Data Privacy: Why is it important?

Data privacy has been a frequently discussed topic in recent years, as data sharing over the internet, high-profile data breaches, and government regulations have converged to highlight the importance of information privacy and informed consent. So what is data privacy, and why is it important?

What is Data Privacy?

Data privacy is the branch of data management that deals with handling personal data in compliance with data protection laws, regulations, and general privacy best practices. Ensuring data privacy involves setting access controls to protect information from unauthorized parties, getting consent from data subjects when necessary, and maintaining data integrity.

Data privacy needs to be a top priority for businesses. Failure to comply with data privacy regulations can lead to big losses. Think of legal action, steep financial penalties, and brand damage.

Ensuring data privacy is part of the larger topic of data governance. Data governance requires organizations to know what data they have, where it’s stored, how it flows through their IT systems, and how it’s used. Data governance best practices allow organizations to maintain data integrity and trust in their data.

data privacy

Why is it important?

In many jurisdictions, privacy is considered a fundamental human right, and data protection laws exist to guard that right. Data privacy is also important because for individuals to be willing to engage online, they have to trust that their personal data will be handled with care. Organizations use data protection practices to demonstrate to their customers and users that they can be trusted with their personal data.

Personal data can be misused in several ways if it is not kept private or if people can’t control how their information is used:

  • Criminals can use personal data to defraud or harass users.
  • Entities may sell personal data to advertisers or other outside parties without user consent, which can result in users receiving unwanted marketing or advertising.
  • When a person’s activities are tracked and monitored, this may restrict their ability to express themselves freely, especially under repressive governments.

For individuals, any of these outcomes can be harmful. For a business, these outcomes can irreparably harm its reputation, as well as result in fines, sanctions, and other legal consequences.

In addition to the real-world implications of privacy infringements, many people and countries hold that privacy has intrinsic value: that privacy is a human right fundamental to a free society, like the right to free speech.

What are the benefits of data privacy compliance?

Proper data privacy compliance can yield four major benefits for a business, including:

  • Lower storage costs. Storing all data forever can be costly and risky. Companies that make rational decisions about what data to collect and store, and implement the minimum retention time for that data, reduce costs for primary and backup data storage.
  • Better data use. Data is time-sensitive. A business making better data collection and retention decisions can benefit from timely and better-quality data — which translates into more accurate and relevant analytical results.
  • Better business reputation and brand. The reputation of a business can be as important as its product or service. A business that successfully adopts and adheres to data privacy practices can demonstrate care for customer data and data privacy, leading to a better reputation and a stronger brand. Conversely, a business that experiences a major data breach can suffer irreparable damage to its reputation and brand.
  • Regulatory compliance. Proper data privacy compliance can protect a business from the litigation and fines that come with data privacy breaches.

Data Privacy Laws

To protect the privacy of personal information, many countries have passed laws and regulations that govern how companies and organizations collect, store, use, and share it.

For example, in the United States, the Health Insurance Portability and Accountability Act (HIPAA) regulates the use and disclosure of protected health information (PHI) by healthcare providers. Similarly, the General Data Protection Regulation (GDPR) in the European Union provides a framework for handling and storing individuals’ personal data. GDPR went on to inspire the California Consumer Privacy Act (CCPA), which provides a comparable set of regulations for businesses collecting information from California residents.

Data Privacy is not Data Security

Security can exist without privacy principles, but privacy needs security — in fact, there is no privacy without security.

Implementing a full suite of privacy policies — data collection, data processing, data portability, data retention, and data deletion — is meaningless if someone can gain unauthorized access to sensitive data. Data privacy and data security professionals must work together to ensure that sensitive data is both private and secure.

Security applies to all types of information, whether it’s PII or not. The question of whether information is personally identifying simply determines the level of security necessary. PII requires the highest security standard. However, privacy encompasses a wider set of obligations than security, including:

  • Data lifecycle: The data lifecycle for PII must begin with a clear purpose for collecting user data. It also maps how PII is managed, from collection to deletion.
  • Data ethics: Ethics extend beyond lawfulness and compliance with data privacy regulations. Ethical behavior towards personal data includes transparency, openness, and fairness regarding how that data is handled.
  • Data quality: While ensuring the accuracy of user data isn’t solely the responsibility of data privacy professionals, it is vital to maintaining data privacy. For example, if patient records aren’t up to date, test results could go to the wrong person.

data privacy

Common data privacy challenges

It’s natural to want to stop your data from falling into the wrong hands, but that isn’t always easy. One of the difficulties is the variety of ways your data can be accessed or tracked. Here are some of the most common challenges people face:

Confusing social media privacy settings

Social media platforms and other online services often have complex privacy settings that can be difficult for users to navigate. It isn’t always clear what’s private and what’s not, or the purpose for which you are sharing data. This can have dangerous consequences, including social media identity theft.

Online tracking

Many websites and apps use cookies, web beacons, and other tracking technologies to collect data about users’ online behavior. Usually, this is legitimate and done only with the users’ consent, but there can sometimes be exceptions. In such cases, users may be unaware that their activities are being tracked and that their data is being shared with third parties.

Phishing scams

Phishing scams are a common way for ​hackers and scammers to trick users into sharing their personal information. Phishing emails and websites may look legitimate, but they’re designed to steal sensitive information, such as login credentials or credit card numbers.

Lack of control over third-party data sharing

Even if users take steps to protect their data, they may have little control over how third-party companies handle their information. For example, if a user shares information with an online retailer, that retailer may share the information with other companies for marketing purposes.


The time when personal data could be quietly collected and shared is gone. Today, organizations that store and use financial, health, and other personal information must handle that data with respect for its privacy. Using the best practices outlined here will help your organization create a baseline privacy framework for becoming a responsible and ethical steward of personal data.


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