Understanding Data Protection Impact Assessments (DPIAs)

The importance of DPIAs for compliance and accountability

Assessing data protection risks is critically important for many reasons. However, the core role of DPIAs is to meet compliance obligations.

Regulators worldwide enforce strict privacy laws. These laws guard against unlawful exposure of user data and protect against data breaches. And they usually require thorough risk assessments to achieve these aims.

Most importantly, the European Union's General Data Protection Regulation (GDPR) requires a DPIA for data processing projects that pose a high risk of harm to data subjects.

Under GDPR, the European Data Protection Board (EDPB) oversees DPIAs. The EDPB requires companies to execute a Data Protection Impact Assessment when projects involve:

• Evaluation of many data subjects and user profiling via automated decision-making tools
• At-scale processing of special data categories such as biometrics or healthcare PII
• Monitoring of public areas
• Moving personal data to jurisdictions outside the EU
• New technology that may put user rights at risk
  
  

DPIAs are also mandated by California's Consumer Privacy Act (CCPA) and Canada's Personal Information Protection and Electronic Documents Act (PIPEDA). The Health Insurance Portability and Accountability Act (HIPAA) also requires assessments that resemble DPIAs for processing healthcare data.

Companies that do not complete DPIAs face a high risk of penalties. Under GDPR, regulators can fine organizations up to 4% of global turnover. A robust risk assessment process minimizes the chance of fines relating to data breaches and privacy violations.

Benefits of conducting DPIAs

Meeting regulatory requirements is a critical benefit of DPIAs. However, conducting a Data Protection Impact Assessment has many other benefits:

1. Promoting privacy awareness

DPIAs help companies to identify data protection risks. They make personal data processing more transparent. Thorough assessment enables the organization's Data Protection Officer to put in place effective policies and controls.

2. Data protection by design

DPIAs are part of a systematic approach to data protection. A Data Protection Impact Assessment provides assurance that an organization has compliant data collection and processing systems. Assessment creates a foundation for future projects, and it guides organizations when choosing effective confidentiality measures.

3. Enhanced trust

Customers and business partners look for robust data protection practices. Companies that prioritize DPIAs will build customer trust and brand reputation.

4. Improved transparency and accountability

DPIAs outline how an organization handles data. Recording this information makes data users more accountable within the organization. It also makes it easier for employees to understand their own data protection obligations.

5. Minimizing data storage

Assessing data protection risks can expose excessive data collection. Companies can cut the amount of high-risk data they use, restricting usage to business needs.

6. Stronger relationships

The Data Protection Impact Assessment process involves many stakeholders and internal departments. This nurtures more effective communication between those involved in data processing. It also contributes to a privacy-centered business culture.

7. Continuous compliance and improvement

Annual reviews of each DPIA allow systematic monitoring of data protection practices. Data Protection Officers can recommend changes to enhance compliance and protect user data. Businesses won't be blind-sided by technological or regulatory developments.

Conducting a DPIA: process and considerations

DPIAs require a systematic process to achieve the best results. Poorly conducted risk assessments are dangerous. They may miss or misinterpret critical privacy risks. These mistakes often arise from following the wrong procedure. Following each step of the Data Protection Impact Assessment is essential.

1. Identify the need for a DPIA

The first step is understanding whether a DPIA is required. To trigger a DPIA GDPR requires a "high risk" to the "natural freedoms" of data subjects.

In practice, the term "high risks" applies to:

• Data collection processes that profile individuals. For example, credit testing or health evaluation systems would always need an impact assessment. The same also applies to many eCommerce businesses. If you create profiles of website visitors based on their purchases or activity, you need a DPIA.
• Companies that make decisions about users or customers based on automated systems.
• Organizations that track or monitor individuals.
• Projects that combine data sets in novel ways. DPIAs are required when organizations merge different databases without awareness of data subjects.
• Organizations handling "sensitive data." Examples include data about children, biometric identifiers, financial data, and healthcare information.
• Organizations that conduct "large-scale" data collection. This includes companies that gather data on many individuals, operate across large regions, or retain data for long periods.
• Projects that deal with vulnerable individuals, where the risk of harm from data disclosure is naturally higher.
• Innovative personal data processing. Companies need DPIAs when they integrate new technology into their data-handling processes.
• International data transfers. This applies particularly to transfers from EU nations to jurisdictions with poor security records.
  
  

DPIAs are not always needed. Most data processing activities qualify as low-risk and do not require DPIAs. For example, collecting and storing emails on a cloud container probably does not require an impact assessment.

In general, organizations do not need DPIAs when data subjects provide consent and data processing does not create high privacy risks.

If you need a DPIA, it should occur as early as possible during the project's lifetime. The assessment must act as a basis for data processing, and it cannot be seen as a secondary consideration.

2. Describe your data processing activities

The next step in the process is identifying your data processing goals. How will the project collect data? How will it store and process data? And how long will personal data remain on the organization's servers?

It is also important to establish responsibility. Who will have access to the data? How will they be accountable for protecting user privacy?

Answering these questions will help you identify risks to individual privacy. The result should be a visualization of data flows throughout the project. This diagram should show different forms of data processing. For example, you may process raw data into research profiles. And it should account for data from collection to deletion.

3. Consider consultation of stakeholders

Data protection officers cannot conduct a DPIA on their own. In practice, officers should consult with all relevant stakeholders to investigate how the organization handles data. Internal stakeholders can advise about operational aspects of data usage, and third parties can also provide information about their roles in handling and protecting data.

4. Assess proportionality and necessity

The next stage is a data compliance evaluation, including the principles of necessity and proportionality.

Necessity refers to whether data collection is necessary. This judgment takes into account the lawful justification for processing. All data collection, storage, and processing must be necessary to achieve the organization's lawful aims.

If data handling passes the necessity test, the next step is assessing proportionality. Proportionality requires organizations to balance privacy risks against their lawful aims.

Personal data processing cannot infringe on basic user rights. However, if organizations put in place data security controls and have a watertight justification for their activities, there is plenty of scope for legitimate data collection.

5. Conduct a risk assessment

At this point, you should know your data processing operations and have determined that the project is necessary and proportionate under privacy regulations. The next step is assessing data operations and identifying privacy compliance risks.

The core task here is establishing whether data processing creates a high risk for individual privacy. Earlier parts of the DPIA process should guide you when listing critical risks. Examples might include:

• Data breaches due to cyberattacks
• Exposure of personal data due to equipment theft
• Disclosure of personal information by employees
• Disclosure caused by inadequate pseudonymization
• Changes to technology or business goals leading to data processing that not specified in the original consent form
• Data breaches or exposure following transfer to unsafe jurisdictions
  
  

Create a register of information security and privacy risks. Remember that DPIAs must account for all risks linked to a project. The register includes risks to individuals (as listed above), risks to corporate or organizational health, and compliance risks resulting from data protection issues.

6. Convert outcomes into a data protection plan

The DPIA risk register should form the basis for a data protection strategy. This document lists high-risk areas. It also records mitigation measures to minimize those risks.

For example, the data protection plan could mitigate cyberattack risks by implementing security measures like firewalls and anti-malware tools. The plan could reduce the risk of data exposure by maintaining robust access controls. The organization could also choose to cut exposure by collecting minimal amounts of data and storing it for short periods.

After listing risk mitigation and security measures, high-risk areas may remain. In this case, organizations must liaise with the supervisory authority. This authority is usually a national Data Protection Commissioner. The DPC will monitor high-risk areas and may require additional audits to protect individual privacy.

7. Regularly review your plan

The process does not end when you have signed off the Data Protection Impact Assessment and implemented mitigation measures. Organizations should schedule annual DPIA reviews to ensure continuous compliance.

Reviews check that the data collected is stored and deleted properly. They audit consent and collection processes and ensure there is still a lawful justification for the project. Reviewers check for database mergers or new data uses that require attention. They assess changes to regulations and technology to detect any compliance gaps.

Integrating DPIAs in project management

Data Protection Impact Assessments must integrate with project management plans. Data protection should be part of a project from the start.

Project managers should bring in DPOs early on to discuss data protection. Compliance teams will identify potential risks. They will also advise about when to trigger a DPIA. Impact assessments are not always required. But if there is a high risk to privacy, they are essential. Compliance professionals can advise about exactly when to start the DPIA process.

Project management plans need to adapt to DPIAs. Managers must document risk assessments and mitigation plans. They should add DPIA reviews into the project lifecycle. Managers should also document reporting to regulators if this is applicable.

Continuous review and reassessment of DPIAs

Data protection is dynamic. DPIAs are not a one-time exercise, and threats to individual privacy can emerge during a project. Without constant reassessment, there is plenty of scope for a GDPR failure. Regulators view inadequately updated assessments as a compliance issue.

Because of this, organizations should review and amend DPIAs regularly. Compliance teams should reassess data collection, storage, processing, sharing, and deletion. Reviewers must assess new risks caused by changes to data processing activities.

Companies should also be proactive when changing their data practices. For example, two companies may merge their data analysis to capture new customer groups. Combining data could create a new set of profiles, posing a high risk to data subjects. A thorough impact assessment should happen before any changes occur.

Conclusion

Understanding the Data Protection Impact Assessment process is a critical GDPR compliance issue. DPIAs protect individuals against harm, identify high risks to confidentiality, and recommend mitigation measures to manage those risks.

Companies that fail to use DPIAs effectively risk compliance fines and reputational damage. So, it makes sense to invest time and resources in creating streamlined impact assessment procedures.

Disclaimer: This article is for informational purposes only and not legal advice. Use it at your own risk and consider consulting a licensed professional for legal matters. Content may not be up-to-date or applicable to your jurisdiction and is subject to change without notice.