May 23, 2023

GDPR Compliance: Questions and Answers

Business owners, data managers, and startup teams working to move their companies through the fundraising process are facing a looming spring timeline related to GDPR compliance. This set of data management regulations was passed into law by the EU parliament in April of 2016, and as the May 2018 compliance deadline approaches, questions are beginning to pile up. Get these questions answered now and the next few months will roll forward on schedule. Wait till the last minute, and a small issue could become large enough to deter potential investors, at the very least. Here are some quick answers to the questions that may be holding you back.

I’m pretty sure the GDPR won’t impact me, since it’s an EU law and I’m located in the US. Am I right?

Probably not. The GDPR will affect every company that operates within the European Union, but it will also apply to all companies that collect, manage, or handle data for European companies and European customers. If you conduct any international business at all, this probably means you. Even if your stakeholders are all highly local, consider your growth plans in the future.

I have customers in the UK. Will the outcome of “Brexit” clear me from compliance obligations?

Again, probably not. The UK may or may not retain the GDPR if it leaves the EU, but at the moment, GDPR regulations will indeed prevail in the UK. If nothing else changes, expect to be held accountable for the data of your UK customers just as you would for customers anywhere in Europe. And keep in mind that GDPR accountability extends to all service providers, partners, vendors and other entities with which your sensitive customer data is shared. It’s a good idea to stay on the safe side and strive for compliance now, even if you end up off the hook after Brexit is resolved.

Do I need to hire a Data Protection Officer? This is my largest and most expensive concern

You're not alone; This is a serious worry for small companies and startups with lean resources. You’ll most likely need to appoint a DPO if your company

  1. Is a public authority,
  2. Engages in systematic monitoring
  3. In of sensitive personal data (check article 37 of the regulation to find out if you fit that definition.)

I’ve experienced data breach exposure in the past. Will this affect my path to GDPR compliance?

No, not as long as you address your exposure and set up a system that allows you to notify the DPA and affected customers within 72 hours if a breach occurs in the future.

Is there one simple resource I can rely on to help me prepare?

You can read the full text of the act right here:

http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32016R0679

And in the meantime, an experienced consulting team can help you organize your compliance requirements into specific milestones. There’s no need for concern if you take things one step at a time and start moving now!


We’re here to help.

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Frequently Asked
Questions

What type of compliance standard can you help with?

We help our clients based on their needs. The majority of our contracts involve SOC-2, HIPAA, and most recently GDPR. Feel free to ask us if we can help with your particular case. If we aren't able to, we can most likely recommend you to someone who can.

How long does a SOC 2 engagement usually take?

We move as fast as our clients are able to make progress. Our fastest client to date got their SOC-2 Type I four months after signing our engagement letter. That record is up for grab if you are up for it.

In our experience however, it takes 6-9 months to achieve a SOC-2 Type I,  and 3-6 additional months to obtain a SOC-2 Type II report.

Which standard do you follow for your security policies?

All of our security policies follow the ISO-27001 standard. The Confidentiality, Integrity, and Availability standards cover the range of standards we like to work with for SOC 2.

Why do we have to become SOC 2 compliant if we are relying on AWS which is already compliant?

SOC 2 stands for Service Organization Control, meaning your clients are interested in understanding your controls, not your hosting provider’s control. As part of your vendor assessment we recommend reviewing AWS’ SOC 2 report, but relying on their report is not enough to become SOC 2 compliant.

Who is behind SOC 2?

The American Institute of CPAs. The AICPA is an established and respected organization that provides two forms of audits to companies that demonstrate evidence of a secure data-protection infrastructure. A Type I is a point in time audit that addresses the company’s description of its system, the suitability of the system’s design, and the effectiveness of its internal data controls. A Type II report happens over a period of time and emphasizes design and also focuses on the validity of the company’s controls.

Are SOC 2 reports a legal obligation?

No, but most enterprise level organizations that engage with sensitive data (again, almost all of them) have an obligation to their stakeholders to prove due diligence regarding data security, which means they’ll want to vet their service providers using this tool. SOC 2 can help these prospective service providers set themselves apart from the competition. Just as important, a SOC 2 report represents a meaningful and respected signifier of trust.

What can happen to a company without a SOC 2 report?

A lack of a SOC 2 report won’t result in legal problems, but it can and will limit outside assessments of the company’s commitment to data security. When large-scale clients look for providers, or large-scale backers look for a likely return on their investment, they don’t want concerns about security to stand in the way. Trust is a chain made of links that have each been put the test and have proven their ability to withstand pressure and scrutiny. Company leaders are wise to let SOC 2 auditors apply this pressure so their clients and backers don’t have to.

When is it too late for a SOC 2 audit?

Never. Even companies that have been in business for years but have never obtained a SOC 2 report can—and should—take steps in this direction now. Being compliant with SOC 2 can open the door to a broader base of more significant clients and larger contract opportunities. That being said, startups in the threshold of the marketplace, and new business owners who hope for an eventual public offering, should obtain a SOC 2 report during the development and financing process. By the time the company approaches Series B and C fundraising rounds, a report should be in hand.

How complicated is the auditing process?

The auditing process can be easy, or complicated depending on your level of preparation.

Preparing for the audit can take some time, attention, and the guidance of reliable data security experts. Don’t leave any part of this process to chance. Approach SOC 2 compliance one step at a time, and start by contacting a consulting firm with track record of experience in your area of the marketplace.