Data Privacy Strategies for Mitigating Inherited Data Risks
An inheritance is not always a good thing, especially when your organization is inheriting Data Privacy risks.
Inherited data risks refer to the potential data privacy challenges that arise when an organization acquires data from another company through business transactions such as acquisitions, mergers, partnerships, or normal business processes. These risks are primarily associated with the data the acquiring company inherits without being involved in its original collection, management, or governance. Inherited data risks present significant and often hidden challenges, primarily from inadequate knowledge of data's provenance and lack of data sensitivity classification, which may cause misalignment with privacy obligations.
This essay outlines effective Data Privacy strategies for mitigating inherited data risks, focusing on understanding data lineage, recognizing sensitive data, and treating privacy as a strategic business risk.
Inherited Data Privacy Risk: Poor Data Lineage
Understanding Data Lineage is not just a best practice but a crucial necessity for organizations to effectively manage inherited data risks. Poor Data Lineage can often lead to hidden risks, potentially resulting in legal and reputational damages when organizations assume they have no obligation to understand data origins. Data lineage involves tracking the life cycle of data, including its origins before your organization received the data and what legally can be done with the data within the organization. By implementing data mapping protocols, organizations can better understand data intake and data flows, ensuring any inherited data can be accurately tracked from its source. Regular audits and documentation are vital to keep the data lineage records accurate and reflective of current data practices. Also, training programs for employees on the importance of data lineage can enhance an organization’s ability to manage data responsibly and recognize potential risks in data inheritance.
Inherited Data Privacy Risk: Lack of Classification for Sensitive Data
The recent developments, such as President Biden's Sensitive Data Executive Order and the Federal Trade Commission (FTC) case against X-Mode/Outlogic, underscore the urgent need for organizations to recognize Sensitive Data. This need will become more important, especially with the FTC’s action against X-Mode/Outlogic and President Biden’s Executive Order reinforcing the critical nature of categorizing sensitive data such as location and personal information. Immediate action is required to ensure compliance and protect the organization's reputation.
Although the Biden Executive Order on Sensitive Data is about data of US individuals sent to countries of concern, the blueprint established for categorizing sensitive data will likely become the norm in organizations regardless of whether organizations are in danger of sending sensitive personal data to countries of concern. The Executive Order categorizes sensitive data into six categories: personal finance (such as credit card information), health (such as medical records), geolocation (such as GPS data), precise geolocation (such as real-time location data), biometric identifiers (such as fingerprints), and human genomic data (such as DNA sequences). Understanding what data is sensitive or not will become a crucial data point for organizations to fully track and understand in the future.
In the X-Mode/Outlogic the FTC stated that organizations who sell sensitive data must verify that they have proper individual consent for sensitive data, even if it is received from another company. Organizations should establish data classification frameworks to accurately identify and categorize sensitive data, ensuring compliance with privacy obligations. Enhanced protective measures such as encryption, access controls, and secure storage and using privacy enhancing technologies (PETs) like anonymization tools, data loss prevention systems, and secure data sharing platforms can be applied to protect sensitive data from unauthorized access and breaches. Additionally, conducting Privacy Impact Assessments, including questions about inherited data, will help organizations understand risks associated with sensitive data and implement appropriate mitigation measures.
Inherited Data Privacy Risk: Not understanding that Data Privacy Risk is Business Risk
Treating Data Privacy as a Business Risk involves integrating privacy considerations into the organization's broader risk management framework. This means that privacy risks should be evaluated with the same rigor as financial or other operational risks. Data is one of the most valuable assets in organizations, and having a better understanding of inherited data risks will be vital for organizations in the future.
This approach ensures that privacy risks are evaluated as a foundational area of concern with the same rigor as financial or other operational risks. The active involvement of senior management in privacy issues is crucial as it ensures that adequate resources and attention are dedicated to data privacy risks of inherited data, not just in the legal sphere but also in the day-to-day operational sphere of the organization. Organizations need to understand inherited data risks as data rights become more complex.
Managing inherited data risk is critical for organizations engaging in business transactions involving data acquisition. By adopting comprehensive data mapping protocols, establishing robust classification frameworks, and treating privacy risks as significant business concerns, organizations can better safeguard against the potential pitfalls associated with inherited data. Additionally, the involvement of senior management and the continuous education of employees about data privacy is crucial to ensuring that privacy obligations are met and that the organization remains compliant with evolving regulatory requirements. Managing inherited data risks effectively protects the organization and upholds its stakeholders' trust and confidence while making Data Privacy a Business Advantage.
