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    From Crisis to Control: How the Digital Personal Data Protection Law Curbs Data Breaches

    By Akshayy Nanda

    In the digital age, personal data breaches are not just a possibility but a recurring reality that can have devastating effects on individuals and businesses alike. These breaches expose personal information, from financial data to personal identifiers, leading to identity theft, financial fraud, and a loss of public trust. The necessity for a robust personal data protection law has never been more evident, as these laws play a critical role in minimizing the frequency and impact of personal data breaches.

    In recent years, news of personal data breaches has become a regular feature in media outlets across the globe, highlighting a pervasive and growing problem in the digital age. From multinational corporations to small businesses, no entity seems immune to the threat of personal data breach that exposes personal information. As digital transactions and data storage become increasingly commonplace, so does the potential for exploitable vulnerabilities, making personal data breaches a frequent topic of concern and media coverage. Given the frequency with which personal data breaches dominate news cycles, the Digital Personal Data Protection Act, 2023 (DPDPA), is anticipated to substantially reduce the incidence of these breaches in the times to come.

    The Damages of Personal Data Breaches

    Personal data breaches can result in substantial financial losses for both individuals and companies. For individuals, the exposure of credit card details and personal identification data can lead to unauthorized transactions and financial fraud. For companies, the costs are manifold; they include immediate costs of breach mitigation, legal fees, fines for compliance failures, and compensations to affected parties.

    Beyond the tangible financial impacts, a data breach can severely damage an organization’s reputation. Trust is a cornerstone of customer relationships, and once it is broken, it can be exceedingly difficult to rebuild. Customers are less likely to engage with a brand if they believe their data is not secure, leading to reduced retention rates and a loss of potential new clients. The long-term reputational damages can far exceed the immediate financial losses.

    The legal repercussions following a data breach can be severe. With the introduction of the DPDPA, organizations can face hefty penalties for non-compliance. These regulations require not only that personal data is secured but also that breaches are reported in a timely manner.   

    The Role of the DPDPA

    The DPDPA requires organizations to implement appropriate technical and organizational measures as well as reasonable security safeguards to protect personal data from unauthorized or accidental access, use, disclosure, disruption, modification, or destruction. As such, there is a legal obligation for businesses to invest in their cybersecurity infrastructure, conduct regular audits, and train their staff adequately. By setting these standards, the DPDPA will significantly lower the risk of personal data breaches.

    The DPDPA also enhances accountability for organizations in their handling of personal data. It requires organizations to not only protect personal data but also to take responsibility in the event of a breach. This includes notifying affected individuals and the regulator about the breach within specified timelines, which can help mitigate the damage sooner and enhance transparency. The timeline within which organizations are required to notify the Data Protection Board will be provided in the awaited rules. Typically, personal data protection laws of other jurisdictions such as the GDPR provide a timeline of 72 hours within which a personal data breach is to be notified. It is also pertinent to mention that unlike the personal data protection laws in other jurisdictions which provide a risk-based threshold for the purpose of notifying the regulatory bodies and affected individuals regarding a personal data breach, there is no such risk threshold provided under the DPDPA. As such, compliance with the DPDPA may prove to be more onerous and challenging for businesses.

    The DPDPA includes provisions for severe penalties for non-compliance, which serves as a deterrent against lax security measures and encourages organizations to prioritize personal data protection. There are different bands of financial penalties for each different non-compliance, for example, failure to implement reasonable security safeguards attracts a penalty which may extend to INR 250 Crores and failure to notify a personal data breach attracts a penalty which may extend to INR 200 Crores.

    By establishing these comprehensive legal requirements, the DPDPA is poised to significantly mitigate the occurrence of personal data breaches. It promises to not only restore but also boost user confidence in digital services, fostering a safer online environment. As such, this legislation is a critical advancement in the fight to protect personal information in the digital age, aiming to keep pace with evolving technological threats and setting a new standard in data privacy regulations.

    What must organizations do to reduce the possibility of data breaches

    To reduce the possibility of personal data breaches, companies need to implement a range of strategic, technical, and organizational measures such as:

    Establish Strong Data Governance Policies – It is critical to develop clear policies on personal data handling within the organization. The policies must define how data is to be collected, stored, used, and shared. The organization must also ensure that access to personal data is limited to only those employees who need it to perform their job functions.

    Data Minimization and Storage Limitation – Two of the fundamental guiding principles of the DPDPA are Data Minimization, i.e., organizations must only collect personal data which is necessary for the specified purpose for which consent is sought from the individuals and Storage Limitation, i.e., data is not retained for perpetuity and is deleted once the purpose for which the data is collected is complete. Data minimization plays a critical role as collecting and storing less data reduces the potential targets for cyber-attacks. With fewer data points available, the opportunity for malicious actors to exploit personal information is diminished. Further, complying with the storage limitation requirement reduces the possibility for personal data breach as the longer data is stored, the greater the risk that it might be accessed unlawfully or accidentally disclosed. By limiting storage duration, companies reduce the window of opportunity for personal data to be compromised.

    Implement Advanced Security Measures – Companies must implement robust security measures such as  strong encryption to protect data at rest and in transit making it less accessible to unauthorized users as well as keep all systems updated with the latest security patches and software updates to protect against vulnerabilities.

    Regular Audits – Companies must perform regular audits of personal data handling and security protocols to identify and rectify potential vulnerabilities and to ensure that the requisite disclosure regarding a breach is made to the Data Protection Board and affected individuals within the specified timeline.

    Risk Assessment – Companies must conduct comprehensive risk assessments to understand potential threats and impacts, helping to prioritize security efforts.

    Train Employees on Data Protection Best Practices – Companies must regularly train employees on the importance of personal data protection, common threats (like phishing attacks), and safe data handling procedures. Employee negligence has emerged as one of the leading causes of personal data breaches across the world. 

    Incident Response Plan – Companies must develop a robust incident response plan to quickly address and mitigate the impact of any personal data breach, including clear roles and communication strategies.

    By implementing these strategies, companies can significantly reduce the risk of personal data breaches, protecting their assets and building trust with their customers and partners.

    Conclusion

    The damage caused by personal data breaches underscores the critical need for stringent and effective personal data protection laws. Compliance with the DPDPA is an essential shield that protects individuals and businesses from the financial, reputational, and legal repercussions of data breaches. By enforcing robust personal data protection standards, enhancing accountability, and empowering individuals, DPDPA is expected play a pivotal role in safeguarding personal data in an increasingly digitized world. The evolution and enforcement of this legislation will be key to mitigating the risks of future personal data breaches and maintaining trust in the digital economy.

    In the digital age, personal data breaches are not just a possibility but a recurring reality that can have devastating effects on individuals and businesses alike. These breaches expose personal information, from financial data to personal identifiers, leading to identity theft, financial fraud, and a loss of public trust. The necessity for a robust personal data protection law has never been more evident, as these laws play a critical role in minimizing the frequency and impact of personal data breaches.

    In recent years, news of personal data breaches has become a regular feature in media outlets across the globe, highlighting a pervasive and growing problem in the digital age. From multinational corporations to small businesses, no entity seems immune to the threat of personal data breach that exposes personal information. As digital transactions and data storage become increasingly commonplace, so does the potential for exploitable vulnerabilities, making personal data breaches a frequent topic of concern and media coverage. Given the frequency with which personal data breaches dominate news cycles, the Digital Personal Data Protection Act, 2023 (DPDPA), is anticipated to substantially reduce the incidence of these breaches in the times to come.

    The Damages of Personal Data Breaches

    Personal data breaches can result in substantial financial losses for both individuals and companies. For individuals, the exposure of credit card details and personal identification data can lead to unauthorized transactions and financial fraud. For companies, the costs are manifold; they include immediate costs of breach mitigation, legal fees, fines for compliance failures, and compensations to affected parties.

    Beyond the tangible financial impacts, a data breach can severely damage an organization’s reputation. Trust is a cornerstone of customer relationships, and once it is broken, it can be exceedingly difficult to rebuild. Customers are less likely to engage with a brand if they believe their data is not secure, leading to reduced retention rates and a loss of potential new clients. The long-term reputational damages can far exceed the immediate financial losses.

    The legal repercussions following a data breach can be severe. With the introduction of the DPDPA, organizations can face hefty penalties for non-compliance. These regulations require not only that personal data is secured but also that breaches are reported in a timely manner.   

    The Role of the DPDPA

    The DPDPA requires organizations to implement appropriate technical and organizational measures as well as reasonable security safeguards to protect personal data from unauthorized or accidental access, use, disclosure, disruption, modification, or destruction. As such, there is a legal obligation for businesses to invest in their cybersecurity infrastructure, conduct regular audits, and train their staff adequately. By setting these standards, the DPDPA will significantly lower the risk of personal data breaches.

    The DPDPA also enhances accountability for organizations in their handling of personal data. It requires organizations to not only protect personal data but also to take responsibility in the event of a breach. This includes notifying affected individuals and the regulator about the breach within specified timelines, which can help mitigate the damage sooner and enhance transparency. The timeline within which organizations are required to notify the Data Protection Board will be provided in the awaited rules. Typically, personal data protection laws of other jurisdictions such as the GDPR provide a timeline of 72 hours within which a personal data breach is to be notified. It is also pertinent to mention that unlike the personal data protection laws in other jurisdictions which provide a risk-based threshold for the purpose of notifying the regulatory bodies and affected individuals regarding a personal data breach, there is no such risk threshold provided under the DPDPA. As such, compliance with the DPDPA may prove to be more onerous and challenging for businesses.

    The DPDPA includes provisions for severe penalties for non-compliance, which serves as a deterrent against lax security measures and encourages organizations to prioritize personal data protection. There are different bands of financial penalties for each different non-compliance. For example, failure to implement reasonable security safeguards attracts a penalty which may extend to INR 250 Crores and failure to notify a personal data breach attracts a penalty which may extend to INR 200 Crores.

    By establishing these comprehensive legal requirements, the DPDPA is poised to significantly mitigate the occurrence of personal data breaches. It promises to not only restore but also boost user confidence in digital services, fostering a safer online environment. As such, this legislation is a critical advancement in the fight to protect personal information in the digital age, aiming to keep pace with evolving technological threats and setting a new standard in data privacy regulations.

    What must organizations do to reduce the possibility of data breaches

    To reduce the possibility of personal data breaches, companies need to implement a range of strategic, technical, and organizational measures such as:

    Establish Strong Data Governance Policies – It is critical to develop clear policies on personal data handling within the organization. The policies must define how data is to be collected, stored, used, and shared. The organization must also ensure that access to personal data is limited to only those employees who need it to perform their job functions.

    Data Minimization and Storage Limitation – Two of the fundamental guiding principles of the DPDPA are Data Minimization, i.e., organizations must only collect personal data which is necessary for the specified purpose for which consent is sought from the individuals and Storage Limitation, i.e., data is not retained for perpetuity and is deleted once the purpose for which the data is collected is complete. Data minimization plays a critical role as collecting and storing less data reduces the potential targets for cyber-attacks. With fewer data points available, the opportunity for malicious actors to exploit personal information is diminished. Further, complying with the storage limitation requirement reduces the possibility for personal data breach as the longer data is stored, the greater the risk that it might be accessed unlawfully or accidentally disclosed. By limiting storage duration, companies reduce the window of opportunity for personal data to be compromised.

    Implement Advanced Security Measures – Companies must implement robust security measures such as  strong encryption to protect data at rest and in transit making it less accessible to unauthorized users as well as keep all systems updated with the latest security patches and software updates to protect against vulnerabilities.

    Regular Audits – Companies must perform regular audits of personal data handling and security protocols to identify and rectify potential vulnerabilities and to ensure that the requisite disclosure regarding a breach is made to the Data Protection Board and affected individuals within the specified timeline.

    Risk Assessment – Companies must conduct comprehensive risk assessments to understand potential threats and impacts, helping to prioritize security efforts.

    Train Employees on Data Protection Best Practices – Companies must regularly train employees on the importance of personal data protection, common threats (like phishing attacks), and safe data handling procedures. Employee negligence has emerged as one of the leading causes of personal data breaches across the world. 

    Incident Response Plan – Companies must develop a robust incident response plan to quickly address and mitigate the impact of any personal data breach, including clear roles and communication strategies.

    By implementing these strategies, companies can significantly reduce the risk of personal data breaches, protecting their assets and building trust with their customers and partners.

    Conclusion

    The damage caused by personal data breaches underscores the critical need for stringent and effective personal data protection laws. Compliance with the DPDPA is an essential shield that protects individuals and businesses from the financial, reputational, and legal repercussions of data breaches. By enforcing robust personal data protection standards, enhancing accountability, and empowering individuals, DPDPA is expected play a pivotal role in safeguarding personal data in an increasingly digitized world. The evolution and enforcement of this legislation will be key to mitigating the risks of future personal data breaches and maintaining trust in the digital economy.

    Akshayy is a Partner in the Personal Data Protection and Competition Laws practice at Saraf and Partners. He specializes in advising companies on navigating the complexities of the Digital Personal Data Protection Act, 2023 (DPDPA).

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    The post From Crisis to Control: How the Digital Personal Data Protection Law Curbs Data Breaches appeared first on MEDIANAMA.

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