Even though data privacy compliance isn’t a legal matter that generates revenue, it can cost companies millions when done incorrectly.
Proactive data privacy compliance can be a huge strategic advantage for businesses, and a great opportunity for legal to demonstrate their value to the business.
Here’s what in-house lawyers need to know about data privacy compliance.
What is data privacy compliance?
Data privacy compliance is the practice of adhering to the data privacy regulations set by regulatory bodies.
One of the most popular and far-reaching privacy regulations is the General Data Privacy Regulation (GDPR), which requires businesses to be transparent about how they collect and use consumer data. Since then, several other data privacy regulations have been enacted across the globe, including a few in the U.S.
Why is data privacy compliance important?
In addition to costing companies millions each year, non-compliance also wears away at consumer trust. These costs add up, and when unattended, can leave a company bankrupt and unable to compete in their chosen market.
Here are three reasons data privacy compliance is crucial to your business:
Whatever money your company has generated through sales efforts would be immediately eroded by fines for non-compliance. This year so far, GDPR has issued over $1.6 billion in fines for non-compliance. After enough of these, your business will no longer be financially salvageable.
Trust is an important factor when it comes to the modern consumer. Seventy-one percent of consumers won’t do business with a company they don’t trust. Repeat data breaches often indicate to consumers that they can’t trust a business to keep their data safe. This makes it impossible to build a strong relationship with and create good experiences for your customers.
Thanks to the increasing connectivity of modern businesses and the growing sophistication of cyber attacks, cybersecurity threats have significantly increased. Now more than ever, businesses have to take every precaution to protect their customers’ data. Since there’s no guarantee your company won’t experience a data breach, you need to ensure DPIAs are in place to mitigate the effect of the breach.
Between business expenses and the cost of poor public opinion, your company needs to invest in data privacy compliance.
Best practices for data privacy compliance
There is no one-size-fits-all solution to data privacy compliance. Doing it well requires a sustained, collaborative, and strategic effort to build a program that effectively meets your business and customers’ needs.
Here are some data privacy compliance best practices that can help your business:
Track data privacy regulations
In 2023 alone, five data privacy regulations have gone into effect. While it may be tedious to track regulations, it’s also critical to a healthy compliance program.
This means legal and compliance teams need to tap into their networks, set alerts from internet sources, and talk to other business leaders about what they’re seeing to be as prepared as possible for upcoming privacy laws.
Knowing what regulations are relevant to your business is a crucial first step in knowing how to implement compliance into your processes and documents.
Conduct regular compliance audits
Regular audits of your contracts and data collection processes are necessary to maintain data privacy compliance.
Check in with other teams
As product and development teams build out more features for your product and other teams acquire more SaaS tools, it’s important for legal, compliance, and security teams to keep track of what kind of data your teams collect and how they use this data.
Check in with your teams on a regular basis to gain insight into whether or not your internal data collection practices align with privacy regulations. Build a process that allows your teams to self-report at regular intervals so you always have a finger on the pulse of what’s going on.
How Contract Lifecycle Management (CLM) can help with data privacy compliance
Contract Lifecycle Management (CLM) tools can help businesses maintain compliance. Here are some key features and capabilities that enable legal and compliance teams to comply with regulations:
System of record
CLM also lets you maintain a system of record, which tracks everything that happens to a contract during its lifecycle. With audit trails and version control, your team can track the contract process and prove compliance.
Contract analysis and reports
With CLM software, legal and compliance teams can generate reports on contract risk. Combined with AI contract analysis, CLM can read contract data and spin up reports on which contracts have missing clauses, how many contracts contain the global privacy terms, and which ones have inconsistent language in their terms. This allows you to track and maintain compliance more efficiently.
Data privacy compliance is a cross-functional effort between legal, compliance, and other risk-assessing teams like finance and procurement. Maintaining compliance not only saves you money in the long run, it also helps you increase trust between your business and consumers. CLM technology empowers your compliance teams to efficiently and effectively manage compliance and keep your business safe. Contact us today to learn how to keep your company compliant.
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