Even Fewer Know What Data Third Parties Hold and Have Addressed Third-Party GDPR Compliance in Contracts

The European Union (EU) General Data Protection Regulation (GDPR) took effect May 25, 2018, yet only 34.5 percent of nearly 500 professionals involved in GDPR compliance efforts say their organizations can defensibly demonstrate compliance with the new data privacy rules today, according to a recent Deloitte poll.

Litigation, regulatory and internal investigation challenges could abound for others. One-third of respondents (32.7 percent) hope to be compliant within 2018. And, 11.7 percent plan to take a “wait and see” approach amid uncertainty over how EU regulators in various countries will enforce the new regulation.

“The fact that the GDPR effective date has come and gone and many are still scrambling to demonstrate a defensible position on GDPR compliance reflects the complexity and challenges as the world of privacy rapidly changes,” said Rich Vestuto, a Deloitte Risk and Financial Advisory managing director in discovery for Deloitte Transactions and Business Analytics LLP.

Third-party contract management for GDPR compliance

Only 13.6 percent of respondents are confident that their organizations know what data third parties have and are leveraging artificial intelligence (AI) and other technologies to analyze and manage third-party contracts for GDPR compliance.

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A majority (56 percent) aren’t done discerning what data third parties have or the potential implications of GDPR on third-party contract management. Some (10.2 percent) have yet to begin addressing third-party GDPR compliance at all.

Vestuto added, “Among the biggest GDPR compliance challenges is third-party contract management. Under GDPR, organizations are responsible for ensuring privacy protection of EU-regulated data shared with or used by vendors and service providers, which requires those organizations to know who their vendors are and precisely what data those third parties hold. Updating or renegotiating contracts and agreements may help ensure third parties are GDPR-compliant when using your organization’s EU-regulated data.”

Discovery challenges loom for 30 percent 

Discovery will be harder for their organizations now that the GDPR is enforceable, according to 30.6 percent of respondents. Surprisingly, 18.6 percent expect discovery to actually become easier under GDPR. Some (17.2 percent) expect no change to their organizations’ discovery practices, as a result of GDPR taking effect.

“Even those professionals closely involved in GDPR compliance may not fully appreciate the implications the new rules may have for discovery related to regulatory inquiry responses, litigation and internal investigation proceedings—as well as other aspects of their businesses,” Vestuto cautioned.

Scalability is key as more jurisdictions add data privacy rules

Nearly half of respondents (48.2 percent) say their organizations’ data privacy programs are scalable to address pending rules in other jurisdictions even if their immediate focus is GDPR. Also, 19.8 percent report that their organizations’ programs are focused solely on GDPR without scalability, potentially leaving them unprepared to deal with new rules elsewhere.

Vestuto concluded, “Other jurisdictions beyond the EU are enacting more stringent data privacy protections. Data privacy programs should be scalable and requirements rationalized on a global basis to ensure that organizations are able to address current and pending rules in various jurisdictions as needed.”

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