As startups continue to grow and create awareness for their brand, they must ensure all compliance requirements associated with conducting business are met. This includes ensuring the correct paperwork has been completed before hiring remote staff. During rapid growth, startups must also ensure they meet the data and privacy compliance requirements in the jurisdiction they operate.
Since growing startups collect an increasing volume of sensitive data from employees and customers alike, fast-growing startups need to understand the intricacies of data privacy.
From exploring the implications of data protection laws to generating strategies for implementing and maintaining effective data protection measures, here's everything you need to know to remain compliant with data requirements!
What is Data Privacy Compliance?
To begin, let's take a closer look at the term data protection.
Data protection is the term given to the protective measures that safeguard various types of sensitive data against unauthorized access, alteration, destruction, or use. In simpler terms, data protection provides the necessary security measures to prevent data breaches and leaks post-data collection.
Data protection is one way to ensure data privacy since it provides insights into how and where to store your data, so you can keep your intellectual property (IP) safe.
Data privacy compliance is the act of implementing internal policies that help safeguard the data collected for business operations. It is also the process of meeting data privacy regulatory standards such as the European Union's GDPR, California's CCPA, and Canada's PIPEDA.
Failing to comply with European Union's GDPR, California's CCPA, and Canada's PIPEDA data compliance can result in significant fines and penalties. GDPR provides supervisory authorities the power to impose administrative fines for non-compliance. The fines can be up to 4% of a company’s global annual revenue or €20 million, depending on whichever is greater.
Significance of Data Privacy Compliance
With the increasing reliance on technology and the collection and storage of customer data, startups must comply with data privacy regulations to stay out of trouble.
Here's why:
- Data privacy protects employees' or customers' personal information and ensures data is not misused or exploited. Protect sensitive information to prevent unauthorized access and mitigate the risk of a data breach or a cyberattack.
- When startups implement effective data privacy policies, companies build trust with clients, customers, and shareholders. It shows them that the organization values their privacy and is actively protecting sensitive information.
- Data privacy also applies to sensitive business secrets, the company's intellectual property, digital assets, and various other business-related data. Data privacy compliance safeguards all these forms of data.
- Data privacy compliance also fosters a startup culture where employees and stakeholders are accountable for protecting valuable information. Implementation of data privacy policies, regular training programs, annual audits, and other effective measures to ensure each employee understands and respects the importance of data and compliance.
Implications of Data Protection Regulations
As a startup, chances are you've got a significant amount of private data to handle. From personal information to sensitive business secrets, you must ensure all information is collected and stored safely.
Startups need to obtain consent from individuals before collecting and processing personal data. You must clearly explain why the data is being collected, how it will be used, where it will be kept, and how long it will be stored. Specific privacy regulations of the jurisdiction the startup operates in may require an opt-out option.
Encrypt sensitive data and regularly update security systems to prevent cyber risks. Implement access controls so only authorized individuals can access the data to safeguard valuable information and meet data compliance standards.
Challenges of Data Privacy Compliance
As startups navigate ever-changing data privacy regulations, they often face challenges along the way. From understanding the complex legal requirements of data privacy to the implementation of robust data privacy policies, startups must overcome all these obstacles and much more to avoid noncompliance.
Implement Strict Policies and Procedures
Compliance with privacy regulations involves implementing strict policies and procedures to ensure information is collected, stored, and processed properly. For startups with limited resources and expertise, this can be a daunting task because failure to comply will result in hefty penalties, reputational damage, or even unrecoverable financial losses. In fact, a study by Globalscape suggests that the cost of non-compliance is 2.71 times higher than the cost of implementing adequate measures.
Judicial Compliance
Startups also need to understand and comply with the various legal regulations that operate in their jurisdiction. Whether it's the Payment Card Industry Data Security Standard (PCI DSS), Health Insurance Portability and Accountability Act (HIPAA), General Data Protection Regulation (GDPR), California's CCPA, and Canada's PIPEDA, startup companies must consider the requirements of all relevant data protection legislation.
Strong Privacy Policies
Strong privacy policies include training employees, establishing secure storage systems such as using cloud services, or regularly auditing the data collection and storage process.
Customer Trust
Since startups are still in the process of establishing themselves in competitive or emerging markets, building trust is vital for customer acquisition. Build a positive brand reputation to increase customer loyalty.
Navigate Data Privacy Compliance
Navigating data privacy compliance can be daunting, especially for growing startups. However, insights into data privacy rules and regulations help startups avoid non-compliance penalties.
Identify
The first step to successfully navigating data privacy compliance is to identify and classify the areas where sensitive data is collected and kept. Conduct data mapping exercises to identify the lifecycle of information, along with areas where the system could be vulnerable to a potential data breach or cyberattack.
Establish
The second step is to establish a safe and secure data backup procedure. Be proactive and ensure you can access important information at all times in case of system failures or other unpredictable circumstances. Identify and develop backup systems to recover vital information.
Implement Encryptions
Encrypt sensitive information to prevent unauthorized individuals from accessing your data and keep all private information protected. Encryptions convert data into unreadable formats, preventing access from unauthorized parties.
Training and Awareness
With a bit of awareness and training, educate your employees to ensure data compliance. Through training programs, data privacy awareness workshops, and conferences, you will minimize the risk of common threats such as phishing scams and data breaches.
Establish a Robust Framework
A well-structured framework provides a concrete foundation for the growth and success of your startup. Develop effective strategies to streamline privacy processes, enhance efficiency in storing data, and mitigate compliance risks.
A robust framework identifies the company's goals, objectives, security measures, and strategic initiatives. A strong privacy framework also assists in scaling a startup since it standardizes privacy policies that adapt and respond to changing market conditions, operational objectives, and judicial privacy regulations.
Implementation and Maintenance Strategies
Regular Training and Awareness Initiatives
To ensure startup employees understand their roles and responsibilities regarding data and privacy compliance, regular training sessions and awareness initiatives should be implemented. These training and awareness sessions include data risk management solutions, ways to safely handle sensitive data, backup and recovery tactics, and other basic privacy compliance regulations.
Ongoing Monitoring
Regularly performing audits and assessments to evaluate the effectiveness of your data protection measures and making the necessary adjustments or updates can ensure sensitive information remains private.
Updated Security Systems and Software
Regularly update security systems and software to mitigate potential cybersecurity threats. Security systems and software such as firewalls, antivirus programs, and intrusion detection systems are ideal solutions that prevent unauthorized access to your network and data.
While these are just a few effective strategies you can use to implement and maintain robust data security measures, data compliance and security are sensitive topics that should be prioritized by growing startups.
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Disclaimer
Borderless does not provide legal services or legal advice to customers, contractors, employees, partners, or the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
