What is GDPR? What does it mean to be GDPR compliant?

Data privacy has become a crucial concern for individuals and businesses in the age of digitization and AI. The General Data Protection Regulation (GDPR) is landmark legislation aimed at protecting the personal data and privacy of individuals within the European Union (EU). It gives EU citizens control over their data and sets high standards for organizations processing it.

This means that US-based and global businesses that collect data from EU citizens must comply with the GDPR.

Understanding GDPR

GDPR is a legal framework that sets guidelines for collecting and processing personal information from individuals who live in the European Union (EU). It was adopted on April 14, 2016, and became enforceable on May 25, 2018. The regulation replaces the 1995 Data Protection Directive, marking a significant shift in how data privacy is approached.

What is GDPR compliance?

GDPR compliance means that an organization, within the purview of the General Data Protection Regulation (GDPR), adheres to the legal standards for managing personal data. GDPR empowers EU citizens with control over their personal information, enabling trust and transparency between them and businesses. It also enforces strong data security measures, reducing the risk of breaches that can harm both customer trust and a company's reputation.

Failure to comply with the GDPR can lead to hefty fines. On the other hand, demonstrating compliance can be a competitive advantage, especially when dealing with privacy-conscious EU customers.

Companies can get started with GDPR compliance with the following steps:

• Conducting a data audit to identify what personal data you collect and process
• Implementing appropriate technical and organizational measures to protect personal data
• Developing clear and concise privacy notices
• Obtaining explicit consent from users for the processing of their data
• Include GDPR-compliant language in standard clause libraries, particularly when working with third-party vendors who may have access to customer data.
• Use contract management software to help them flag risky or non-compliant clauses across their entire contract portfolio.
• Consult with their in-house legal and IT teams for more best practices in data privacy.

Principles of GDPR

The GDPR is built on several fundamental principles designed to safeguard personal data. These principles are:

1. Lawfulness, Fairness, and Transparency:

Personal data must be processed lawfully, fairly, and in a transparent manner.

2. Purpose Limitation:

Data should be collected for specified, explicit, and legitimate

purposes and not further processed in a manner that is incompatible with those purposes.

3. Data Minimization:

Only data that is necessary for the intended purpose should be collected and processed.

4. Accuracy:

Personal data should be accurate and, where necessary, kept up to date.

5. Storage Limitation:

Data should be kept in a form that allows individuals to be identified no longer than necessary.

6. Integrity and Confidentiality:

Personal data must be processed in a manner that ensures appropriate security, including protection against unauthorized or unlawful processing, accidental loss, destruction, or damage.

7. Accountability:

The data controller is responsible for and must be able to demonstrate compliance with these principles.

Rights of Data Subjects

The GDPR equips EU residents with a powerful toolbox of rights concerning their data. These rights grant them significant control over how their information is collected, used, and stored. Here's a breakdown of some key GDPR data subject rights:

1. Right to Access:

Individuals have the right to access their personal data and obtain information about how it is being processed.

2. Right to Rectification:

Individuals can request the correction of inaccurate personal data.

3. Right to Erasure (Right to be Forgotten):

Individuals can request the deletion of their data under certain circumstances.

4. Right to Restrict Processing:

Individuals can request the restriction of processing their data in certain situations.

5. Right to Data Portability:

Individuals have the right to receive their personal data in a structured, commonly used, and machine-readable format and transmit it to another controller.

6. Right to Object:

Individuals can object to the processing of their data based on certain grounds.

7. Rights Related to Automated Decision-Making:

Individuals have the right not to be subject to decisions based solely on automated processing, including profiling, which produces legal effects concerning them or similarly significantly affects them.

Who does GDPR apply to?

The GDPR applies to two main categories of organizations:

Organizations established in the EU

This applies to any company or entity with a branch or office physically located within the European Union, regardless of where the data processing itself happens.

Organizations outside the EU

Even if a business isn't physically located in the EU, the GDPR applies if a company offers goods or services (free or paid) to individuals in the EU or monitors the behavior of individuals within the EU. This could include tracking website visitors from the EU.

Some limited exceptions exist, such as organizations processing personal data for purely personal and non-commercial reasons. Additionally, the GDPR applies differently to small businesses with less than 250 employees.

GDPR as contractual obligations

Companies rely on contracts to clearly define the responsibilities of organizations handling someone's personal data, also known as GDPR. This is particularly important when one organization (the controller) hires another (the processor) to handle that data on their behalf.

For example, imagine a company that collects customer data on its website (controller). They might store that data in a cloud storage service (processor). An agreement with GDPR clauses between these two organizations would spell out exactly how the processor can use the customer data, how it must be secured, and what happens to the data at the end of the service.

These clauses are crucial for all parties on the same page regarding data protection and in compliance with EU regulations. GDPR compliance helps controllers maintain control over customer information even when it's being handled by a third-party vendor.

Benefits of GDPR Compliance

GDPR compliance is not just about avoiding fines. It's about building customer trust, protecting user data, and creating a more secure digital environment.

Strengthens Data Privacy:

The GDPR empowers EU citizens by giving them more control over their data. This fosters trust and transparency between businesses and their customers.

Reduces Risk of Data Breaches:

The GDPR requires strong security measures to help organizations protect personal data from unauthorized access, loss, or misuse. This reduces the risk of costly data breaches that can damage reputation and customer trust.

Avoids Hefty Fines:

The GDPR has strict enforcement mechanisms with significant fines for non-compliance. Fines can reach up to €20 million or 4% of a company's global annual turnover, whichever is higher.

Builds Competitive Advantage:

Demonstrating GDPR compliance can be a competitive advantage, especially when serving EU customers who value their privacy. It shows your company’s commitment to responsible data practices.

Harmonizes Data Protection Laws:

The GDPR creates a standardized approach to data privacy across the EU, simplifying compliance for businesses operating in multiple European countries.

What happens if you breach GDPR?

Not complying with GDPR can bring a number of negative consequences for the organization. Here's a breakdown of the potential repercussions:

Fines:

The GDPR has teeth. Failure to comply can result in hefty fines, reaching up to €20 million or 4% of a company's global annual turnover, whichever is higher. These fines can be significant and have a major financial impact.

Reputational Damage:

Data breaches and privacy scandals can severely damage an organization's reputation. GDPR non-compliance can lead to negative press, loss of customer trust, and a tarnished brand image.

Loss of Business:

In today's privacy-conscious world, customers increasingly choose businesses that demonstrate strong data protection practices. Non-compliance with GDPR could lead to customers taking their business elsewhere.

Operational Disruptions:

The GDPR compliance process can be complex. Failure to comply could lead to operational disruptions, hinder business activities, and potentially cause delays.

Legal Action:

In addition to fines imposed by data protection authorities, individuals whose data rights are violated under GDPR may take legal action against the organization.

It's important to remember that GDPR compliance isn't just about avoiding fines. It's about building trust, protecting user data, and creating a secure digital environment. Organizations can avoid these potential pitfalls and reap the benefits of responsible data practices by taking steps to comply.

How a Contract Management Platform Can Help

The GDPR is a complex regulation, but it is important for businesses that collect data from EU residents to understand and comply with it. As mentioned previously, the cost of non-compliance can be very steep. By taking steps to comply with the GDPR, businesses can help protect the privacy of their customers and avoid hefty fines.

A contract management platform can be a valuable tool for organizations striving for GDPR compliance, especially when handling data. Here's how these platforms can lend a helping hand:

Streamlined Clause Management:

Many platforms offer pre-built or customizable GDPR-compliant clauses in a clause library that can be easily inserted into contracts. This saves time and ensures vital data protection provisions are included in agreements with vendors, partners, and other third parties.

AI-Powered Search:

Advanced platforms can scan contracts to identify and locate clauses where the collection of personal data and its methods are mentioned. They are then automatically surfaced to the contract professional via a personalized dashboard or through a chat interface. This helps organizations pinpoint which clauses might merit closer review and approval steps to mitigate legal risks further.

Enhanced Transparency:

Contract management platforms can act as a central repository for all GDPR-related contracts. In the best contract management platforms, contract managers can access all associated contracts in an intuitive dashboard. This provides easy access and simplifies the process of demonstrating compliance to regulators or data subjects upon request.

Improved Accountability:

The platform can track obligations and deadlines outlined in data processing agreements (DPAs). This ensures tasks like data security audits or data deletion requests are completed on time, fostering accountability within the organization.

Simplified Workflows:

Contract management platforms can automate workflows related to GDPR compliance. For instance, they can trigger reminders for data subject access requests or renewals of data processing agreements, streamlining the process.

Overall, a contract management platform can act as a central hub for GDPR-related contracts, clauses, and obligations. This promotes efficiency, reduces the risk of errors, and empowers organizations to confidently navigate the complexities of GDPR compliance.

The Icertis difference

Looking for a contract management platform that does all the above and more? Today, more than a third of the Fortune 100 trust the Icertis Contract Intelligence platform to transform the contract lifecycle management at their organizations. From automated contract analysis to risk assessment, Icertis uses AI to empower you to extract valuable insights from your contracts, reduce risks, and ensure compliance.

To learn more about how Contract Intelligence can help you manage your organization’s GDPR compliance, request a demo today.

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