
To address risks, mitigation measures need to be implemented. However, these measures can be costly, technically complex, not possible due to organisational structure or simply disruptive to existing workflows.
Unlike cybersecurity, where best practices such as encryption and firewalls are well defined, privacy risk mitigation lacks universal standards. Organisations must therefore develop tailored strategies that align with their specific risks. This is a delicate task that requires skills, knowledge and extensive experience – it is a craft.
Leadership may resist the changes that are required to enhance data protection. For example, modifying data collection practices or enforcing stricter access controls can face pushback from business units that do not prioritise compliance in their day-to-day operations.
Documentation and Record-Keeping
The GDPR requires organisations to document DPIA findings, decisions and risk mitigation measures. This documentation must be thorough and justifiable in the event of a regulatory review. However, maintaining detailed records can be time-consuming.
Different teams may take varying approaches to DPIA documentation, which may lead to inconsistencies. Organisations must therefore establish clear guidelines. Furthermore, DPIAs are not one-time exercises; they require periodic reviews and updates as processing activities change. Organisations often struggle to maintain and update DPIA records over time. A data privacy management software may prove a good investment in that it enhances efficiency and creates standardisation.
Third-Party and Supply Chain Risks
Organisations increasingly rely on third-party vendors for data processing. Ensuring that these vendors comply with data protection laws and conducting DPIAs for outsourced activities is a significant challenge, but necessary to identity all risks in scope.
Data processing agreements (DPA) will ensure vendor compliance with DPIA requirements, however, negotiating these terms with third parties can be complex, especially when dealing with global service providers with strong market positions. Furthermore, organisations must continuously monitor third-party compliance. Regular audits and assessments are necessary but can be resource intense.
Integrating DPIAs into Business Processes
Many organisations treat DPIAs as compliance checkboxes rather than proactive risk management tools. This reactive approach reduces their effectiveness in preventing privacy risks. At the same time, traditional DPIA processes may not align with fast-paced business operations and may therefore need to be reviewed.
Data protection should be a fundamental part of an organisation’s culture. However, many organisations struggle to integrate DPIA processes into decision-making. Leadership support and employee engagement are crucial for fostering a culture of awareness.
Regulatory Engagement and Handling DPIA Outcomes
Data protection authorities may request DPIAs for review and organisations must be prepared to justify their assessments and risk mitigation measures effectively.
A DPIA may identify significant risks that cannot be effectively mitigated. In such cases, organisations must decide on next steps and may need to consult with data protection authorities. Engaging with regulators requires a well-prepared approach to address potential concerns.
Proactive Risk Management
Conducting DPIAs is a complex yet essential process for organisations processing personal data. While DPIAs help organisations identify and mitigate privacy risks, they, at the same time, present several challenges, including regulatory uncertainty, stakeholder resistance, data mapping difficulties and risk assessment subjectivity.
To address these challenges, organisations must develop a structured DPIA approach, invest in training and awareness, adopt standardised risk assessment frameworks and templates – or possibly invest in data privacy management software – and integrate DPIAs into business processes. Furthermore, continuous monitoring, regulatory engagement, and proactive risk mitigation strategies can enhance the effectiveness of DPIAs.
As data protection regulations continue to evolve, organisations that embrace DPIAs as a proactive risk management tool rather than a compliance obligation will be better positioned to safeguard personal data, build customer trust, reduce regulatory risks and drive business innovation.
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