The Benefits of GDPR Compliance and Data Governance: Protecting Your Data and Your Business
Last Updated on: April 25th, 2023, Published on: April 25th, 2023
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In this blog, we will learn:
- Why GDPR compliance is important
- What non-compliance can cost you
- Implementing data governance and being GDPR compliant: How to make a business case?
- The ROI of GDPR: A hypothetical scenario
- How to draft an email introducing GDPR across your organization
Let us dive right in.
The GDPR regulation requires businesses to safeguard the privacy and personal data of citizens in the European Union from theft, misuse, etc. It is applicable to businesses in EU member countries and companies catering to EU customers. These organizations will also need to monitor data that is exported out of the EU.
Table of contents
- Learn from their mistakes: What multi-million dollar fines teach us about GDPR compliance
- The case for investing in GDPR compliance: How a data governance tool can save you time and money
- Investing in GDPR compliance: A 505% return on investment
- Writing a letter to your employees introducing them to GDPR
- Rounding it all up
- Becoming GDPR compliant with data governance: Related reads
While modern businesses must be compliant with GDPR provisions, let’s take a look at what non-compliance with GDPR can cause
Learn from their mistakes: What multi-million dollar fines teach us about GDPR compliance
Here are a few real-life examples of organizations that have faced significant fines due to non-compliance with GDPR:
In July 2021, Amazon was fined €746 million ($888 million) by Luxembourg National Commission for Data Protection (CNDP) - the largest ever fine for violation of GDPR. The penalty resulted from a complaint filed by 10,000 individuals against Amazon in May 2018, alleging improper processing of personal data.
The CNPD found that Amazon’s advertising targeting system infringed GDPR by lacking proper consent. The complaint was filed through a French privacy rights group, La Quadrature du Net, which supports digital freedom.
In September 2022, Meta Ireland was fined €405 million ($454 million) by the Irish Data Protection Commission (DPC) for GDPR violations related to processing children’s personal data. The DPC’s investigation focused on Instagram business accounts that publicly displayed contact information of children aged 13-17.
The DPC found that Meta failed to provide clear information to child users, lacked appropriate technical and organizational measures, and failed to conduct a Data Protection Impact Assessment.
3. British Airways
In October 2020, the UK Information Commissioner’s Office (ICO) issued a fine of £20 million (approximately €22 million) to British Airways for a data breach that occurred in 2018. The breach affected around 400,000 customers and involved unauthorized access to their personal data, including names, addresses, payment card numbers, and CVV numbers.
4. Marriott International
In October 2020, Marriott International was fined £18.4 million (approximately €20.4 million) by the ICO for a data breach that exposed the personal data of approximately 339 million guests, including 30 million residents of the European Economic Area (EEA).
The breach occurred in 2014 but was only discovered in 2018. The exposed data included names, email addresses, phone numbers, passport numbers, and dates of birth.
In January 2019, France’s data protection authority, CNIL, imposed a fine of €50 million on Google for violating GDPR principles related to transparency, information, and consent. CNIL found that Google did not provide clear and easily accessible information about its data processing practices and did not obtain valid consent from users for personalized advertisements.
In October 2020, the Hamburg Commissioner for Data Protection and Freedom of Information (HmbBfDI) fined H&M €35.3 million for violating GDPR by collecting and storing excessive amounts of employee data without a legal basis.
The data included private information about employees’ personal lives, such as family issues, religious beliefs, and illnesses, which were used to make decisions about their employment.
7. TIM (Telecom Italia)
In January 2020, the Italian Data Protection Authority (Garante) issued a fine of €27.8 million to Telecom Italia (TIM) for numerous GDPR violations, including aggressive marketing practices, failure to obtain valid consent for data processing, and inadequate security measures to protect personal data.
These examples highlight the importance of GDPR compliance and the potential financial and reputational consequences of non-compliance for organizations. Implementing robust data protection measures, adhering to GDPR principles, and regularly monitoring data processing activities can help organizations avoid such penalties and protect their customers’ personal data.
The case for investing in GDPR compliance: How a data governance tool can save you time and money
To make a strong business case for implementing a data governance tool and investing in GDPR compliance, it is important to emphasize the benefits, risks, and potential costs involved. Here’s a high-level overview of key points to include in your business case:
1. Introduction to GDPR
Briefly explain that the General Data Protection Regulation (GDPR) is a comprehensive set of data protection rules and regulations that apply to any organization processing the personal data of individuals in the European Union (EU). It has been in effect since May 2018 and is designed to protect the privacy and rights of EU citizens.
2. Legal obligations
Explain that as an organization with business units in Europe (or as the case may be), your company is legally obligated to comply with GDPR, regardless of the company’s location. Furthermore, non-compliance can result in significant fines and penalties, which can be as high as 4% of annual global turnover or €20 million, whichever is greater.
3. Reputational risks
Emphasize that non-compliance with GDPR can damage the organization’s reputation, as data breaches and failure to protect customer information can lead to negative publicity and loss of trust from customers, partners, and stakeholders.
4. Competitive advantage
Point out that investing in GDPR compliance and data governance can be a competitive advantage, as it demonstrates a strong commitment to data privacy and security. Moreover, it can enhance customer trust and loyalty.
5. Streamlined data management
Explain that implementing a data governance tool will enable the organization to efficiently manage its data, track PII and non-PII datasets, and ensure compliance with GDPR requirements. This can lead to improved data quality and easier access to accurate, up-to-date information for decision-making and reporting.
6. Cost savings
Mention that a robust data governance framework can help prevent potential fines and legal fees resulting from non-compliance. Besides, it can save time and resources by automating and streamlining data management processes.
7. Collaboration and Efficiency
Describe how implementing a data governance tool will enable the data governance team to independently access and analyze the data sets. More importantly, describe how it will reduce the reliance on your data team and increase overall operational efficiency.
8. Return on Investment (ROI)
Finally, you’ll need to provide an estimate of the costs of implementing a data governance tool and the potential financial benefits. Be sure to include cost savings from avoiding fines, penalties, and legal fees, as well as improved efficiency in data management and decision-making.
In summary, emphasize the importance of GDPR compliance for the organization’s legal obligations, reputation, competitiveness, and long-term success. Present the data governance tool as a strategic investment that will enable your company to efficiently manage its data, ensure compliance, and ultimately contribute to the organization’s growth and sustainability.
Investing in GDPR compliance: A 505% return on investment
Now, it is time to go a little deeper into this and the best way to do it is by understanding the ROI of GDPR compliance.
Let us consider a hypothetical scenario of an online retailer, “ShopSmart,” that operates in the European market and processes the personal data of EU citizens.
The current situation
ShopSmart has not yet implemented a comprehensive GDPR compliance strategy, and its data management practices are fragmented and inefficient. The company faces potential risks of non-compliance, including fines, legal fees, and reputational damage.
ShopSmart plans to invest €200,000 in GDPR compliance initiatives, which include:
- Implementing a data governance tool to manage personal data more efficiently and securely.
- Training employees on GDPR principles and data protection best practices.
- Hiring a Data Protection Officer (DPO) or engaging an external consultant to oversee the compliance process.
- Enhancing data security measures, such as encryption and access control.
- Conducting Data Protection Impact Assessments (DPIAs) for high-risk data processing activities.
The following benefits and cost savings can be attributed to the investment in GDPR compliance:
- Avoiding fines 👉 Assuming that ShopSmart’s annual global turnover is €10 million, a potential GDPR fine could be as high as €400,000 (4% of annual global turnover). By implementing GDPR compliance measures, ShopSmart significantly reduces the likelihood of facing such a fine.
- Legal fees 👉 In the event of non-compliance, ShopSmart may need to engage legal services to navigate regulatory investigations, negotiate settlements, or defend against lawsuits. This could cost the company an estimated €100,000 or more.
- Reputational damage 👉 Although difficult to quantify, reputational damage resulting from non-compliance could lead to a loss of customers and revenue. Assuming a conservative estimate of a 5% reduction in revenue due to reputational damage, this could result in a loss of €500,000.
- Operational efficiency 👉 By implementing a data governance tool, ShopSmart can streamline its data management processes, reducing the time spent on manual data handling tasks by 20%. Assuming an annual cost of €300,000 for the data management team, this efficiency gain results in a cost saving of €60,000 per year.
- Improved customer trust 👉 By demonstrating its commitment to data privacy and security, ShopSmart can enhance customer trust, leading to increased customer loyalty and retention. Assuming a 3% increase in repeat business due to improved customer trust, this could generate additional revenue of €150,000.
The total potential benefits and cost savings amount to €1,210,000 (€400,000 + €100,000 + €500,000 + €60,000 + €150,000), while the initial investment in GDPR compliance is €200,000.
ROI = (Total Benefits - Initial Investment) / Initial Investment ROI = (€1,210,000 - €200,000) / €200,000 ROI = 5.05 or 505%
In this hypothetical scenario, ShopSmart’s investment in GDPR compliance yields a significant return on investment (ROI) of 505%. It shows the true value of investing in data protection measures which also helps avoid potential fines, legal fees, reputational damage, and to improve operational efficiency and customer trust.
Writing a letter to your employees introducing them to GDPR
Now, here’s a comprehensive introduction to GDPR that you can readily use to circulate among folks who need to read.
Subject: Introduction to the General Data Protection Regulation (GDPR)
As a global news organization with business units in Europe, it is crucial for us to understand and comply with the General Data Protection Regulation (GDPR). This email provides a comprehensive introduction to GDPR, its objectives, key principles, and our responsibilities under this regulation.
What is GDPR?
The General Data Protection Regulation (GDPR) is a comprehensive data protection law that came into effect on May 25, 2018. It applies to all organizations processing the personal data of individuals in the European Union (EU) and European Economic Area (EEA), regardless of the organization’s location. GDPR is designed to protect the privacy and rights of EU citizens by ensuring organizations handle their personal data responsibly and securely.
Objectives of GDPR
- Harmonization of data protection laws 👉 GDPR aims to create a uniform set of data protection rules across the EU, making it easier for organizations to understand and comply with the regulations.
- Strengthening individual rights 👉 GDPR empowers individuals by giving them more control over their personal data, providing them with rights such as access, rectification, erasure, restriction of processing, data portability, and the right to object.
- Enhancing data protection and privacy 👉 GDPR requires organizations to implement appropriate technical and organizational measures to ensure the security and confidentiality of personal data.
Key principles of GDPR
- Lawfulness, fairness, and transparency 👉 Personal data must be processed lawfully, fairly, and transparently, ensuring individuals are informed about how their data is being used.
- Purpose limitation 👉 Personal data should be collected for specified, explicit, and legitimate purposes, and not further processed in a manner incompatible with those purposes.
- Data minimization 👉 Only the minimum necessary amount of personal data should be collected and processed to fulfill the stated purpose.
- Accuracy 👉 Personal data must be accurate, kept up to date, and corrected or deleted as necessary.
- Storage limitation 👉 Personal data should be retained only for as long as necessary to fulfill the stated purpose.
- Integrity and confidentiality 👉 Personal data must be processed in a secure manner, protecting it against unauthorized access, disclosure, or destruction.
- Accountability 👉 Organizations must take responsibility for their data processing activities and demonstrate compliance with GDPR.
As an organization subject to GDPR, we must:
- Appoint a Data Protection Officer (DPO) if required, based on our size and the nature of our data processing activities.
- Implement appropriate data protection measures, including data minimization, pseudonymization, and encryption.
- Conduct Data Protection Impact Assessments (DPIAs) for high-risk data processing activities.
- Obtain valid consent from individuals before processing their personal data, where applicable.
- Respect individuals’ rights, including the right to access, rectify, erase, and object to the processing of their personal data.
- Notify relevant data protection authorities and affected individuals in case of a data breach within 72 hours.
- Maintain records of data processing activities and demonstrate compliance with GDPR.
It is essential that all of us understand the importance of GDPR compliance and the potential consequences of non-compliance, which can include significant fines, penalties, and reputational damage. If you have any questions or need further clarification on GDPR, please do not hesitate to contact [Data Protection Officer or Responsible Person].
[Your Name] [Your Title/Position]
GDPR Compliance: Rounding it all up
Here’s a simple and easy-to-remember summary of the benefits of GDPR compliance, organized into five key areas:
- Legal compliance
- Avoid fines and penalties
- Meet regulatory obligations
- Enhanced reputation
- Demonstrate commitment to data privacy
- Build customer trust and loyalty
- Operational efficiency
- Streamline data management processes
- Improve data quality and accuracy
- Risk management
- Mitigate security and privacy risks
- Protect against data breaches
- Competitive advantage
- Stand out in the marketplace
- Attract privacy-conscious customers
By remembering these five key areas, you can easily recall the benefits of GDPR compliance and the importance of investing in data protection measures.
Becoming GDPR compliant with data governance: Related reads
- What Is Data Governance? Its Importance, Principles & How to Get Started?
- Data Governance Model: Creating a Sustainable Framework for Effective Data Management
- Data Governance Process: Why Your Business Can’t Succeed Without It
- Data Governance and Compliance: Act of Checks & Balances
- What Is Data Lineage & Why Is It Important?
- What Is a Data Catalog? & Why Do You Need One in 2023?
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