With the new EU rules on the way, organisations need to consider their attitudes towards privacy—and quickly, to minimise the risks to balance sheet and reputation, as Chris Eaton of KPMG in Bermuda explains.
Organisations can no longer afford to treat privacy as an afterthought. Cybersecurity and the battle against hackers has long dominated the chief information officer’s agenda, but cybersecurity is not the same as privacy. The EU’s new rulebook, the General Data Protection Regulation (GDPR), marks a fundamental shift towards the view that privacy must be at the forefront of organisations’ minds when dealing with consumer data.
Due to come into force in May 2018, the GDPR could lead to organisations being hit with fines of up to 4 percent of global worldwide turnover for non-compliance.
Although the GDPR is perhaps the most comprehensive attempt to define a coherent regulatory framework for privacy, governments around the globe are sharpening their focus on the issue and introducing legislation to offer greater protection to consumers—and harsher penalties for violations.
Bermuda has introduced the Personal Information Protection Act (PIPA), which received Royal Assent on July 27, 2016 and is due to come into force in the summer of 2018. PIPA was drafted with the intent to enable Bermuda to join the international ‘network of trust’ currently existing between countries with similar levels of informational privacy protection—a concept the EU refers to as ‘adequacy’.
The EU permits third party countries to apply for an adequacy finding, which allows the free flow of personal data from the EU without the EU data exporter having to implement any additional safeguards or being subject to further conditions. As a result of securing adequacy, transfers to the country in question will be assimilated to intra-EU transmissions of data, thereby providing privileged access to the EU single market, while opening up commercial channels for EU operators.
At present, Canada, Guernsey, Jersey, Isle of Man, Israel, New Zealand, Argentina, Uruguay, and Switzerland have been identified as having met the standard and are able to transfer personal information with the EU member states.
One of the first issues to tackle should be mindset. What may have been accepted, or at least tolerated, in the past, should be reviewed in light of stricter global approaches to privacy legislation.
Gaining customer consent by mystifying them with long-winded legal statements and 20-page policy disclaimers is not a sustainable strategy. Transparency should be the guiding principle regarding privacy. Organisations need to ensure they fully understand what they want to do with customer data, and where and how they are storing it, and then explain it to customers in a clear and simple way.
As authorities around the globe sharpen their focus on privacy, many organisations are not ready for what’s about to hit them. Fines that were once measured in the tens of thousands for organisations caught mishandling, mis-collecting or misusing customer data could potentially rise to hundreds of millions or even billions. With many industry insiders expecting regulators to flex their newfound muscles early in order to make a point, organisations need to move quickly to understand their obligations.
Seven steps to privacy readiness:
KPMG member firms’ privacy professionals support clients around the globe in resolving complex privacy issues, from niche challenges specific to certain organisations to end-to-end privacy compliance programmes in complex and highly regulated industries.
The KPMG privacy team has deep experience in helping clients to address the challenges posed by privacy risk, with a structured and flexible approach to meet the needs of diverse organisations. The global reach of KPMG member firms enables them to work effectively across multiple territories at a local level.
Areas where KPMG member firms are frequently engaged
Bermuda Re+ILS interviewed Chris Eaton for their spring publication. Chris Eaton is senior manager, advisory at KPMG in Bermuda. He can be contacted at: firstname.lastname@example.org.
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