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28 February 2024 - 6 minutes

Data Privacy Regulations: Compliance Challenges and Best Practices

Data can let companies have some incredible insights, but we need to keep data privacy at the top of our priority list.

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It’s widely known that access to data means we are better suited to make decisions; after all, with more information at our fingertips, we can see what’s worked in the past, evaluate the current issues facing users, and make future predictions. And luckily for us, advancement in data, machine learning, and artificial intelligence mean that we can now process incredibly large amounts of data, getting a more universal and accurate picture of what’s going on. 

It’s not all rainbows and butterflies, however. Frequently, this data is directly connected to people and their sensitive information, such as identifying details, medical history, or financial data which means that we need to take the proper steps to both protect and properly use individuals' data, ensuring their privacy through data regulations.

This can lead to quite a few questions and challenges and as the world gets used to accessing such large amounts of data, more and more doubts will arise. In this article, we’ll cover the basics of data privacy regulations, why data privacy has become such an important topic in recent years, some challenges that companies face when dealing with data, and our suggestions for the best data practices. 

The Basics of Data Privacy 

To put it simply, data privacy refers to safely and properly handling data that contains sensitive information, which could include (but isn’t limited to) information about someone’s medical records, their personally identifying details, or their finances. Not all data is sensitive and needs to be treated with such caution, but there are five basic fundamentals of data privacy that all aspiring data professionals should know: data confidentiality, data security, data limitations, transparency, and compliance.

  • Data confidentiality: data confidentiality handles the most basic aspect of protecting someone’s data: only those who are authorized to do so can access the data, view it, and distribute it, ensuring that it’s only seen by those who have a need to do so. It’s important to remember that data confidentiality isn’t the same across the board and some pieces of data might be more confidential than others. 

  • Data security: data security is the actual act of protecting confidential data from unauthorized users, ensuring the only people who access it are those who have permission to do so. It also guarantees that the data remains unaltered or changed. 

  • Data limitations: a key part of understanding data regulations is comprehending that companies should seek to collect as little personal data as possible from their users, limiting the collection of data for non-necessary purposes. 

  • Transparency: before collecting information from users, companies must be completely transparent in what data they’re collecting, what they intend to do with the data, and how the data will be protected and stored. 

  • Compliance: there are quite a few guidelines for how data needs to be collected, used, and stored and this will usually vary based on your location; to be compliant with local and international regulations, companies will need to adhere closely to the regulations established. 

A key basis of data privacy is that users have the right to decide what they want to do with their data and, of course, if they want it to be shared at all. That’s why it’s in the best interest of companies to be completely transparent and open with their data policies; if users are unsure of how their data will be stored or used, they’re less likely to consent to sharing their information with the company. 

Companies are incentivized to following the basics of data privacy to ensure that users are encouraged to share their information for the following reasons: 

  • To make better decisions: you know that the best decisions are backed by data and that’s precisely why companies want to collect user data; with more information about who their users are and what they need or want, companies are better suited to make choices that will attract and retain users.

  • To increase personalization: users want to have personalized experiences when shopping and if companies can collect information about their backgrounds, experiences, and desires, there’s a higher chance that their experience will be personalized and the user is encouraged to return to the company. 

  • To improve marketing efforts: the vast majority of companies cater their products or services to specific groups of people; for example, a clothing company may design their products for a certain age range or gender. And the more information that a company has, the better suited they’ll be to market directly to their target audience. 

  • To connect with the customer: even though they know that they’re just one in a million customers, customers want to feel special and valued and creating campaigns or products/services that directly connect with the customer is a key part of creating lasting bonds between the user and the customer. 

The Challenges of Data Privacy Regulations 

As the importance of protecting user data increases, so do the challenges associated with data privacy and adhering to local and international regulations while still benefiting from user data collection. There are quite a few challenges out there, but here are just a few: 

  • Increasing costs: prioritizing data privacy is a key part of all companies’ plans, but it isn’t a simple process; it involves quite a few steps, such as data archiving, backing up data, cybersecurity teams, and frequent check-ins which can have quite a few costs. However, the cost of repairing a data breach, in addition to any fines that could come along if regulating bodies find that the company was not in compliance with regulations, are much, much higher. 

  • Rapidly growing amounts of data: the amount of data companies have is not even comparable with that of just a few years ago and companies are collecting more and more data as they’ve found that more data leads to better decisions. But as the amount of data that companies have or want to collect increases, so do the risks associated with storing and accessing such large amounts of data. 

  • Expanding use of technology: the introduction of 5G technologies and other efforts to bring internet connectivity to every corner of the globe means that companies not only have a wider reach, but also that more and more people are susceptible to their personal data being leaked or incorrectly used. In addition, those new to using internet connected devices may not be fully versed on the importance of data privacy or their rights associated with choosing to share their data or not. 

  • Human error: in most cases, your data will be stored or viewed by humans and even the best intentioned data professionals can make mistakes such as storing it in the wrong place, giving access to unauthorized individuals, or falling prey to scamming attempts. 

  • Malicious attacks: our understanding of the dangers posed by cyberattacks is increasing, but so are the cyberattacks themselves and ensuring that users and companies are well-versed in how to protect their data is a continuous challenge that is constantly evolving. 

  • Changing regulations: in terms of technology, the concerns associated with data collection are relatively new and we’re still learning the best ways to protect user data while simultaneously giving companies the opportunity to improve and better serve their customers. And to add another challenge, local and international regulations can differ and depending on where companies are offering their services, they might need to adjust their practices. 

The Best Practices for Data Privacy 

The exact steps a company should take to ensure data privacy and compliance will differ significantly based on their location, services, and goals, but generally speaking, these are the best practices to follow to ensure data privacy in an ever changing world: 

  • Only collect necessary data: medical practices may need to collect patient weight, height, and gender information for their medical care, but clothing stores do not need this information to provide a more personalized user experience; make sure that as a company, you’re only collecting necessary data and as a user you’re only giving out the data that the organization requires. This not only limits the amount of identifying information out there, but also helps limit the amount of data the organization has to store and protect. 

  • Continually review the security of your data storage: as we mentioned above, cyberthreats are evolving just as rapidly as our efforts to protect data and you’ll have to commit to continuously reviewing your security to ensure there are no data breaches and add new practices to further protect your data. 

  • Commit to educating employees and users about the importance of data privacy: everyone should know how important protecting data is, but it’s true that some people aren’t totally aware of how drastic a data breach could be. Therefore, commit to educating both your employees on why protecting data is key and users on what data they should share and what they shouldn’t to avoid any risk of human error in the data collection and storage process. 

As you can see, data has the potential to allow organizations and companies the power to provide better services; however, more and more regulations are being put into place and it’s becoming increasingly important to prioritize the proper compliance with data privacy regulations to protect both the company and the user. 

This is precisely why skilled data professionals who are aware of the risks of data breaches and the best practices for protecting data are in such high demand; if you’re interested in getting into data protection and filling this need in the tech job market, an Ironhack bootcamp in Data Analytics or Cybersecurity is the perfect place to begin. 

Learn what you need to know to master data privacy and help transform the tech world through safe data practices with Ironhack. Ready? We’ll see you in class.

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