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The business case for data privacy: beyond legal compliance
Sponsored by C. Mputhia Advocates
Dr Cathy Mputhia-Mugendi, the CEO and lead consultant at C. Mputhia Advocates, and Associate Advocates Davis Too, Amos Shihundu and Lindah Nchaban.
Photo credit: Pool
By C. Mputhia Advocates Data Privacy Team
The digital age has undoubtedly provided immense benefits to both individuals and businesses. The rising collection and storage of sensitive and personal information have made data privacy a growing concern.
Data privacy is not just a legal requirement, it's a business imperative. Protecting customer information builds trust and strengthens long-term relationships. Robust data privacy practices offer a competitive edge by fostering customer trust and loyalty, setting a brand apart, and safeguarding intellectual property, all of which drive innovation and business growth.
The Data Protection Act of Kenya that was enacted as recent as 2019 outlines the rules businesses must follow to protect personal data. However, over the recent past, we have witnessed a number of cases where non-compliance with data privacy laws has led to severe financial consequences of not only hefty fines, legal costs, but also long-term impacts on customer relationships and brand reputation. The results of these breaches have caused a lot of entities significant amount of money. However, these data breaches diminish the trust customers have in various businesses, leading to loss of business and tarnished reputation
It is important to note the role that data privacy plays for businesses as it defends against cyber threats, ensures compliance with regulations, and maintains operational performance, customer trust, and the privacy, availability, and integrity of sensitive data.
In order to achieve this, there is need to ensure that businesses have data privacy mechanisms such as policies, measures and procedures. When dealing with data, at the collection stage it is important to ensure that consent of the persons is lawfully obtained, this process ensures transparency in how data is collected and used, limiting data collection to what is necessary for specific purposes, obtaining consent where required, maintaining data accuracy and security, granting individuals the right to access and correct their data, storing data only for as long as needed, and safeguarding it against unauthorized access or breaches.
Businesses should regularly examine and re-evaluate their data privacy policies and measures, test their design concepts and procedures, and assess their data privacy and security posture in order to foster confidence. A breach in data security doesn't follow a set schedule. An attitude of constant development is necessary for managing privacy and security.
This data privacy-first culture of policies and measures is vital to customer satisfaction on the onset. When customers are assured that their data is being securely handled, they are more likely to remain loyal and continue their business relationship.
The approach to data privacy policies and measures is not a one-size fits all solution as they must be tailored to each business, as the risks and requirements vary depending on industry, customer demographics, and the types of data collected. For example, healthcare providers handle sensitive medical data, which includes patient health histories and treatment information. Educational institutions store sensitive information about children, such as academic records, family data, and personal identifiers. Telecommunications businesses, on the other hand, handle real-time sensitive data, including text messages, location data, and internet usage, all of which must be protected to prevent misuse or breaches. The sensitivity of data directly correlates with the risk of breaches, which can lead to substantial fines and significant damage to brand reputation. Businesses handling sensitive data must implement strong privacy measures, ensuring limited access and providing customers with the assurance that their data is secure. Each business handles different data and faces different privacy threats.
The need for strong data protection measures underscores the importance of staying updated on emerging laws and regulations, as data privacy is an ever-evolving field. Complying with the emerging laws will not only help a business be legally compliant but also educate its customers on new laws.
Emerging technology is also a new opportunity and a threat to data privacy; however, businesses can take advantage of the opportunities to use new technology to protect customer’s data. For instance, businesses can stay ahead of changing privacy technology by using AI-powered solutions that can automate activities, monitor data flows, and report irregularities.
Businesses that adhere to data privacy laws and regulations are more likely to have a competitive edge over their rivals in addition to gaining new clients. As data privacy cases increase, investors, suppliers, customers, and consumers are increasingly likely to consider and interact with businesses who are either data privacy compliant or demonstrate attempts to comply. Businesses that prioritise privacy and build a reputation for reliability and integrity can improve their market positioning and possibly become leaders in a market that is growing increasingly data-conscious.Â
Integrating international compliance into data privacy strategies is crucial for businesses as they expand globally, ensuring they remain compliant with diverse regulations while maintaining customer trust across borders. Different regions such as the European Union with its General Data Protection Regulation (GDPR) have unique data protection laws that businesses must follow. Adhering to GDPR gives a business a competitive advantage in the global market.
Data privacy compliance should increasingly be viewed as a need for customer satisfaction and brand reputation rather than as a legal compliance. This will influence how a business develops as technology and data privacy regulations advance.
Davis Too is a Data Audit & Risk Consultant & Associate Advocate at C. Mputhia Advocates, and Linda Nchaban is a Data Policy & Governance Consultant & Associate Advocate at C. Mputhia Advocates.