One-Year Anniversary of the GDPR: A Look Back and Ahead

When the European Union’s General Data Protection Regulation (GDPR) took effect in May 2018, it signaled the start of more aggressive privacy oversight and enforcement in an era of rapidly advancing technology.  The diversity and scope of enforcement actions, and the intersection of data privacy regulation with technology, are likely to pose increasing challenges for regulators and for businesses.

In the first nine months the GDPR was in effect, regulators brought more than 200,000 cases in 31 countries and issued nearly €56 million in fines.  The diversity of monetary fines and enforcement actions is striking, and demonstrate the GDPR’s broad scope.  Thousands of GDPR actions are currently pending, and organizations should expect EU regulators to continue to aggressively pursue instances of non-compliance.

The GDPR has also spurred regulatory momentum in many other regions, including the US. One consequence is the drive toward greater data localization; many large technology companies have discovered that transferring large amounts of data outside the EU can run afoul of GDPR requirements.  Another consequence is that many new regulatory standards are not uniform, and companies may struggle to comply where privacy regimes conflict.  Ultimately, companies may incur substantial costs in order to bring their data use practices into compliance.

Finally, the convergence of GDPR and other data privacy regulation with evolving technology – 5G networks, IoT, AI, the Cloud – will challenge businesses’ ability to foster technology innovation while also protecting privacy.   Businesses should expect the EU to take an active approach to AI’s consumption and processing of personal data, especially when it distinguishes individuals based on race, gender, political beliefs, or other sensitive categories, even where the consequences are unintentional.

The combination of these factors creates the potential for a hydra-like cyber risk for businesses. Risk professionals should prepare for the potential pitfalls that lie ahead by consulting with their advisors and insurance brokers about evolving regulatory standards and changing technology, and adopting insurance policy terms and conditions to address their organizations’ widening exposures.