Why IAM is Critical for GDPR Compliance

The European Union’s General Data Protection Regulation (GDPR) aims to give EU consumers greater control over their personal information. It does this by controlling how organizations collect, process, use, store and share this information.

Organizations that collect the data of EU consumers must comply with the GDPR. For this, they must ensure that only the right people have access to this data. This requires effective and reliable identity and access management (IAM).

IAM enables organizations to manage a range of ‘digital identities’ belonging to people, devices, and even software. IAM also gives organizations the ability to control user access to customer information. That’s why it is a critical component of an organization’s GDPR compliance program.

The GDPR is the world’s toughest consumer privacy law. It applies to any organization that collects or processes the information of EU consumers. This includes organizations inside and outside the EU, large companies, and small and medium-sized businesses (SMBs).

GDPR requires these organizations to implement adequate safeguards to protect the data of EU residents and consumers. It also specifies the rights of these people regarding their data. They have the right to consent to companies collecting and using their data, as well as the right to ask organizations to erase their data (the right to “be forgotten”).

GDPR non-compliance can attract some heavy fines and penalties. The sheer volume of such fines has increased over the years. Between May 2018 and January 2020, EU data protection authorities handed out fines amounting to $139 million. But between January 2021 and mid-January 2022, this amount shot up to $1.2 billion.

One of the most high-profile cases of GDPR violations involved Google. Within just a few hours of the law coming into effect in 2018, the internet giant was hit by privacy complaints. Following investigations, it was fined €50 million by the French Data Protection Authority (CNIL) in June 2020.

The frequency and scope of data breaches constantly increases. These events impact the people whose data is compromised or stolen, as well as the companies that were hit.

In addition to disrupting the affected organization’s operations, a breach can also affect its reputation and financials. This is because the average cost of:

• Remediation has increased from $3.86 million in 2020 to $4.24 million in 2021
• A data breach has increased by $1.07 million due to remote work

By itself, the GDPR cannot stop data breaches. However, it forces organizations to take data security more seriously, since it requires them to:

• Implement strong security controls to protect their customers’ data and privacy
• Perform regular audits on these controls to maintain compliance

The regulation also mandates organizations to continually review who can access what kind of data and assess and control where this data resides. To meet these requirements, IAM plays a critical role.

An effective IAM system may have multiple components:

• Principle of Least Privilege (PoLP): This principle means that an organization provisions just the minimal level of permissions for a user to do their job, which also entails the organization to know exactly which user has what level of access and when the access was granted.
• Segregation of duties: More than one user is required to complete tasks related to the collection or processing of customer data. This requires that multiple managers must be involved – either handling specific steps of a task or mutually approving – to execute a critical permissions-related task so that no single entity can unilaterally perform an approval step.
• Authentication: Strong authentication techniques are implemented to verify user identities and control access to customer data.
• Lifecycle management: The entire lifecycle of customers’ information is properly managed, from collection and processing to distribution and removal.
• Encrypted directory: All personal data is securely stored in a fully encrypted directory.

Together, these IAM components enable organizations to see who can access which data, how, and for what purpose. This is the first step to protecting customer data.

GDPR demands “accountability” from organizations collecting and processing EU citizens’ personal data. This requires permanently enforcing a system to control access to this data. And this is only possible with IAM.

The GDPR also mentions ‘privacy by design,’ which means protecting data with the help of strong technology. Enter IAM.

By implementing IAM, a user can only access the customer data they need to do their job. Such controlled access can lower the probability of a data breach, limit the damage of a breach and help to prevent costly GDPR violations.

In addition to the components mentioned above, your IAM system may include:

Multi-factor authentication

Weak, reused or shared passwords can be easily stolen or misused, increasing the risk of breaches. That’s why stolen or compromised credentials were responsible for 61 percent of data breaches in 2021.

MFA eliminates the inherent security challenges of passwords. It requires more than one authentication factor to allow a user to access a customer’s data. Even if a bad actor steals a user’s password, they will also need to compromise one or two other factors – which is very difficult to do. This additional layer of security protects customers’ data – and helps you remain GDPR-compliant.

Adaptive authentication

Adaptive authentication is a reliable way to protect customers’ data. As part of an IAM system, it analyzes a user’s request to access an enterprise system. It then assigns a risk score to the user based on known characteristics of the user’s request and asks for additional credentials based on this score.

If a login is deemed suspicious, the system challenges the user to prove their identity. It may even prevent their access. Through such adaptive actions, you can better protect your customers’ data and maintain GDPR compliance.

If your organization collects, processes or stores the data of EU citizens, GDPR-compliance is not an option, it is a must. An effective IAM strategy can go a long way towards helping achieve this compliance.

IAM does not automatically guarantee GDPR compliance. However, it can help you strengthen your data controls so you can better protect customer data and meet your GDPR goals with regards to security, transparency and governance.