Data privacy protection has become one of the top concerns for executives, worldwide. Just one stroke of bad luck can create a major data security breach for companies-a computer hacker breaks into a company's website and steals customer data; a disgruntled employee discloses confidential information; or, a laptop is stolen from an employee while traveling. Even a well-managed company can run into trouble by taking just one wrong step as it collects, stores, transfers, or discloses data. And, the consequences of such incidents can be serious and even devastating.  

The advent of the Internet and evolving information technology has, for all of their remarkable attributes, complicated the issues surrounding data protection. The damages sought in data privacy protection lawsuits are simply jaw dropping-heavy fines, injunctions, lawsuits, government investigations, sanctions, and even criminal liability-not to mention negative media attention, diminished brand reputation and lost consumer confidence.  

Today, almost every company processes information relating to its employees, customers, suppliers, or other third parties. Some data, specifically employment records, mailing lists, insurance records, medical records, school records, bank records, arrest records, data banks, privileged communications, social security numbers, and other government-provided identification numbers, is protected by data privacy laws, globally. Which data and what laws? Read on to learn more.

What Is private data?

Clearly, the most effective way to combat and protect against data privacy lawsuits is to understand which data you collect is private and to implement correct data privacy and security protocols.  

For example, employers collect and process employees' payroll and health benefits information which may be subject to different data privacy laws around the world. Employers may monitor and store communications sent or received using company computers, and, in many cases, they receive and store personal information from customers in their role as providers of goods or services, as well as vendor records. Much of this data is also subject to privacy data laws.  

Regardless of the circumstances your company must pay close attention to the collection, use, transfer, and disposal of any information that your company stores, and must comply with state, federal and international privacy laws-not a simple proposition.  

Why are data privacy laws so complicated?

Data privacy laws vary dramatically from country to country. Some countries have enacted comprehensive laws while others have few or no rules in place. For companies that do business around the world, the issue of privacy has indisputably become complex as countries are increasingly active in enacting proprietary data security laws.  

For example, in the United States a complex patchwork system of state and federal laws cover data privacy-such as the Federal Trade Commission Act, the Gramm-Leach-Bliley Act, and the Health Insurance Portability and Accountability Act of 1996-while the European Union has a comprehensive data protection directive that requires compliance by all 27 member states. But, the directive of the European Union also allows for significant variations among the member states and to make matters worse, enforcement has not been consistent. Further, several Latin American countries have recently enacted or are drafting comprehensive legislative frameworks to protect private information. Throughout the Middle East, which previously had no data protection law, there is an emerging need and governments are responding. Meanwhile, China has sparse data protection law, and only a few countries in Africa, such as Tunisia and Mauritius, have adopted comprehensive privacy laws.  

In this context, it is important for companies to not only acquaint themselves with the current privacy regulations and laws in all countries and jurisdictions where they do business, but to also be prepared for new developments.  

Does your company need a policy for managing data privacy?

Even for companies whose core businesses are not online, the need to collect, process, store, and transmit information electronically exists. Every business, therefore, needs to ensure that its policies and procedures reflect the legal framework governing this area. It is good company practice to adopt a privacy policy that provides the basic framework for all data protection compliance activities.  

Privacy policy must be properly communicated and supported by training to ensure that staff members, including management, are aware of the rules and understand them. Guidance and other educational materials should also be made available and easily accessible. Compliance with relevant policies must be regularly monitored and breaches sanctioned. Contracts with third-party delegates should be reviewed to ensure that they too contain provisions regarding the protection of private data. It is also advisable that organizations undergo independent data security audits periodically. A well-constructed and comprehensive policy can provide a solution for competing interests and so represents an effective risk-management tool.  

What should you do?

Significant legal action may follow a security breach. Companies should have a plan in place to respond even before a breach occurs.