The Vital Role of Data Privacy Policies in Your Small Business
We have all heard about data breaches that have plagued large companies such as Snapchat and Uber. But are cyber attacks a small business problem? Yes, 43% of cyber attacks are on small businesses. What’s worse is that only 14% of small businesses are prepared for cyber attacks. Failing to safeguard sensitive information such as employee information can lead to legal troubles and the detriment of any business. As your venture grows, so does the importance of protecting your data.
In this blog post, we'll explore why developing and enforcing a robust data privacy policy, with included provisions for HR data, is essential and why employee acknowledgement of this policy from employees is a key step towards securing sensitive information. CPR can help guide your small business through this process as well!
43% of cyber attacks are on small businesses and only 14% of small businesses are prepared for cyber attacks.
Why Data Privacy Matters for Your Small Business
Small businesses must be proactive in safeguarding the information they handle, especially in an era where the potential for data breaches make daily headlines. Here are more reasons why data privacy from an HR perspective are a critical concern:
Legal Compliance: HR data often includes the gathering and storage of sensitive employee information. Data protection laws vary between states and federally. The strictest U.S. state law is the California Consumer Privacy Act (CCPA). Developing a data privacy policy ensures that your business is compliant with data protection regulations, mitigating legal risks. Non-compliance can result in hefty fines and damage to your reputation. In 2021, a survey revealed that 44% of small businesses spent $250,000-$500,000 and 16% spend between $500,000 - $1M to cover the costs of security breaches.
Employee Trust & Retention: Trust is typically slow to build but can be quickly destroyed. Employees entrust your business with their personal details such as their social security number, demographic information, bank information, and medical details. Protecting HR records is not just about trust and compliance; it's about your duty (and also the law!) to safeguard the confidentiality of employee records.
Protecting Intellectual Property: Your intellectual property (IP) is a critical asset. IP includes copyrights, trademarks, trade secrets, and patents. How would you feel if your secret product, ingredients, or process was disclosed publicly? What risk would that pose to your business? A robust data privacy policy helps protect IP from unauthorized access.
Mitigating Security Risks: If your company’s employee information were to be leaked right now, what is your documented process on the steps you will take? Who is well versed in this process to know what to do? Who specifically has access to employee information and what specific information? A well-structured data privacy policy outlines security measures and helps mitigate internal risks. The policy should outline strict protocols for access and handling of sensitive HR information.
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Developing Your Data Privacy Policy
Creating a data privacy policy tailored to your small business’ needs involves several key steps:
Identify Data Types: Clearly define the types of data your business collects, processes, and stores. This includes customer information, employee personal information, employee performance records, trade, and any other sensitive data.
Usage and Processing: Outline how the collected data will be used. Be transparent about the purposes for which the data will be processed, ensuring alignment with legal requirements.
Security Measures: Detail the security measures in place to protect the data. This may include encryption protocols, secure storage, access controls, and measures to prevent unauthorized disclosures.
Data Retention Guidelines: Specify how long data will be retained and establish procedures for secure data disposal when it is no longer needed.
Employee Training: Human error accounts for almost 90% of all cyber attacks. Conduct training sessions to ensure that employees and anyone performing HR or payroll duties understand the importance of data privacy and their role in safeguarding and handling sensitive information responsibly.
Employee Acknowledgment
Once you have a data privacy policy, the next crucial phase is ensuring that your employees are aware of and acknowledge understanding of the policy. Having employees acknowledge the data privacy policy is often a legal requirement so ensure your HR consultant, like CPR, guides you in the legal landscape. It demonstrates that your business has taken steps to inform and educate its workforce. Also, like all policies, acknowledgment shows due diligence in holding employees accountable for adhering to the policies in place. It reinforces the importance of safeguarding sensitive information.
Final Thoughts
To be clear, having a data privacy policy does not guarantee that your business will not experience a cyber security attack. However, developing a process for handling confidential data, crafting a robust data privacy policy, and ensuring employee acknowledgement is not just a legal necessity; it’s about creating a workplace where trust thrives, and sensitive information is treated with the utmost care.
By laying the foundation and outlining precautions to safeguard sensitive information, you're not only protecting your business’ assets and your workforce’s sensitive information, but also building trust with employees, customers, and partners. Remember, in the world of business, trust is a necessary currency that can propel your business to new heights.
CPR can help you with your data privacy policy, so ask us today!
Disclaimer: The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information on this website may not constitute the most up-to-date legal or other information.
