“While the recent digital data sharing ruling from the European Court of Justice didn’t come as a surprise, the implications on global business operations and technical complexities for online and cloud services, are significant. Companies are scrambling to rethink their current business processes and data governance strategy in order to address these changes. Similar to insurance regulations in the U.S., where companies must comply to both federal and state regulations, businesses affected now face a patchwork quilt of regulations that they must address through their compliance strategies.” – Joanna Belbey, Compliance Subject Matter Expert, Actiance.
While the recent digital data sharing ruling by the European Court of Justice isn’t surprising, the implications on global business operations and technical complexities for online and cloud services are significant. Companies are left scrambling to rethink current business processes and their data governance strategy.
Even though companies around the world have been systematically moving data across borders, there are cultural differences between how the United States and the 28 members of the European Union (EU) view data sharing. Europeans view privacy as a fundamental right and contend that American data privacy rules do not offer the same level of individual protection. The new EU court ruling on the safe harbor agreement is expected to make it harder for companies including Amazon, Apple, Google and Facebook to collect data and mine online information from millions of EU citizens and use it as a cornerstone for business practices.
So what does this mean for businesses that have been sharing data across borders?
It is expected that Europeans will now have greater say over how their online information is collected, transferred and managed by technology companies, without limiting access to how Europeans can access online and cloud-based services.
This ruling takes hold immediately and organizations must abide by and enforce it. Now organizations face a patchwork quilt of requirements from each EU country with only some overarching requirements. This will be similar to U.S. insurance regulations where companies must comply with both federal and state regulations. As such, organizations must adjust their compliance strategies to reflect these changes and meet the new regulations.
What should firms do today?
Although this ruling is effective immediately, there may not be any reason to panic, as larger firms have alternative legal channels for data transfers to the US. Reach out to your suppliers and obtain details about how your data is being handled today. If it is out of alignment with local laws, work with your attorneys to review country data privacy laws and revise your processes accordingly. There are also discussions between Brussels and Washington that may resolve the issue over time.
However, consider this recent ruling as a wakeup call. Clearly, firms can no longer ignore that people are increasingly concerned about the security and privacy of their data. Whether it’s your customers who worry about hacks that compromise their credit card numbers and private information, or object to marketing efforts that invade their privacy, or employees and contractors concerned about the security of payroll and health information, now is a perfect time to reevaluate your firm’s overall data and security processes.
This is no longer just an IT problem, it’s an enterprise-wide challenge that requires senior management support. Proactively engage key stakeholders across your organization such as IT, Data, Privacy, Security, Legal, Compliance, Risk, HR, Sales, Marketing, Advertising, lines of business and others to define how data is currently collected, used, managed, transferred and stored. Work together to craft polices and business processes to secure that data to protect your firm’s reputation and give you a competitive advantage.
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