5 Reasons Why Privacy by Design is More Critical Than Ever in 2023

By 2023, government regulations requiring organizations to provide free and accessible consumer privacy rights will cover 5 billion citizens globally.

Fundamental principles such as privacy rights and purposeful processing are included in almost all of these regulatory changes. We’ve learned from cybersecurity that shifting left works by automating security scanners in order to ensure protection throughout the development process.

Based on that principle, ‘privacy by design’ builds observability and tracking into the code from day one, in order to ensure the potential for continuous compliance with any and all relevant privacy laws and policies. This is in contrast to traditional post-production solutions, which have a number of integral weaknesses, including their reliance on manual processes, expense, and the fact that they are usually implemented too late to mitigate data risk.

Here are five reasons why privacy by design is a must for companies and organizations in 2023: 

1) The cost of not taking action:

Data breaches, fines and reputation management in the aftermath of such events present very serious potential – and avoidable – financial burdens.  By building protection into the process of designing, developing and deploying technology, privacy by design proactively guarantees personal data is being protected by means of preventative measures. 

As of September 2022, the 12 largest data breach fines, penalties, and settlements to date totalled more than $4.4 billion. That figure does not include thousands of other cases globally each year. According to “State of Privacy — The European Union”, an August 2022 report published by Gartner, in 2021, EU sanctions for privacy violations increased sevenfold as compared to the previous year, resulting in $1.2 billion in fines.

By 2026, organizations mishandling personal data will suffer three times more financial damage from class actions and mass claims than from enforcement sanctions.  By taking an active role in protecting customer data, companies and organizations ensure they are meeting all applicable laws and regulations. 

2) CPRA, a comprehensive update of the CCPA:

In 2022, cosmetics retailer Sephora agreed to pay $1.2 million in the first public enforcement action under California’s landmark consumer privacy law, known as the CCPA.

On January 1, 2023, the new and expanded California Privacy Rights Act (CPRA) will require further technological and operational capabilities to ensure proper data security and compliance. Though technically an act passed by the California legislature, the CPRA’s impact will be felt globally. To successfully manage the complexities of the CPRA, organizations must develop an understanding of the data they collect, store, and transfer, as well as implement a comprehensive data governance strategy to meet the new requirements of the CPRA.

Due to the new challenges of the CPRA, the core tenets of privacy by design are no longer just ‘nice to have’, but are foundational to ensuring comprehensive compliance.

This includes but is not limited to, data mapping of personal and sensitive information, mapping the details of personal information (PI) data that has been shared to third parties, assisting in building a process for data subject rights (DSR), accuracy, data minimization and data retention.

3) Customers demand it:

Privacy by design improves customer service and loyalty. By taking steps to protect customer data, organizations are able to provide customers with experiences that build trust in their services, increase customer loyalty and subsequently drive revenues.

Organizations with underserved privacy user experiences, missing proper transparency, consent and preference management, and lacking the automation of DSR responses, result in an abundance of complaints and the highest rates of customer attrition. A top recommendation from Gartner's 2021 Security and Risk Survey is to drive automation in the privacy UX to make it efficient for individuals to exercise their rights and keep operational costs manageable.

4) Automation is key in a global economic crisis:

According to Gartner’s survey, the average annual budget for managing privacy risks was $2.2 million, with 55% percent of respondents indicating that this was an increase over the previous year.

Organizations that have at least 100 employees and $50 million in total annual revenue for fiscal year 2020 were spending, on average, $1,524 per data subject access request (DSR), and the majority of respondents (85%) were able to process a request within two weeks of receipt.

Half of the respondents indicated their organization received 51 to 100 data subject rights requests (DSR) per month. Privacy by design can be used to enable mapping of relevant storage and services as part of development life cycle, helping engineers develop DSR-related issues as an integral part of the product, thus dramatically increasing DSR-related efficiency.

5) The more manual work is involved in managing data privacy, the greater the risk of costly data and compliance breaches.

Privacy by design identifies, streamlines and manages potential risks associated with personal data and takes steps to mitigate them before they become a costly and seemingly insurmountable hurdle. Automation includes assessing potential threats to customer data, such as unauthorized access or exposure of PI data to unauthorized storage and databases, and developing measures to protect it. 

A privacy professional talent shortage calls for automation: By 2024, a privacy professional talent shortage will lead to 100,000 positions unfulfilled, forcing fragmented automation investment. Gartner’s 2021 Security and Risk Survey showed that 63% of surveyed organizations planned on increasing staff levels for their privacy programs. With a privacy talent shortage on the rise, the automation of privacy by design keeps up to the pace and the breadth of changes across organizations.

As was successfully done in security a few years ago, shifting left and giving responsibility to engineering is undoubtedly the solution for privacy, as well. Moreover, many privacy professionals approach the issues from a legal context, lacking the technical background required to understand complex issues related to big data and related technologies. This further underlines the operational resource crunch and the need for privacy by design. 

Final Thoughts

As the data landscape continues to evolve, leveraging privacy by design will ensure that privacy considerations are taken into account from the very start and throughout the entire lifecycle of a product or service. Simultaneously, data privacy and security measures remain effective and up to date, as technology and the associated risks and regulations rapidly advance. As we enter 2023, privacy by design proves to be critical in identifying and mitigating potential risks associated with personal data, improving customer service, and ensuring compliance with data privacy regulations.

About Me

My experienced encouraged me to establish Privya, a data privacy startup focused on ensuring that data privacy and compliance could be built into companies' digital products from day one. Please check out my work and let me know what you think in the comments below!