As of May 25, 2018 the European Union (EU) will alter business requirements for companies that possess personal information pertaining to EU residents. The General Data Protection Regulation (GDPR) applies to any company doing business with customers in the EU, and will have a far reaching impact, greater than many corporations realize. While a primary purpose of the GDPR is to harmonize data privacy protection regulations across the various EU member nations, the potential business interruption for organizations around the world that will result from these new standards is a serious concern.
The applicable fines set forth in the GDPR for failing to comply with regulations are significant. Corporations that handle EU customer data, regardless of where the company is based, can face up to EUR 20 million (approximately $22.3 Million U.S. Dollars) in fines, or 4% of their total global revenue for the preceding fiscal year, whichever is higher, for GDPR noncompliance. Hence, if a company has customers based in the EU, these GDPR requirements must be taken seriously.
The GDPR data protection protocols must be in place for “Personally Identifiable Information” (PII), of all living EU citizens, regardless of where that information is sent, processed, or stored. In addition, the company possessing such PII data must have a process in place to verify and prove that valid protections exist. Corporations are not exempt from the GDPR simply because they don’t have offices there, or don’t process data in the EU. The EU’s concept of data privacy differs greatly from the United States’, but U.S. based corporations doing business with EU citizens will still have to adhere to the strict requirements of the GDPR. The impact of the GDPR reaches nearly all companies, including many who are seemingly unaware of its regulations. In certain specific circumstances, companies must create a position of “Data Protection Officer” (DPO), whom will address GDPR compliance. Hence, the costs to prepare for compliance will include requirements for trained personnel and financial investment in technology.
Having a means to comply with the stringent requirements of the GDPR is no simple task. Planning is required to comply, which is why the regulations are not meant to take effect until May 2018. Some of the complex issues that need to be addressed for GDPR compliance include:
- How electronic information is stored, transferred, accessed, and secured.
- Document retention schedules, and how they are enforced.
- Written proof of compliance.
Creating an effective compliance strategy will be costly and many companies have not set aside money in their projected annual budget for the funds required to address these concerns, which means they will come from emergency or other contingency planning budgets.
Those corporations who have already begun to address their information management capabilities in general will have an advantage in complying with the GDPR requirements. Many of the key elements of a corporate “Information Governance” (IG) plan are related to the issues of concern for GDPR compliance. The ability to manage information, and address data governance, corporate risk, and regulatory compliance, are existing concerns for corporations, notwithstanding the GDPR. Existing technology for cybersecurity and “Data Loss Prevention” (DLP) can also be utilized to help prepare for the GDPR. Moreover, search and retrieval technology and techniques used for eDiscovery purposes also serve as a means to assist in managing information. The illustration below from Susan Bennett, of Sibenco, provides useful insight into aspects of information governance, many of which help address the specific needs of the GDPR.
(Source: “What is Information Governance and How Does it Differ from Data Governance,” Sibenco, 2017, Information Governance vs Data Governance)
Handling sensitive information, such as PII, is a challenge that pertains to both IG and GDPR compliance. Restrictions imposed on the transfer of PII by the GDPR can be addressed by the use of technology. Identification of sensitive content within a business record, and the ability to redact portions of content, can impact whether that specific file is transferrable under the rules set forth by the GDPR. Having a means in place to identify the content of data will be essential for GDPR compliance. In addition to IG protocols, “Knowledge Management” (KM) practices will also enhance a corporation’s ability to comply with the GDPR. The ability to garner business intelligence about the information the corporation possesses will serve as a significant advantage for GDPR compliance. Knowledge of not only files in possession and control of a business, but also about the content level within those files, will be a prerequisite for doing business with EU customers.
Addressing GDPR Compliance
Since the GDPR specifically requires the ability to prove data protections are in place, documentation of existing privacy safeguards is essential. All documentation and processes must clearly address issues such as: where is the data; what type of data exists; who has access to the data; what is in the data content; how is data stored; how is data transferred; how is newly created data incorporated? Without answers to these questions, GDPR compliance is impossible.
Below are suggestions for IG best practices which can be specifically implemented to address the requirements of the GDPR:
Data Mapping. If a DPO does not know the location and/or the contents of corporate data, it is impossible to fully protect that information per the GDPR requirements. The need for data mapping is rather obvious since the risk of non-compliance is too high without the knowledge of location of all the corporate sources of data. If the data map for the corporation is incomplete or inadequate, a discussion with the I.T. stakeholders in the company should take place to update this information. Collaboration between I.T., management, and the corporate legal department, in order to create a comprehensive data management plan is a vital step toward GDPR compliance. Any corporate data stored by third-party providers, including cloud services vendors, or data archival companies, requires attention. The data in the possession of third-party providers is also subject to the GDPR regulations applicable to the corporation, including information retained by outside counsel law firms. If data in possession or control of the corporation contains PII of EU citizens, GDPR compliance requires steps to protect such information.
Understanding File Contents. Many corporations seem ill prepared for the requirement to know the contents of their internal data. Knowing where data resides is only part of the equation. A corporation must also know what the data is and contains. For example, are the files legally binding in nature, such as contracts and agreements? Do the files contain any sensitive data, such as PII or PHI?
Consent. A key requirement of the GDPR is the need to obtain specific consent from an individual before being obtaining, storing or utilizing their personal data. The corporation must provide a clear affirmative action or statement providing permission to process the individual’s data. In addition, the GDPR establishes that the individual has a “Right to be Forgotten,” and can request their personal information be explicitly removed from use. Without some other legal reason to process an individual’s information, the corporation must respect a request to delete data without undue delay.
Information Request. On a similar note, an individual has a right to request access to the personal information being gathered and stored about them. The individual may request information from a company about any of their personal data, including: who has access to their information, how the data is accessed; where it is being accessed; and the purpose for which it is being accessed. Furthermore, an individual can also seek corrections about their personal data, if the EU resident feels the information is inaccurate. The individual may object to the use of their data for profiling by the corporation.
Retention Schedules. Enforcing corporate document retention schedules, while also maintaining proper litigation hold protocols, is already a challenge for many corporations. There are inherent risks associated with maintaining information when there is no legal obligation to retain possession of that data. An effective means of dispensing with specific information that is outside of an applicable document retention schedule is an important component for both IG and GDPR compliance.
Security Breaches. An overarching component of the GDPR is the need to provide cybersecurity protections to prevent data breaches, as well as express provisions regarding notifications of data breaches to both the supervisory authority and to individuals whose information has been exposed. Hence, corporations must not only be aware when a breach has occurred but also must have a means to notify those impacted by the breach of what specifically was exposed.
Data Transfer. The GDPR places explicit restrictions on transfers of personal information. Corporations must have an enforceable plan to prevent unauthorized data transfers, and the GDPR puts forth stringent requirements regarding data transfers to locations outside of the EU. Whether a data transfer is permissible under the rules of the GDPR, will require answers to a series of queries about the content of the information. If PII, or otherwise sensitive information, exists in the data at issue, additional restrictions will be applied, possibly revoking permission for the transfer of that information. An entire file might be improper to transfer under certain circumstances, thereby prohibiting access for persons outside of the EU to view such information. In other instances, a portion of the content of a file might block the permissible transfer, however if actions are taken to redact the specific content in question, the remainder of the file might be permissible for a data transfer.
What Is Auto-Classification and How Does It Assist with GDPR Compliance?
It is clear that properly managing all data in a corporation’s possession to comply with GDPR regulations is an extremely onerous task for most businesses. The GDPR requirements necessarily create an increased reliance upon automation in order to properly manage the lifecycle of corporate information.
The explosion in the volume of data in the possession of corporations has already led to the advancement in various technologies that assist managing information. Corporate best practices for IG, KM, E-Discovery, compliance and cybersecurity, all provide guidance for the use of technology which help address GDPR regulations. One particular automation technology that will serve as a tremendous asset to corporations struggling with GDPR mandates is referred to as “Auto-Classification.”
Auto-Classification Software data mines information at the content level, and then categorizes files based on the information’s substance. This technique is already being utilized by many corporations as part of their IG strategy. Auto-Classification’s ability to group information by category or by specific characteristics will prove useful for GDPR compliance. Similarly, Auto-Classification’s ability to detect the presence of PII and other sensitive content will likely become a best practice when it comes establishing GDPR protections.
One impediment in complying with GDPR is the vast amount of “Dark Data” currently residing in most corporate networks. Dark data is information existing on shared file servers, or in employees email inboxes whose content or purpose is largely unknown. Auto-Classification helps manage unwieldy unknown information and sheds light on the contents and origins of such data. Corporations utilizing document management systems (DMSs) or enterprise content management systems (ECMs) rely on Auto-Classification to categorize files outside of the document/content management platform, subsequently placing that information into folder-level taxonomies within their systems.
Auto-Classification software uses both pattern-matching algorithms as well as artificial intelligence to detect file contents and attributes such as: personal information; authorship and origin; type or format of document; and expected retention period. In addition, Auto-Classification technologies are configured follow a set of customized rules regarding file disposition. For example, a rules-based Auto-Classification system will enforce a specific document’s retention schedule, and then place the file into the proper folder taxonomy structure. Auto-Classification technology specifically meets the GDPR requirements to have a system in place that can detect what information it has, where it lives and how it will be handled under differing circumstances.
With a proper Rules Engine, sensitive information is protected via individual security level restrictions, including limitations based on the geographical location of the user attempting access. Rules are also used to block improper information transfer to locations outside the EU. Furthermore, rules are used to trigger certain events, such as an expiration date associated with certain data which would make such information eligible for deletion.
Conclusion: Advantages Of Using Automation For GDPR Compliance
While compliance with GDPR regulations will be no small task for most enterprises, the use of automation makes the task more manageable. Though not every organization is as proactive as they should be, there is still time for those companies to prepare for the GDPR regulations, and avoid the imposition of fines. Enterprises that have been more proactive in automating their IG strategies are in a better position to comply with the GDPR than others. Companies most likely to avoid fines are those with a DPO in place, who can document the automated steps taken to provide the required protections to personal sensitive data. Similarly, corporations with established IT security protocols and passed audits will have an easier path toward GDPR compliance.
Return on investment is often a key metric required by corporations before they approve expenditure of funds. While companies may have been reticent about investing in IG technology previously, the GDPR requirements serve as a stark turning point to that strategy. The potential for business interruption caused by the GDPR, not to mention its stringent fines for non-compliance, prove out any return on investment calculation several times over. Furthermore, the benefits derived from improved information management techniques assist not only GDPR compliance, but also corporate efficiency and knowledge management capabilities.
Certainly technology is creating some unique challenges for business. Protecting the privacy of individuals is increasingly difficult as the volume of personal data in possession of corporations continues to explode. However, through intelligent use of a proper combination of people, process and technology, the challenges of GDPR compliance can be adequately met. Conversely, waiting for the deadline of May, 2018 to approach without taking steps to address that challenge could prove very costly.
Lack of preparedness for GDPR is an alarming concern. According to a Symantec survey in 2016, “91% (Ninety-One Percent) of 900 business IT decision makers polled in the U.K., France, and Germany have serious concerns about their ability to be compliant by May 2018. The attention paid to the looming threat from the GDPR’s effective date May 25, 2018, will only grow as that date approaches.
Ms. Serkes is President & CEO of Valora Technologies, a leading provider of document, data and content analytics solutions for Information Governance and eDiscovery. One of the company’s original founders, Ms. Serkes takes a very active, day-to-day executive role in the company. In her tenure, Valora has successfully landed some of the most prominent corporate, legal and government clients in the world. A Harvard Business School MBA and MIT graduate, Ms. Serkes is a frequent industry speaker and panelist.
Joe Bartolo, J.D., Senior Solutions Consultant for Valora Technologies, is a former litigator in New York State, with 11+ years of experience working for eDiscovery providers. Joe is a VP in the Metro New York Chapter of ACEDS, and is the Co-Chair of their Educational Committee. Mr. Bartolo is a former working group leader in the EDRM, and has instructed continuing legal education courses about eDiscovery and information governance throughout the United States. Joe received a Juris Doctorate Degree from Rutgers School of Law – Newark in 1992, and a Bachelor of Arts Degree in Political Science from New York University in 1989. Follow Joe on Twitter @joseph_bartolo.