Understanding data protection liabilities for C-suite executives and senior leaders

Understanding data protection liabilities isn’t only a regulatory requirement for C-suite executives and senior leaders – it’s a critical aspect of effective leadership. These key roles carry specific responsibilities and obligations in managing data protection and privacy as they are at the forefront of strategic decision-making.

If you hold a senior leadership role within a business, you will more than likely have some input in deciding the purpose and means of processing personal dataInformation which relates to an identified or identifiable natural person.. You will understand the significance of data protection safeguardsWhen transferring personal data to a third country, organisations must put in place appropriate safeguards to ensure the protection of personal data. Organisations should ensure that data subjects' rights will be respected and that the data subject has access to redress if they don't, and that the GDPR principles will be adhered to whilst the personal data is in the... and the consequences of data protection breaches.

But are you aware of the extent of your liabilities?

Data protection liabilities for senior leaders often refer to the legal obligations related to the handling of personal data and any associated risks that may be encountered. A thorough understanding of data protection legislation, such as the General Data Protection RegulationRegulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data (General Data Protection Regulation). (GDPR) and in the UK, also the Data Protection Act 2018The Data Protection Act 2018 is a United Kingdom Act of Parliament which updates data protection laws in the UK (and supersedes the Data Protection Act 1998), and implemented the GDPR into UK legislation. (DPA), will ensure you take appropriate, proactive measures to mitigate risks and minimise personal liability.

In this blog, we explore the different leadership roles, their data protection management responsibilities, and the various liabilities that are associated, ranging from reputational damage to financial and legal penalties. We also give an overview of some of the ways to mitigate those risks and ensure compliance with data protection legislation.

How data protection management varies for different senior leaders in an organisation

Data protection management is a multifaceted responsibility and requires a collective effort across various leadership roles. This collective effort is essential because each senior leader contributes unique expertise and perspectives to the overall data protection strategy.

A well-rounded data protection approach not only ensures compliance with privacy regulations but also helps build trust and confidence among stakeholders and customers.

Here are some examples of the key data protection responsibilities related to the various senior-level roles:

What data protection liabilities do C-suite executives face?

Non-compliance with data protection regulations can result in a variety of consequences for organisations, ranging from legal and financial penalties to reputational damage.

Let’s take a look at some of these in more detail.

Fines

Under the UK’s Privacy and Electronic Communications RegulationsPECR is the UK implementation of the ePrivacy Directive (Directive 2002/58/EC) providing certain rules on marketing, cookies, communication services security and customer privacy (in relation to traffic/location data, billing, line identification and caller directories). (PECR), the ICOThe United Kingdom’s independent supervisory authority for ensuring compliance with the UK GDPR, Data Protection Act 2018, the Privacy and Electronic Communications Regulations etc. has the authority to impose fines on company directors, potentially up to £500,000 if their company does not address an ICO-imposed fine or faces liquidation.

In very rare circumstances, directors could face personal liability under the DPA 2018:

• If they are actively involved in decisions that lead to non-compliance such as endorsing practices that don’t meet regulatory standards
• Where a breach occurs due to a lack of appropriate safeguards and directors were aware of the potential risks and did not act
• In situations where the company is insolvent and cannot pay the fine

Criminal charges

In severe cases, data protection authorities may seek criminal charges against C-suite executives who have been directly involved in violations.

In May 2023, a Finnish CEO received a 10-month suspended prison sentence following a data theft incident. The business filed for bankruptcy as a result of the breach, leaving investors with combined losses of over £237m.

Under the DPA 2018 in the UK, there are a number of criminal offences:

• Section 144: False statement made in response to an information notice
• Section 148: Destroying or falsifying information and documents
• Section 170: Unlawful obtaining of personal data
• Section 171: Re-identification of de-identified personal data
• Section 173: Alteration of personal data to prevent disclosure to data subjectAn individual who can be identified or is identifiable from data.

Additionally, under paragraph 15 (1), it is an offense to intentionally obstruct a person executing a warrant issued under this Schedule or failing to provide necessary assistance without a reasonable excuse.

Default responsibility for senior leaders of organisations operating in Quebec

Senior leaders of organisations operating in Quebec must be mindful of the specific requirements regarding the appointment of a Data Privacy Officer. Under Quebec’s new legislation, known as Law 25, one crucial aspect is that if a Privacy Officer is not explicitly appointed, the responsibility defaults to the CEO or Managing Director (MD).

This means that, by default, the highest-ranking executive of an organisation is accountable for overseeing the organisation’s compliance with privacy regulations.

Organisations of all sizes and sectors operating in Quebec should appoint a Privacy Officer with the expertise and specialist knowledge needed to ensure compliance with privacy laws and understand global data protection complexities.

Read our blog: Quebec’s Law 25 for more information

Data protection liabilities in different jurisdiction

It is important for senior leaders to understand which laws apply to their organisation, especially when operating over multiple jurisdictions. This is because different regulations bring varying fines or legal penalties for violations. For example, under the U.S. Health Insurance Portability and AccountabilityPerhaps the most important GDPR principle, which requires controllers to take responsibility for complying with the GDPR and, document their compliance. Act (HIPAA), C-suite executives can face civil fines of up to $1.5M and criminal penalties up to 10 years’ imprisonment.  

Tips to mitigate data protection risks

Senior leaders can minimise their personal liability by complying with relevant data protection regulations and ensuring the correct procedures are in place to reduce the risk of data breaches. For example:

• Privacy by design
  

  From the outset, you should integrate data protection considerations into your organisations systems, services, and procedures. This proactively demonstrates your commitment to data protection and helps foster a privacy-centric culture.

• Stay informed

  Keeping up to date with privacy regulations helps ensure your organisation remains compliant, and being aware of the latest technology advancements allows you to continuously assess and manage potential risks.

• Risk assessments

  You should conduct regular data protection impact assessments (DPIAs) to identify potential vulnerabilities in your organisation’s activities, systems, and processes. This will allow you to prioritise high-risk areas and implement appropriate mitigations.

• Data breach responseAn organisation's procedure or approach for recording, investigating, containing and mitigating a personal data breach. plan

  Developing an effective data breach response plan, tested on a regular basis, will enable your organisation to respond to incidents. This will minimise the impact on business operations, reducing financial and reputational impact.

• Access controlsA series of measures (either technical or physical) which allow personal data to be accessed on a need-to-know basis.

  Access controls regulate who can view and use personal data. Implementing strong access controls will help maintain data confidentiality by restricting unauthorised access and monitoring access patterns to identify potential security breaches. Senior leaders should consider limiting access to personal data based on job roles and responsibilities and regularly review privileges.

• Staff training

  Conducting regular data protection training will increase employee understanding of data protection legislation, company-specific policies and procedures, and staff responsibilities in safeguarding personal data. Training materials should be frequently reviewed to ensure it is up to date with regulations

• Data Protection professional

  Appoint an experienced professional with no conflict of interest to ensure that your organisation is aware of changes in the regulatory environment and can advise the highest level of management about privacy risks and considerations.

Summary

C-suite executives and senior leaders play a pivotal role in safeguarding their organisation’s data and the personal data of stakeholders, employees, and customers. Non-compliance with data protection regulations can leave senior leaders open to data protection liabilities, including financial penalties and legal action.

Data breaches are a risk that all organisations strive to avoid. They can occur due to sophisticated cyberattacks, vulnerabilities in an organisation’s infrastructure, or human error. Therefore, having a strong compliance frameworkA series of policies, procedures, actions plans etc. detailing an organisation's compliance with any relevant laws, Codes of Practice etc. and taking proactive measures to mitigate risk are key. These measures will help minimise data protection liabilities and ensure compliance with data protection legislation worldwide.

If your organisation’s executive team would benefit from external support with your data protection compliance, please contact us.

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In case you missed it… 

• GDPR advice for Saas companies entering EU & UK markets
• Data retention and the GDPR: Best practices for compliance
• What is a DPA and why do you need one?

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