GDPR Risk-Based Approach: 6 Steps to Get It Done
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The introduction of the General Data Protection Regulation (GDPR) in the European Union in 2018 forced organizations worldwide to rethink their data management practices.
Today, the stakes are high - non-compliance with GDPR can attract heavy fines and a potential loss of consumer trust. In spite of that, several businesses have not fully understood the potential risks involved in data processing. As a result, implementing appropriate mitigation strategies to safeguard personal information has taken a backseat.
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In this article, we will explore:
- What does it take to achieve GDPR conformity?
- How to identify, assess, and prioritize risks?
- How to implement a risk-based aprroach to GDPR with a case study?
Ready? Let us dive in!
Table of contents
- What is GDPR conformity: 7 Requirements to know in 2023!
- 6 Steps to implement a risk-based approach in GDPR
- Case study: Implementing a risk-based approach to GDPR in “FinTrust,” a mid-sized retail bank
- Summing up
- GDPR risk-based approach: Related reads
What is GDPR conformity: 7 Requirements to know in 2023!
The term “GDPR conformity” refers to compliance with the General Data Protection Regulation (GDPR), which is a regulation enacted by the European Union in 2018 to protect the privacy and personal data of EU citizens. The GDPR applies to any organization, regardless of its location, that processes the personal data of EU citizens. GDPR conformity means that an organization is adhering to the requirements and principles laid out in the regulation.
Compliance with the General Data Protection Regulation (GDPR) involves multiple dimensions, and each organization’s requirements may differ depending on its size, the nature of its business, and the type of data it processes.
Below are some of the key requirements that organizations generally need to fulfill to achieve GDPR conformity:
- Basic principles
- Rights of data subjects
- Accountability and governance
- International data transfers
- Data breach notification
- Fines and penalties
- Consent mechanisms
Let us understand each of them in detail:
1. Basic principles
- Lawfulness, fairness, and transparency: Organizations must process data in a lawful, fair, and transparent manner. This usually requires obtaining explicit consent from individuals before processing their data, unless other lawful bases are applicable.
- Purpose limitation: Data should be collected for specific, explicit, and legitimate purposes and not processed further in a way incompatible with those purposes.
- Data minimization: Only the data necessary for the intended purpose should be collected and processed.
- Accuracy: Organizations are required to ensure the accuracy of the data they collect and process.
- Storage limitation: Data should not be stored longer than is necessary for the purposes for which they are processed.
- Integrity and confidentiality: Organizations must ensure the secure processing of data, protecting it from unauthorized access, disclosure, alteration, and destruction.
2. Rights of data subjects
Data subjects, or individuals whose data is being processed, have specific rights under GDPR, including:
- Right to be informed
- Right of access
- Right to rectification
- Right to erasure (“right to be forgotten”)
- Right to restrict processing
- Right to data portability
- Right to object
- Rights in relation to automated decision-making and profiling
Organizations must facilitate the exercise of these rights and inform data subjects about them.
3. Accountability and governance
Organizations are required to:
- Appoint a Data Protection Officer (DPO) if they engage in large-scale processing of special categories of data or systematically monitor individuals.
- Conduct Data Protection Impact Assessments (DPIAs) for high-risk processing activities.
- Maintain records of data processing activities.
3. International data transfers
GDPR imposes restrictions on transferring personal data outside the European Economic Area (EEA). Organizations must ensure that adequate safeguards are in place if data is transferred to countries that do not have an adequacy decision from the EU Commission.
4. Data breach notification
Organizations are required to report data breaches to the relevant supervisory authority within 72 hours of becoming aware of the breach, unless the breach is unlikely to result in a risk to the rights and freedoms of individuals. Affected individuals must also be notified if there is a high risk to their rights and freedoms.
5. Fines and penalties
Failure to comply with GDPR can result in significant fines, up to €20 million or 4% of the company’s annual global turnover, whichever is higher.
6. Consent mechanisms
If consent is the lawful basis for processing, it must be freely given, specific, informed, and unambiguous. Consent mechanisms should be easily accessible and simple to use, and individuals should be able to withdraw consent as easily as they gave it.
This is not an exhaustive list, but it gives an overview of the main requirements for GDPR conformity. Organizations should seek legal advice to ensure full compliance tailored to their specific circumstances.
6 Steps to implement a risk-based approach in GDPR
The risk-based approach under GDPR is a strategic method to identify, assess, and prioritize risks associated with the processing of personal data. It forms the cornerstone of any comprehensive GDPR compliance strategy by focusing on the most critical areas where a data breach or misuse could occur.
- Identification of risks
- Assessment of risks
- Prioritization of risks
- Implementation of measures
- Monitoring and review
Step 1: Identification of risks
The process starts with identifying potential risks associated with the collection, processing, and storage of personal data. This stage should involve a multidisciplinary team including legal, IT, and operational members.
Risks can range from data breaches due to cyber-attacks to accidental leaks by employees. The scope of identification should be broad, capturing both intentional and unintentional risk scenarios.
Tools like Data Processing Impact Assessments (DPIAs) can help in systematically identifying these risks.
Step 2: Assessment of risks
After identification, each risk should be assessed based on its impact and likelihood. Impact refers to the potential consequences, which could range from financial penalties to reputational damage.
Likelihood considers the odds of the risk event occurring.
The use of risk matrices can help visualize and assess risks effectively. The goal is to have a well-documented understanding of each risk, underpinned by robust analysis.
Step 3: Prioritization of risks
Once risks are assessed, the next step is to prioritize them. High-impact, high-likelihood risks typically take precedence. The organization should also consider its own risk appetite, or the level of risk it is willing to accept.
Prioritization helps organizations allocate their resources more efficiently. Time-bound action plans should be created for each risk, clearly stating who is responsible for what.
Step 4: Implementation of measures
After prioritization, the organization should then implement the necessary measures to manage the identified risks. These data quality measures could range from technical solutions like encryption and firewalls to organizational changes like policy updates.
Organizations should also consider a phased approach to implementation, especially for more complex measures that require significant resources or changes to existing systems.
Step 5: Monitoring and review
Once measures are implemented, continuous monitoring and periodic reviews are essential. Key Performance Indicators (KPIs) can be used to assess the effectiveness of the risk management strategies.
Monitoring ensures that the measures are effective and identifies any new risks that may have emerged.
Step 6: Documentation
Documentation is a vital component of the risk-based approach. All steps—from risk identification and assessment to prioritization and implementation—should be meticulously documented. This serves multiple purposes: it helps in internal audits, enables continuous improvement.
Proper documentation provides a defensible position, showing that the organization has taken all necessary steps to comply with GDPR’s risk-based approach requirements.
Understanding and executing these steps proficiently enables organizations to manage risks effectively while also ensuring GDPR compliance.
Note: Adopting a risk-based approach is not just a requirement under GDPR; it’s also a best practice that offers the dual benefit of protecting an organization from the legal ramifications of non-compliance and safeguarding the privacy of individuals.
Failing to adopt this approach leaves organizations vulnerable to data breaches, hefty fines, and reputational damage
Case study: Implementing a risk-based approach to GDPR in “FinTrust,” a mid-sized retail bank
Our hypothetical company - “FinTrust,” a mid-sized retail bank, manages a plethora of data, from customer personal details to transactional data. Recognizing the far-reaching implications of GDPR, the bank decided to implement a robust, risk-based approach to data protection and compliance.
Identification of risks
FinTrust established a Risk Management Team (RMT) that brought together expertise from Legal, IT, Compliance, and Customer Relations departments. This team began by identifying potential vulnerabilities in the bank’s data processing chain.
Real-world scenario: The customer service team noted that some customer service representatives had access to more customer data than needed to perform their duties. This was seen as a data minimization risk.
Assessment of risks
The RMT initiated a thorough risk assessment exercise using Data Protection Impact Assessments (DPIAs) and other internal audit mechanisms. Each risk was weighed against criteria such as potential GDPR fines, operational disruption, and reputational damage.
Real-world insight: During the assessment, the bank realized that a significant part of their customer data was stored on third-party cloud services. The risk here involved potential data breaches at the vendor’s end, leading to non-compliance.
Prioritization of Risks
A risk heat map was created to visualize the level of attention each risk required. High-impact and high-likelihood risks were treated with priority.
Real-World challenge An identified top-priority risk was the insecure transmission of transactional data between the bank’s mobile app and its servers. A breach here could potentially expose millions of transactions.
Implementation of Measures
To mitigate identified risks, the RMT developed a multi-faceted strategy:
Role-based access control (RBAC): Access to customer data was limited based on job responsibilities.
Data encryption: End-to-end encryption was implemented for data transmitted between the bank’s app and its servers.
Vendor audits: Conducted security audits on third-party vendors responsible for data storage.
Real-world tactic: A series of “ethical hacking” tests were commissioned to identify vulnerabilities in their mobile and web platforms.
Monitoring and review
Post-implementation, the bank established continuous monitoring mechanisms:
Anomaly detection: Real-time monitoring was set up to detect unusual data access or transactions.
Customer feedback loops: Established a system for customers to report data security concerns directly.
Real-world insight: The bank found, via monitoring, that there was an unusual level of access requests made during off-hours. Immediate investigation led to the identification of a compromised internal account, and quick action was taken.
Every stage of this process, from risk identification to implementation, was meticulously documented:
Process logs: Detailed logs were kept for each step in the risk assessment and mitigation process.
Compliance records: All compliance-related actions were documented, with time-stamps and named responsible parties.
Audit trails: Generated automated logs for all data accesses and alterations.
Real-world requirement: When FinTrust was audited, this thorough documentation proved invaluable, showcasing their comprehensive, risk-based approach to GDPR compliance.
Through a carefully executed risk-based approach, FinTrust not only aligned itself with GDPR requirements but also fortified its data protection mechanisms.
This effort, though resource-intensive initially, saved the bank from potentially catastrophic financial and reputational damages. It also helped instill a pervasive culture of data protection awareness, crucial in today’s digital age.
In summary, the risk-based methodology is central to achieving meaningful GDPR conformity. By thoroughly identifying, evaluating, prioritizing and mitigating data processing risks, organizations can adopt a targeted approach to compliance.
Technical solutions like encryption and access controls address technological vulnerabilities. Organizational measures including staff training and vendor oversight tackle operational risks. Rigorous documentation provides accountability.
While resource-intensive initially, the long-term benefits of risk-based thinking are immense – avoiding data breaches, fines, and reputational damage.
As regulations and technologies evolve, regular reviews and monitoring are imperative to adjust strategies accordingly. By embracing risk-based compliance, organizations reinforce not just conformity, but also trust.
GDPR risk based approach: Related reads
- Data Governance and GDPR: A Comprehensive Guide to Achieving Regulatory Compliance
- Business Glossary & GDPR: A Smarter Way to Compliance
- Tide’s Story of GDPR Compliance: Embedding Privacy into Automated Processes
- The Benefits of GDPR Compliance and Data Governance: Protecting Your Data and Your Business
- 16 Essential GDPR Questions to Ask in 2023
- How Crucial is Data Governance for Data Privacy?
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