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 personal information (PI)—a person's full name, phone number, email address, etc.—then you run the risk of mishandling that data.

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

Here’s how to conduct one.

What Is a Privacy Impact Assessment?

In short, a PIA is one of many types of privacy assessments that analyzes how you collect, use, share, and maintain PI. This analysis ensures compliance with industry regulations, identifies privacy risks of new processing activities (e.g., collecting new categories of personal data, launching new applications, or starting any initiative that changes how your organization collects and processes data), and helps uncover ways to reduce privacy risks.

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

Some common reasons to conduct a PIA include:

• Implementing new technologies that handle or collect PI to understand privacy implications at the onset and guarantee properly safeguarded data.
• Updating existing systems to assess and mitigate possible privacy risks during system-wide maintenance.
• Routinely auditing for potential privacy issues to ensure vigilant protection of individual data privacy rights and maintain compliance with changing regulations.

While data breaches are a concern, the primary goal of a PIA is to minimize risk to 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 or selling sensitive data without considering where it might wind up.

PIAs vs. DPIAs

PIAs and Data Protection Impact Assessments (DPIA) often get used interchangeably in conversations around data security and privacy, but they serve different purposes. While a PIA helps evaluate and manage potential privacy risks when handling PI, it is typically an internal process for your organization. Some organizations choose to publish the results of their PIAs in order to garner trust, and some public organizations are required to do so for compliance with U.S. federal regulation; however, most organizations use PIAs 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 ensuring your internal practices align with the specific legal requirements outlined in major data legislation.

Here are three key ways that PIAs differ from DPIAs:

3 Reasons Why PIAs Are Important

A privacy impact assessment reduces the risks associated with handling any form of 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

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

PIAs aim to simplify the process, ensuring your organization stays on the right side of the law. While an internal PIA 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 currency for modern businesses. Privacy-conscious consumers want assurance that their information is handled with care, and PIAs are your best bet for building and maintaining a solid reputation.

By routinely completing a PIA, 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 processes. As such, a proven commitment to data privacy 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 a nightmare for your organization and customers alike. While PIAs are about reducing privacy risk and do reduce security risk as a result, it's not a direct A-to-B outcome. 

Instead, PIAs 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 processes.
• Minimizing collection of unnecessary or excessively sensitive data and ensuring your organization collects only necessary data with an intended purpose.

Conducting a PIA means your organization is taking a proactive stance against any 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 PIAs

As legislation evolves to keep up with data privacy needs, compliance remains a legal imperative. Organizations can’t afford to take shortcuts when it comes to staying aligned with regulatory requirements. Luckily, PIAs 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 processes. Title II, Section 208 outlines requirements for agencies to incorporate PIAs into the development cycle of informational systems.

By mandating the use of PIAs, the E-Government Act ensures every public-sector entity is assessing the privacy implications of handling PI. Routine assessments are a valuable tool for federal agencies to ensure compliance with privacy requirements and to manage privacy risks.

Health Insurance Portability and Accountability Act of 1996 (HIPAA)

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

By integrating PIAs into healthcare practices, organizations can ensure compliance 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 there is a breach of unsecured EHI.

The California Privacy Rights Act (CPRA)

The CPRA amended the existing California Consumer Privacy Act (CCPA) in January 2023, introducing the need to conduct risk assessments before collecting or using consumer 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 with a presence 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 what constitutes a “significant risk” to consumer privacy. But at a minimum, a risk assessment should include:

• A summary describing how PI is collected, used, disclosed, and retained.
• Categories of PI being processed.
• Context of the processing activity.
• Consumer expectations for the purpose of 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 their own particularities. Covering each state’s PIA requirements is outside of the scope of this blog, but if you want to review state law characteristics at a glance (including their PIA 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. GDPR compliance reaches beyond the geographical borders of EU nations, however. 

Organizations handling data for EU citizens must perform DPIAs, but it’s good practice to also conduct 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

Conducting your own PIA requires a systematic and thorough approach. The depth and content of the PIA should be appropriate for the nature of the information being collected, as well as 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 assessed. Identify the types of PI that are at risk of being affected and determine the boundaries of the assessment.
2. Identify and document data flows: Map out how PI moves through your organization. Understand entry points, storage locations, and transmission methods.
3. Clarify data accuracy and usage: Understand the ways data is processed, your existing security measures, and potential privacy risks. Take inventory of the people, vendors, or tools that access data and how they can compromise mitigation.
4. Assess privacy risks: Conduct an analysis of your data flow, considering factors such as data sensitivity, purpose, and potential vulnerabilities in your systems. Evaluate the likelihood of these factors exposing consumers to privacy risks and understand the potential consequences.
5. Implement risk mitigation strategies: Develop privacy-enhancing measures to minimize identified risks. 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 PIA’s 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 PIA to stay ahead of the latest processes and ensure ongoing compliance with the latest privacy laws.

You Don't Need to Conduct PIAs on Your Own

Conducting a PIA 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 conducting your first or fiftieth PIA, 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 ensure compliance with ease by:

• Managing your privacy program in one location.
• Ensuring compliance in 50+ countries without any headaches.
• Mapping your data stores to understand risk and prioritization.
• Identifying vendor risk and simplifying how you assess new solutions.
• Guiding you through the assessment process.
• Streamlining and automating the PIA workflow.

With regular privacy assessments powered by Osano, you’ll reduce your company’s risk, comply with the law, and, most importantly, protect your customers. Our templated assessments, based on industry best practices, and data mapping capabilities make it easy to carry out the PIA workflow.