Best Practices For Financial Data Privacy Regulations

Data privacy, often known as "information privacy," is the notion that a person should have control over their personal data, including the right to choose how organisations gather, keep, and use their data.

 

Businesses regularly acquire user information such as email addresses, fingerprints, and credit card numbers. Supporting data privacy entails gaining user consent before processing data, preserving data from misuse, and allowing users to actively manage their data.  

 

Principles of Data Privacy

 

In many organisations, data privacy is handled by an interdisciplinary team that includes legal, compliance, IT, and cybersecurity professionals. These teams create data management policies that regulate how their organisations gather, utilise, and secure personal data while respecting users' privacy rights. They also create methods for users to assert their rights and establish technical safeguards to protect data.

 

Organisations can govern their data policies using a variety of data privacy frameworks, such as the NIST Privacy Framework1 and the Fair Information Practice Principles.2 Furthermore, the specifics of each organisation's data governance policy are significantly influenced by any privacy rules that the company is required to follow. 

 

That said, there are a few general data privacy principles that appear in most frameworks and regulations. These principles inform many organisations' data privacy policies, processes and controls.  

 

1. Access

 

Users have the right to know what data a corporation collects. Users should have on-demand access to their personal information. They should be allowed to update or modify that information as needed.

 

2. Transparency

 

Users have the right to know who has their information and what they do with it. Organisations should explicitly describe what data they are gathering and how they intend to utilise it. After collecting data, organisations should keep users up to date on critical data processing details, such as any changes to how data is used and any third parties with whom it is shared.

 

Organisations should keep up-to-date inventories of any data they have. Data should be classified according to its kind, level of sensitivity, compliance requirements, and other pertinent considerations. Access control and usage regulations should be based on these classes.  

 

3. Collection, retention, and usage limitations

 

Any data that an organization acquires should serve a specific purpose. Users should be informed of this goal, and the data should only be used for it. The organization should simply acquire the least amount of data required for its declared purpose and retain the data until that goal is met.

 

4. Privacy by design

 

Every system and procedure in the organisation should have privacy enabled by default. Any products designed or implemented by the organisation should prioritise user privacy. Data collection and processing should be opt-in, not opt-out. Users should keep control over their data at all times.

 

Also Read | 6 Software Tools used for Data Privacy

 

Why is Data Privacy Important?

 

Almost all areas of daily living are carried out on the internet, including corresponding, purchasing, and making appointments. And every time we use the internet, we frequently leave minor traces of personal information behind, such as an email address, credit card number, or location. The firms that run the websites we visit collect and utilise that information in a variety of ways. Sometimes they even share or sell the data through data brokers. 

 

1. Data privacy is important for companies.

 

Data privacy rules ensure that sensitive information is protected and that no unauthorised access, disclosure, or theft occurs. Breach or other abuse can have serious regulatory ramifications for businesses, including penalties and litigation, as well as harm to their brand and reputation.

 

2. Legal and Regulatory Compliance

 

Under various data protection laws and regulations, such as the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA), organisations must establish safeguards to protect individuals' data privacy rights. Compliance with these regulations protects organisations from legal consequences, large penalties, and reputational harm.

 

3. Preserving Individual Autonomy

 

Data privacy allows people to keep control of their personal information. It lets them control how their data is collected, utilised, and shared. Data privacy protects individuals' autonomy and ensures that personal information is not exploited or misused without their consent.

 

4. Ethical Data Practices

 

Maintaining data privacy is an ethical obligation. Organisations that handle data must obtain proper consent for data collection, usage, and dissemination. Businesses that adhere to ethical data practices demonstrate their commitment to protecting individuals' rights and fostering openness in their operations.

 

Also Read | What is Data Privacy in Data Science?

 

Best practices for protecting financial data

 

Understanding financial data protection best practices is a fantastic starting step towards safeguarding your organisation. Here are some suggestions to get you started.

 

1. Use strong passwords

 

One of the leading causes of financial data breaches is compromised credentials. According to a Verizon research, 61% of breaches are triggered by unauthorised users accessing employee accounts.

 

Phishing attempts, weak passwords, and shared computers are common offenders as employees transition to remote work, but they can all be prevented. To limit unauthorised access, best practices include using two-factor authentication (2FA) or a single sign-on solution like 1Password.

 

2. Implement role-based access

 

Not every employee should have access to every facet of your systems. Employees should only have access to the files and folders they need. For example, your marketing department does not need access to financial data, nor does your accounting department need access to your website's back-end code.

 

3. Train your staff to recognise security threats

 

Hackers nowadays do not waste time attempting to get access to systems. They can get access far more quickly and easily from within, either by sending phishing emails or fooling staff into clicking on harmful websites.
 

Establish a company security policy and ensure that all employees understand their role in upholding it. You may even encourage some people to become data security champions by offering rewards for enforcing and advocating security standards. Update your policies on a regular basis to reflect the changing threat landscape, and provide periodic training improvements to reinforce them.

 

4. Use Data Backup

 

Data backup is an integral part of financial data protection. While it will not avoid a cyberattack, it will ensure that you are able to resume operations swiftly. As a best practice, keep three copies of your systems on two distinct media, one of which should be saved off site or in the cloud.

 

Consider this: not all data loss is the result of malevolent attacks. In many circumstances, it could be the consequence of a simple error. Accidental file deletion occurs frequently and can be equally damaging if you do not have a backup.

 

Conclusion

 

Financial data is critical to the operation of global financial markets, providing the insights required for investment decisions, risk assessment, and compliance. Adhering to international standards for data interchange provides uniformity, dependability, and accessibility of financial information around the world, boosting market efficiency and transparency.