Data privacy is often overlooked in today’s digital landscape, but stakeholders are increasingly recognizing privacy as a competitive imperative, leading many companies to update their compliance and audit standards.
In many ways, 2020 was a year of reckoning for data privacy on the internet. After more than a decade of enthusiastically embracing a “freemium” model in which consumers traded copious amounts of personal data for access to digital platforms, many are adopting a rapid about-face.
However, as a Mckinsey & Company report on data privacy notes, “As consumers become more careful about sharing data, and regulators step up privacy requirements, leading companies are learning that data protection and privacy can create a business advantage.”
Here are five reasons that businesses need to prepare for compliance audits now.
#1 Customers Demand It
Today’s customers are increasingly intentional about sharing personal data. What’s more, they expect companies to handle their information responsibly, and they are willing to punish companies that act inappropriately.
For instance, a consumer survey of data privacy habits found that 32% of respondents indicated that they care about data privacy and abandoned a company or provider because of its data-sharing practices.
In addition, the survey illuminated consumer frustrations with organizational transparency regarding data collection and use practices. That’s why the Harvard Business Review is encouraging companies to “address the transparency gap that actives have called out.”
Of course, data privacy standards have legal consequences, and regulators are progressively advocating for consumer protections.
#2 Regulators Enforce It
Several years ago, Europe’s General Data Protection Regulation (GDPR) and California’s Consumer Privacy Act (CCPA) were like landmark regulatory standards that would impose hefty fines on companies that failed to protect consumer data.
Some companies have received significant fines for failing to comply with these standards, and it’s clear that the financial requirements of compliance, or worse, failure, can be immense. Indeed, compliance is a complex task, requiring organizations to account for a confluence of risk factors, technological advancements, and human realities.
Therefore, every organization needs to account for these factors, ready to respond to compliance audits with ease.
#3 Competitors Capitalize on It
More and more companies are judged by their data privacy standards. For example, Facebook has endured seemingly perpetual criticism for its opaque data use standards, misuse of customer information, and expansive collection practices, allowing competitors to crop up and regain coveted market share.
Studying the effects of data privacy standards, PwC concluded, “Having a good data strategy and a related effective privacy compliance program can help give companies a competitive edge.”
There is often minimal differentiation between platforms, services, and products, meaning regulatory compliance can signal value and entice consumers when other factors fail to distinguish brands.
As one Gartner analyst observes, “Privacy is becoming a reason for consumers to purchase a product, in the same way that ‘organic,’ ‘free trade,’ and ‘cruelty free’ labels have driven product sales in the past decade.”
#4 Investors Are Worried About It
Failure to achieve compliance comes with financial penalties and consumer backlash, making it a top priority for investors. To meet the moment, board members are demanding accountability from managers. They want to know that a compliance audit won’t undermine the bottom line or future business prospects.
#5 The Future Embraces It
Undoubtedly, the future of the internet will be more privacy-focused than its predecessor. Gartner estimates that at least 65% of the world’s population will have its personal information covered by privacy regulations, which will significantly expand many company’s compliance audit requirements.
Companies counting on deregulation will inevitably fall behind. Instead, it’s those developing a robust compliance audit process that are positioned to thrive in this new privacy-focused environment.
What Do We Do Now?
There are many compliance solutions that support systems reporting requirements. However, accounting for the human element of compliance standards is significantly more challenging. Teramind bridges the gap, providing compliance solutions that address insider threats, errors, or accidents, empowering companies to manage compliance audits related to data protection, security, and other factors.
Teramind’s software is tailored for today’s most complicated privacy regulations, including GDPR, HIPAA, PCI DSS, and ISO 27001 while offering flexibility to meet shifting or emerging compliance standards.
Data privacy will play a prominent role in future iterations of the internet. Companies that want to thrive need to begin developing a compliance strategy now.