Privacy Impact Assessment For Data Protection & How to Conduct One

With so much of our society’s data flowing through digital platforms, keeping it safe is increasingly crucial. If your business has access to any personally identifiable information (PII) or personal information (PI)—a person's full name, phone number, email address, etc.—then you risk mishandling that data.

Many businesses and government agencies rely on privacy impact assessments (PIA) to identify and address privacy gaps in their operations. But these assessments are more than a regulatory checkbox; they are proactive measures against evolving challenges in data privacy. 

Here’s what you need to know about them.

What Is a Privacy Impact Assessment (PIA)?

In short, a privacy impact assessment is a type of privacy assessment that analyzes how you collect, use, share, and maintain PI in your enterprise. This analysis helps you comply with industry regulations, identifies privacy threats of new activities (e.g., collecting new categories of personal data, launching new applications, or starting any initiative that alters how your organization collects and handles data), and helps uncover ways to reduce exposure.

Think of it as a guide for your organization on how to comply with data privacy laws and properly protect all the personal information you handle. 

Some common reasons to carry out this assessment include:

• Implementing new technologies that handle or collect PI to understand privacy implications at the onset and guarantee properly safeguarded data. For example, ensuring that all data transmissions occur over HTTPS and that your organization only interacts with secure websites can significantly reduce the risk of data breaches.
• Updating existing systems to evaluate and mitigate possible privacy risks during system-wide maintenance.
• Routinely auditing for potential privacy issues to confirm vigilant protection of individual data privacy rights and maintain compliance with changing regulations.

While data breaches are a concern, the primary goal of an impact assessment is to secure individuals’ personal data and their right to privacy. Privacy violations can occur without a data breach, and can be intentional acts by businesses—like sharing sensitive information or selling it without considering where it might wind up.

PIA vs. DPIA

Privacy impact assessments and Data Protection Impact Assessments (DPIA) often get used interchangeably in data security and privacy conversations, but they serve different purposes. While the former helps evaluate and manage potential privacy threats when handling PI, it is typically an internal practice for your organization. Some organizations choose to publish the results of their PIAs to garner trust, and some public organizations are required to do so for compliance with U.S. federal regulation; however, most organizations use privacy impact assessments as an internal guide.

On the other hand, the reach of DPIAs extends to the impacts of data protection outside of your business, specifically compliance with regulations like GDPR (more on that below). While it shares the same goal of protecting PI, it’s ultimately about making sure your internal practices align with the specific legal requirements outlined in major data legislation. DPIAs are mandatory under GDPR when processing operations are likely to result in a high risk to the rights and freedoms of natural persons.

Here are three key ways that a PIA differs from DPIA:

3 Reasons Why Privacy Impact Assessments Are Important

A privacy impact assessment reduces the chances of data breaches when handling any PI. Its main benefits are to ensure compliance with privacy laws, increase trust in your organization, and reduce the likelihood of future data breaches. 

1. Support Compliance With Privacy Laws Like the GDPR and HIPAA

Whether it’s GDPR in Europe, HIPAA in healthcare, or other regional or industry regulations, privacy impact assessments make certain you address all the components required for compliance—saving you from legal headaches. 

These assessments simplify the procedure, ensuring your organization stays on the right side of the law. While an internal privacy impact assessment doesn't specifically meet legal requirements (like a DPIA), it helps reduce your risk by proactively aligning your practices with privacy regulations.

2. Increase Public Trust in Your Organization

Trust is a vital resource for modern businesses. Privacy-conscious customers want assurance that their information is handled with care, and PIAs are required to build and maintain a solid reputation.

By routinely completing a privacy impact assessment, you're not just talking the talk of privacy compliance; you're walking the walk and embedding respect for consumer rights into your products, services, and internal practices. As such, a proven commitment to data privacy, including the drafting of policies that consciously incorporate privacy protections, will boost your reputation as a company that emphasizes data privacy above all else.

3. Reduce the Likelihood of Data Breaches

Data breaches can be nightmares for your organization and customers alike. While privacy impact assessments are about reducing vulnerabilities and do reduce security threats as a result, they don't offer a direct A-to-B outcome. 

Instead, they play an active role in enhancing your security posture by:

• Identifying risky data transfers and offering clarity into how security measures can be improved to protect unauthorized access during transfer.
• Minimizing collection of unnecessary or excessively sensitive data and guaranteeing your organization collects only necessary data with an intended purpose.

A privacy impact assessment demonstrates that your organization proactively identifies and blocks security gaps or data vulnerabilities. This protects you from the financial and reputational fallout of a data breach and instills customer confidence in how you handle their PI.

Regulations That Require Privacy Impact Assessments

Compliance remains a legal imperative as legislation evolves to keep up with data privacy needs. Organizations can’t afford to take shortcuts when staying aligned with regulatory requirements. Luckily, privacy impact assessments are designed to help you comply with several government regulations.

E-Government Act of 2002

Congress enacted the E-Government Act of 2002 to improve the management and promotion of electronic government services and approaches. Title II, Section 208 outlines requirements for agencies to incorporate privacy impact assessments into the development cycle of informational systems.

The E-Government Act mandates the use of privacy impact assessments so that every public-sector entity can assess the privacy implications of handling PI. Routine assessments are a valuable tool for federal agencies to comply with privacy requirements and manage potential security threats.

It’s important to note that this act primarily applies to U.S. federal agencies. Therefore, if your organization operates in the private sector, its applicability may be limited, and other regulations might be more relevant to your privacy impact assessments.

Health Insurance Portability and Accountability Act of 1996 (HIPAA)

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) guards patient privacy in the healthcare industry. The law mandates the completion of PIAs to assess and address potential threats to the confidentiality and integrity of protected health information.

By integrating these assessments into healthcare practices, organizations can comply with HIPAA's stringent privacy provisions:

• Privacy Rule: Establishes the rights for individuals to access and control their own PI.
• Security Rule: Specifies the technical and administrative protections that organizations must implement to protect the confidentiality, integrity, and availability of electronic health information (EHI).
• Breach Notification Rule: Requires organizations to notify individuals and the Department of Health and Human Services (HHS) when unsecured EHI is breached.

The California Privacy Rights Act (CPRA)

The CPRA amended the existing California Consumer Privacy Act (CCPA) in January 2023, introducing the need to conduct threat evaluations before collecting or using user PI. However, the law only applies to businesses that meet at least one of the following:

• Annual gross revenues of $25 million or more and do business in California. 
• Buy, receive, or sell the personal information of 50,000 or more California residents, households, or devices. 
• Derive 50% or more of their annual revenue from selling California residents' personal information.

Most businesses in California will meet one of these thresholds, especially since website cookies can easily capture thousands of individuals’ PI in a few days.

The law doesn’t strictly define a “significant risk” to consumer privacy. But at a minimum, the assessment should include:

• An analysis of how personally identifiable information is collected, used, disclosed, and retained.
• Categories of PI being handled.
• Context of the handling activity.
• Consumer expectations for PI processing.
• Purpose, benefits, and negative impacts of PI processing.
• Safeguards to address negative impacts.
• Assessment of whether the negative impacts outweigh the benefits.

Other U.S. State Privacy Laws

Over a dozen states have at least discussed, if not passed, their own comprehensive data privacy laws. Most mirror the requirements established in the CPRA, but each has its own particularities. Covering each state’s assessment requirements is outside this blog's scope, but if you want to review relevant state law characteristics at a glance (including their privacy impact assessment requirements), check out our U.S. Data Privacy Law Guide.

General Data Protection Regulation

On the international stage, the General Data Protection Regulation (GDPR) casts a wide net to protect the privacy rights of individuals within the EU. However, GDPR compliance reaches beyond the geographical borders of EU nations. 

Organizations handling data for EU citizens must perform DPIAs, but it’s good practice to also perform PIAs as a complementary part of data protection impact assessments. 

GDPR's emphasis on privacy by design and default demands comprehensive privacy tactics. So, PIAs remain an integral step in keeping your organization compliant even though DPIAs are more detailed and the only requirement.

How to Conduct a Privacy Impact Assessment

Carrying out your own privacy impact assessment requires a systematic and thorough approach. The depth and content of the assessment should be appropriate for the nature of the information being collected and the size and complexity of your data management system.

Whether you’re launching a new project or onboarding a new vendor, here’s a step-by-step guide for your organization’s PIAs:

1. Define your scope: Clearly outline the project or process being considered. Identify the types of PI that are in danger of being affected and determine the boundaries of the assessment.

2. Identify and document data flows: Map out how PI moves through your organization. Track entry points, storage locations, and transmission methods.

3. Clarify data accuracy and usage: Understand the ways data is handled, your existing security measures, and potential vulnerabilities. Take inventory of the people, vendors, or tools that access data and how they can compromise mitigation.

4. Assess privacy risks: Analyze your data flow, considering factors such as data sensitivity, purpose, and potential vulnerabilities in your database and systems. Calculate the likelihood of these factors exposing consumers to threats and understand the potential consequences.

5. Implement mitigation strategies: Develop official privacy-enhancing measures to minimize identified threats. This may include minimizing data collection, defining retention periods, minimizing the use of sensitive PI, and only transferring data externally when absolutely necessary.

6. Document final outcomes: Compile a detailed report to summarize the findings. Clearly communicate any residual risks and steps taken to address them. This documentation should serve as an ongoing reference point for compliance.

7. Review and update regularly: The privacy landscape will continue to evolve, and so should your assessments. Regularly review and update your assessment to stay ahead of the latest processes and assure ongoing adherence with the latest privacy laws and governance requirements.

You Don't Need to Do Privacy Impact Assessments on Your Own

Carrying out a privacy impact assessment is a collaborative effort that often involves input from various stakeholders, including privacy officers, legal experts, IT professionals, and project managers.

Whether you’re planning on your first or fiftieth assessment, you don’t have to navigate the complexities on your own. Osano stands as a reliable partner in data privacy, offering valuable support to organizations aiming to protect PI and  comply with ease by:

• Managing your privacy program in one location.
• Complying with regulations in 50+ countries without any headaches.
• Mapping your data stores to understand threat levels and prioritization.
• Identifying vendor risk and simplifying how you consider new solutions.
• Guiding you through the assessment process.
• Streamlining and automating the privacy impact assessment workflow.

With regular privacy assessments powered by Osano, you’ll reduce your company’s chances of data exposure, comply with the law, and, most importantly, protect your customers. Our templated assessments, based on industry best practices and data mapping capabilities, consciously incorporate privacy protections throughout the PIA workflow.