PRIVACY PROGRAM

MANAGEMENT
Tools for Managing Privacy Within Your Organization

Executive Editor and Contributor

Russell R. Densmore, CIPP/US, CIPP/IT
Deputy Chief Privacy Officer, Lockheed Martin Corporation

Contributors
James M. Byrne, CIPP/US, CIPP/G, CIPP/IT
Elisa Choi, CIPP/IT
Ozzie Fonseca, CIPP/US
Edward P. Yakabovicz, CIPP/IT
Amy E. Yates, CIPP/US

An IAPP Publication

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 ©2013 by the International Association of Privacy Professionals (IAPP)

All rights reserved. No part of this publication may be reproduced, stored in a retrieval
system or transmitted in any form or by any means, mechanical, photocopying,
recording or otherwise, without the prior written permission of the publisher,
International Association of Privacy Professionals, Pease International Tradeport, 75
Rochester Ave., Suite 4, Portsmouth, NH 03801, United States of America.

CIPP, CIPP/US, CIPP/C, CIPP/E and CIPP/G are registered trademarks of the IAPP,
registered in the U.S.

Cover design: Noelle Grattan, -ing designs, llc.

Copy editor: Sue Ducharme, TextWorks

Compositor: Ed Stevens, Ed Stevens Design

Indexer: Wendy Catalano, Last Look Editorial Services

ISBN: 978-0-9885525-1-7
Library of Congress Control Number: 2012955874

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 Contents

Preface. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix
Russell R. Densmore, CIPP/US, CIPP/IT
Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi
Richard Soule, CIPP/US, CIPP/E
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii
J. Trevor Hughes, CIPP

SECTION I: Privacy Program Governance

CHAPTER ONE
Strategic Management
Create an Organization Privacy Vision and Mission Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Develop a Privacy Strategy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Structure the Privacy Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

CHAPTER TWO
Develop and Implement a Framework
Frameworks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Develop Organizational Privacy Policies, Standards and/or Guidelines . . . . . . . . . . . . . . . . . . . . . . . 29
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

CHAPTER THREE
Performance Measurement
The Metric Life Cycle. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

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 SECTION II: Privacy Operational Life Cycle
CHAPTER FOUR
Assess
Assessment Models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Assess Key Areas of Your Business (Data, Systems and Process) . . . . . . . . . . . . . . . . . . . . . . . . . 90
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103

CHAPTER FIVE
Protect
Data Life Cycle Management (DLM) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Information Security Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Privacy by Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
Conduct Analysis and Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125

CHAPTER SIX
Sustain
Monitor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
Communicate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150

CHAPTER SEVEN
Respond
Information Requests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
Legal Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157
Incident Planning. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163
Incident Handling. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192

INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193

ABOUT THE AUTHORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201

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 Figure List
Section I
Figure 3.1: Five-Step Metric Life Cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Figure 3.2: Resource Utilization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section II
Figure II.2: Privacy Operational Life Cycle. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Figure 5.1: The Foundational Principles of Privacy by Design (after Cavoukian) . . . . . . . . . . . . . . . . 122
Figure 6.1: Audit Life Cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137

Table List
Table 1.1: Sample Approaches to Privacy around the Globe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Table 2.1: Elements of a Data Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Table 2.2: U.S. Federal Privacy Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Table 2.3: International Privacy Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Table 2.4: Self-Regulatory Privacy Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Table 2.5: Sources of Outside Privacy Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Table 2.6: Sources of External Privacy Support by Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Table 2.7: PCI DSS Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Table 2.8: Privacy Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Table 2.9: Industry Frameworks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Table 2.10: Privacy Languages and Protocols. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Table 2.11: Privacy Policy Framework Template . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Table 3.1: Sample Metrics Template . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Table 3.2: Metric Template Example: Awareness and Training Measure. . . . . . . . . . . . . . . . . . . . . . 72
Table 3.3: Other Metric Examples. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Table 7.1: Breach-Related Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190

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SAMPLE FROM CHAPTER FOUR

Assess

2. Assess Key Areas of Your Business

(Data, Systems and Process)
The functions of internal audit and risk management, information technology
(IT), information security and privacy office/team are closely related and, in many
companies, may form one team. A simple analogy may serve to describe this relationship.
If you were to picture an information network in terms of plumbing, then IT would
be directing attention to the pipes and how they fit together to allow for the proper
flow of water (i.e., personal information). Internal audit/risk and information security,
on the other hand, are more concerned with how securely the water flows through the
pipes. They ask questions, such as: How can that water (data) be protected and who has
access to it? Where does the water flow, which pipes are being used, and which pipes are
inadvertently being exposed to wrong uses by wrong users (i.e., security breaches)?
A thorough privacy assessment approach should support these business areas.
s Internal audit and risk management
s Information technology: IT operations and development
– Business continuity and disaster recovery planning

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s Information security
– Security, emergency services and physical access
– Incident response and breach notification
s Human resources/ethics
s Legal and contracts
– Compliance
– Mergers, acquisitions and divestitures
s Processors and third-party vendor assessment
s Marketing/business development
s Government relations/public policy
s Finance/business controls

2.1 Internal Audit and Risk Management

Internal audit (IA) and risk management functions review and analyze the whole
organization—all departments, functions and operations. They are responsible for
discussing audit and risk with senior leaders, mid-level managers, first-level managers
and employees. Based on the industry, these roles take on different meanings. Auditors
and risk managers take on many roles and responsibilities based on the industry and
organization, to include finance, performance, quality, project, operations and more.
Their responsibilities include reviewing privacy assessment results and the identification
of privacy risk for the organization.
Internal auditors evaluate the organization’s risk management culture and identify
risk factors within all systems, processes and procedures. In addition to evaluating
control design and implementation to ensure proper risk management, internal auditors
test those controls to ensure the proper operation. Risk managers ensure business and
regulatory requirements through detailed market, credit, trade and counterparty analysis
that communicate risk and issues throughout the organization.8
The nature of IA and risk management is different from other groups that may
conduct internal risk assessments. Most IA departments report to an audit committee
that reports to the board, assuming a predominantly independent role from the rest of
the organization. While assessments come back with recommendations about what should
be fixed, audits come back with findings that must be fixed. Since IA is independent
of management in most cases (also a good best practice to separate the roles and
responsibilities), the audit committee can be confident that internal audits are unbiased
in the reporting of audit findings. Internal audits, or self audits, within an organization
signify a commitment by the organization to be proactive in its approach to reducing
corporate risk. This is evidenced by several positive contributions, such as:

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s Focus on value-add activities beyond financial controls

s Use enterprise risk management (ERM) processes making risk a priority
s Hire auditors and risk managers with different skill sets (e.g. HR, IT, IA)
s Identify risk factors proactively, before they become incidents
s Ensure an independent perspective using audit committees and third parties on
the governance, risk management, and control processes
s Identify and use best practices for recommendations to improve controls,
performance, and reporting throughout the entire organization

2.2 Information Technology: IT Operations and Development

IT operations and development is a crucial piece of an organization’s privacy program.
Here is where the IT team implements controls and technical solutions in systems
that include computers, networks and automated systems to provide a high degree
of security technical controls in order to sustain the privacy program objectives and
goals. It is important for IT operations and development to follow the organization’s
guidelines and incorporate privacy requirements from the outset.
There is no one-size-fits-all solution regarding technical controls—every environment
has its own specific needs, requirements and protections. Smaller companies will not
necessarily have the same kinds of security concerns that confront larger companies, so this
area needs proper research and evaluation. The goal is always the same—to protect the data
for every organization—so controls should be implemented through refined engineering
processes that are repeatable, documented and measured.
Numerous technical controls, devices, systems and products exist throughout the market
today. The privacy professional should leverage internal offices, such as IT or security, to
assist in discussions, evaluations, requirements and use. A simple rule to follow with any
technical issue is to use an expert rather than attempt to become an expert. Although
privacy professionals may know and understand certain technologies, they should always
consult, document and collaborate on all things IT and strengthen those ties to privacy.
2.2.1 Business Continuity and Disaster Recovery Planning
Although not typically thought of as a part of audit or risk, business continuity and
disaster recovery planning (BCDR) are two complementary processes that prepare an
organization for crises and managing the business afterwards, thereby reducing risk.
As stated by an audit executive, “Internal audit’s job is to provoke [thinking about]
the unthinkable and ensure we have a plan.”9 The focus is to recover from a disaster
when disruptions of any size are encountered. The overall goal of any BCDR plan is to
maintain your organization’s operations by mitigating the effects of disruptions. In other
words, developing a good BCDR plan is practicing sound risk management.

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BCDR is sometimes considered a high-cost insurance policy that is never used; thus
the privacy professional should understand the key role played by this critical function and
how it impacts (both negatively and positively) the organization. As the Info-Tech Research
Group states, “When risk and business impact are misinterpreted or miscommunicated
[within the BCDR plan], many problems arise:
s Lack of unified incident response across the organization
s Failure to achieve consensus on standardized recovery processes
s Incomplete or nonexistent risk assessments, assumptions and objectives
s Insufficient communication plans to coordinate recovery/continuity efforts
s Inability to recover data and applications”10
An effective BCDR ensures critical business functions continue; thus, understanding
which staff and systems are mandatory to continue as a business and how to resume
operations are necessary components. Recovery and restoration of personal information
must be handled appropriately during the recovery period. The stressful conditions
experienced during disaster recovery operations can cause mistakes that result in
data being exposed. It is essential, therefore, to have a plan in place prior to a crisis to
safeguard all personal information that ensures the organization privacy objectives and
goals. Info-Tech recommends the following BCDR practices:11
s Make BCDR clear to executives so they understand BCDR is more than
technology and must be properly budgeted and tested
s Convince the business to get involved so they understand the cost of downtime
in lost business, customer relationships and customer service
s Develop recovery time objectives and recovery point objectives and then
communicate those throughout the organization to stakeholders at all levels to
ensure collaboration, support and awareness
s Use BCDR best practices; do not create the wheel, and eliminate rework or
duplicated work between IT, security and privacy
Because the BCDR plans include many components, the privacy professional should
focus on the privacy aspects to protect and manage data privacy throughout BCDR
planning, execution and reporting. As an example, during a pandemic, Rachel Hayward
states, “Privacy professionals need to work with the business continuity planners and
human resource departments to clarify any questions regarding the collection, use, and
disclosure of personal employee information during the development of organizational
[business continuity plans] that include considerations … The challenge is to balance
these needs with the needs of the organization to plan for the potential of prolonged
staff shortages caused by employee illness, and, potentially, employees staying home from

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work to care for loved ones … a single department within an organization may be
severely affected while other areas are less affected, or not affected at all.”12
The privacy professional should ask the following questions for BCDR:
s Does our BCDR plan align with our organization’s privacy policies and
procedures?
s How will we protect personal information from loss and exposure before,
during and after an event?
– Maintaining a backup system off-site?
– Training for backup employees to handle various tasks in an
emergency?
s Are there business contingency plans in place that ensure data privacy?
– Alternate locations for office operations with the same protections?
– Alternate means of communicating within the organization and to
outside contacts (e.g. supply chain networks, customers) with the
same level of privacy controls?
It is recommended the BCDR be assessed from a privacy perspective.

2.3 Information Security

Information security is a complex topic that includes technical and physical controls
that span the organization to form IT systems, building security, remote users, vendors
and third parties. As controls change all the time based on newer releases of technology,
software applications, upgrades, decommissions and rotation in staff, control management
should be an agenda item at many privacy and security meetings to communicate,
understand and provide proper management practices, information and collaboration of
that data. These controls have to include the privacy requirements of the organization.

As privacy is concerned with an individual’s ability to control the use of personal information,
information security focuses on mechanisms for protection of information and information systems.

At the high level, information security provides standards and guidelines for applying
management, technical and operational controls to reduce the probable damage, loss,
modification or unauthorized access to systems, facilities or data. This includes having
a strategy for document destruction, sanitization of hard drives and portable drives,
security of fax machines, imaging and copier machines. Many times there is confusion
between applying all three of these controls, and information security is only considered
within the technical controls of an enterprise, domain, system, etc. The privacy

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professional should become an expert with all three as related to the policies, standards
and codes of conduct of the organization’s management structure, objectives and goals.
At the highest levels, these three controls are secured through three common information
security principles from the 1960s, known as the C-I-A triad, or information security triad:
s Confidentiality. Prevention of unauthorized disclosure of information
s Integrity. Ensure information is protected from unauthorized or unintentional
alteration, modification or deletion
s Availability. Information is readily accessible to authorized users
Further advanced information security concepts developed years after the principles
from above were established include:
s Accountability. Entity ownership is traceable
s Assurance. All other four objectives are met
These practices apply high-level reasoning to risk management and define the
organization’s objectives and goals for data security. Since security practices are based on
geographical, legal, regulatory and other considerations, the privacy professional should
understand the organizational strategies to meet those and determine stakeholders for
communication, collaboration and information sharing. Information security in general
is a complex topic that may span the organization. By becoming familiar with the
stakeholders, the privacy professional will have open channels of communication to and
from those key players throughout the life cycle management aspects.
It is important the security controls are an integral part of the privacy assessment
process.
2.3.1 Security, Emergency Services and Physical Access
All security-related services should be aligned with the organization’s privacy policies
and procedures. Physical security measures implemented at each facility should reflect
the sensitivity of the information housed at that location. Procedures should be in place
to control access to the organization’s facilities and to prevent unauthorized access to
resources within those facilities.
Monitoring physical access to the organization’s facilities is a function of the security
department. Procedures should be in place to confirm that the data being used to monitor
access (e.g., surveillance videos, access logs, etc.) is handled, stored and destroyed appropriately,
in accordance with the entity’s privacy and security requirements.The security department
should also be aware of the organization’s incident response protocol, as they may be
required to notify or otherwise provide evidence of potential breaches to the designated
parties (e.g., privacy office, incident response team, information security, etc.) and to help
support investigations regarding unauthorized access or compromise. It is also important
these services, wherever they collect personal information, also undergo a privacy assessment.

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2.4 Human Resources/Ethics

Depending on the organization’s size, industry, geographical location and more, HR and
ethics management cross boundaries or are totally separate. Smaller organizations might
be forced to merge the offices, while larger organizations could devote many more
resources to these tasks.
2.4.1 Human Resources
Staff in the HR department looks at the personal information life cycle of specific HR
data to ensure that the handling of all information by HR personnel is in compliance with
the organization’s privacy policies and procedures.
The human resources function will include personal information in areas such as:
s Talent acquisition and hiring
s Performance management
s Training and development
s Compensation and benefits
s Employee relations
s Employee records
s Succession planning
Multinational organizations are required to meet local regulations and the privacy
expectations of their employees in all countries in which they operate. Obligations do not
simply disappear because the office or employees are in another state, country or continent.
Specifically, cross-border data transfers should be monitored to regulate the export of
personal data to ensure regulatory compliance and data privacy.The employment contract
provides overall employee consent for certain work-related activities. Some surveillance/
monitoring in the workplace will require additional privacy considerations.
Employee privacy considerations are other important activities for HR to review:
s Investigations of fraud and criminal activities
s Handling of organization trade secrets for the protection of that information
s Prevention of discrimination, sexual harassment and other human rights
concerns
s Compliance with workplace safety
s System integrity with compliance of security and privacy practices13
2.4.2 Ethics
Not all companies have a separate ethics office, but all companies need to have an
ethics function. This may be tied in with compliance or HR, but there needs to be
accountability for people doing the right thing within the organization.

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There needs to be a trusted place in your organization where people can take their
complaints, concerns and possible whistle blowing when necessary. If an allegation
should arise, for example, concerning someone invading another individual’s personal
information, there needs to be a procedure for responding, resolving and documenting
the situation. Usually this is a function of the privacy office.
Ethics will often function in a manner similar to IA; that is, independent of the
normal chain of command and properly empowered and staffed to perform necessary
tasks. Ethics will usually report directly to the board, or as close to the board as possible.
This is necessary to guard the integrity of the ethics function, protect the data and
protect the organization from possible misconceptions of data confidentially. If an
allegation were to be made against the chief executive officer of the corporation, for
instance, you could not have your ethics department reporting to the very person
being investigated. By guarding the independent operations of the ethics function, your
organization sends a strong message about its commitment to privacy protection.
Wherever the ethics function is located within your organization, you need to make
sure that you are addressing the issue of people doing the right thing with other people’s
personal information, investigating matters as they arise and reporting those to proper
stakeholders to protect the individuals and the organization.

2.5 Legal and Compliance

As with many other categories, legal and contracts can overlap in layers or be two
distinct topics, depending on the organization’s size, geographical location and other
factors. These tasks may overlap within administrative, clerical and research duties.

Legal, security, audit, risk and compliance may overlap or be separate based on the organization.

2.5.1 Legal
“Privacy policies have become long legal documents that most attorneys, let alone
the average consumer, have difficulty understanding. They are meant to provide notice
to individuals about data collection, use and disclosure policies. However, they are often
complicated, long, and unintelligible and, as a result, rarely read by the average consumer
… Your organization’s privacy practices must align with its privacy promises to minimize
legal liability.You can do so by conducting factual and legal due diligence. The factual due
diligence allows you to determine what information your organization uses. The legal due
diligence allows you to determine what laws govern the use of that information.You need
to understand both in order to competently draft a privacy policy that minimizes legal risk
for your organization.”14 The legal office is therefore the necessary owner of this task, to
perform legal liability activities in conducting the due diligence.

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To perform this due diligence, a legal office, team or person with the legal roles,
responsibilities and empowerment must be appointed to act for the organization. This
role will then have the responsibility for ensuring that the organization is in compliance
with all legislative, regulatory and market requirements that are specific to your industry.
They should also understand local privacy obligations and requirements that pertain to
that organization in the countries from which the data is collected. This includes, for
example, registering and obtaining international transfer approvals with data protection
authorities (DPA) in those countries where this is required.
Administrative, clerical and research duties may apply across the organization or be
delegated to a small group. Administrative duties may include legal advice, translation of
laws and regulations into plain language, lawsuits, and senior leadership to the organization.
Clerical duties include contracts (e.g., assisting the contracts office, writing contracts, etc.),
legal document management and possible budget and expenditure assistance.
Research is another legal duty to ensure the organization is acting in accordance with
laws, regulations, industry, geographical location, etc.The privacy professional should become
familiar with the legal staff and how the organization performs the legal duties, as well as
how privacy is impacted, managed, addressed, and considered or scrutinized by the legal team.
Legal should have controls, documentation management practices and tracking
mechanisms to identify, track and record all procurements, contacts, service-level
agreements and performance measurements for privacy management. Are there
established procedures in place, for instance, to review contracts with vendors who
handle personal data while representing your business? Is that data tracked and reviewed
on an ongoing basis? Do the organization customers have a need to review this material
for auditing or reporting purposes? The vendors must be held to the same standards as
employees, and all vendor functions must be aligned to the privacy requirements you’ve
established through your privacy framework.
An incident management and breach response team should include IT, security, the
privacy office, legal and HR as required. This team manages the breach notification
activities, as necessary, with guidance and leadership from the legal office to ensure
understanding of the regulatory aspects and internal control of the information,
the findings and the impacts that result. The legal office—as a privacy management
stakeholder—should be aware of the privacy governance in the organization, roles and
responsibilities, lines of communication, joint planning and coordination of risk.

2.5.2 Compliance
Privacy compliance is no less complicated than the legal aspects. For example, in
the EU, the EU Data Protection Directive requires member states to adopt laws that
protect personal information, to disclose who is collecting the data and why, and who
will ultimately have access to it. The Directive also gives the person the right to access

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the data and make corrections to it. Some multinational organizations doing business
between the EU and U.S. may use Safe Harbor, while companies operating solely with
the U.S. have federal, state and local regulations and laws that are sectoral, based within
finance, healthcare and other industries. Compliance to the privacy standards and laws
is challenging and not getting any easier. As stated in Chapter 2, because penalties for
violation of privacy laws and regulations are increasing, the privacy professional must be
prepared to address, track and understand any penalty that could affect the organization.

Compliance to privacy standards and laws is challenging and not getting any easier,
regardless of geographic location, industry or organization size.

Compliance can exist within any of the core business functions: legal, security, IT,
audit or others. There are specific merits to the layering, overlapping or separation
of each as defined by the organization objectives or goals. Regardless, the roles and
responsibilities of each function must still be performed in one way or another to
ensure the success of the organization. Mark Ruppert states that the advantages and
disadvantages of combining these include:
s Separation of legal, compliance, internal audit and security functions:
“collaboration is more challenging, but functional independence is assured.”
s Combining legal, compliance, internal audit and security functions:
“collaboration is assured, but functional independence is more challenging.”15
He also highlighted the fact that twenty-two comparative compliance categories
exist within a generic organization to reflect the complexity in the compliance roles and
responsibilities that may include:16
s Requirement s Activity focus s Risk
s Purpose s Relationship s Follow-up
s Reporting management s Investigation
s Internal authority s Training s Hotline
s Span of responsibility s Auditing s Information systems
s Professional standards s Monitoring s Internal controls
s High-level focus s Expertise s And others that
s Primary risk focus s Compliance plan overlap from this list

Access to the organization, proper governance, lines of reporting and authority,

organization placement and organizational access impact all of these categories to

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achieve effective privacy management and governance. The privacy professional will
need to define the roles and responsibilities of compliance for the organization and
document when, where and how privacy is managed within many of these layers. The
starting point to complete this task may be within several offices or unique roles that
depend greatly on the organizational structure and purpose. It may be the legal office,
internal audit, risk management or privacy office itself.
Because of the overlap for compliance, the privacy professional should be prepared
to track and investigate all possible roles and responsibilities within the organization.
Remember that each organization completes this role differently by combining or
separating them. The key will always be found in the organizational governance
structure, joint planning and coordination of risk management in the organization.
Risk is typically the driving factor for establishment of many offices, including
privacy, security, audit and compliance, so the starting point will be to understand the
organizational risk approach, the supporting offices and the governance.
2.5.3 Mergers, Acquisitions and Divestitures
Mergers, acquisitions and divestitures contain many legal and compliance aspects,
with their own sets of concerns related to privacy. Mergers form one organization
from others, while acquisitions involve one organization buying one or many others;
divestitures remove one aspect of an organization for several motives, which may include
selling off part of the business not integral to the core.
An organization can be exposed to unnecessary corporate risk by acquiring
companies that may have different regulatory concerns than the current business
environment. Examples below illustrate the need to consider the variety of regulatory
considerations that may be involved in any of these actions, to include:
s Acquiring an organization that is a U.S. Health Insurance Portability and
Accountability Act (HIPAA)-covered entity if the parent organization is not
s Acquiring an organization that needs to meet PCI-compliant standards or
other regulatory compliance, such as Statement on Auditing Standards, No. 70,
Service Organizations (SAS 70) reporting
s Acquiring an organization that has employees in countries with specific privacy
legislation; for example, PIPEDA, EU Data Protection Directive, etc.
s The acquisition of an organization with existing client agreements requires a
review by the new ownership in regards to the control, movement and use of
the data, including marketing
s New resources, technologies and processes need to be assessed in order to
identify all actions that are required to bring them into alignment with privacy
and security policies before they are integrated into the existing system

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2.5.3.1 Divestitures
With respect to both partial and total divestitures, the organization should conduct a
thorough assessment of the infrastructure of all, or any part of, the entity being divested
prior to the conclusion of the divestiture. These activities are performed to confirm that
no unauthorized sensitive information, including personal information, remains on the
organization’s infrastructure as part of the divestiture, with the exception of any pre-
approved proprietary data.
It is important to the organization to include a privacy checkpoint as part of the
merger, acquisition, and divestiture processes.

2.6 Processors and Third-Party Vendor Assessment

Processors, third-party vendors and business process outsourcers who are now
a part of the standardized business practice must also be part of the privacy
management program to remain vigilant about data protection. In the majority of
the legislations, accountability remains with the organization; therefore, privacy
controls that determine how data is to be protected and handled must exist in the
contracts with the processors and third-party vendors. Compliance factors, the ever-
changing landscape of privacy and security regulations, multinational considerations,
geographical location and other factors relevant to storing, processing, and
transmitting privacy data must maintained.
Organizations should carefully vet vendors prior to selection and continue to
monitor and audit them through the life of the contract to ensure proper privacy and
security risk management practices. Contract language should be written to call out
privacy protections and regulatory requirements within the statement of work and
then mapped to service-level agreements to ensure there are no questions about the
data privacy responsibilities, breach response, incident response, media press releases
on breaches, possible fines, and other considerations, as if the vendor were part of the
organization. Privacy/security questionnaires, privacy impact assessments and other
checklists can be used to assess the vendor risk and should include consideration for the
vendor’s privacy and information security policies, access controls, where the personal
information will be held and who has access to it. Results may indicate improvement
areas that may be fixed or identify higher-level risk that may limit the ability of that
vendor to properly perform privacy protections.
Once risk is determined, the organization best practices may also be leveraged to assist
a vendor too small in size or with other limited resources by offering security engineering,
risk management, training through awareness and education, auditing and others.
The vendor contract should include specific information about what services the
vendor will be providing and what the vendor’s responsibilities are. The following list
gives a few examples of the kind of information you may want to consider including:

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s Specifying the type of personal information the vendor will have access to at
remote locations
s How the vendor plans to protect personal information
s The vendor’s responsibilities in the event of a data breach
s How the data will be disposed of when the contract is terminated
s Limitations on the use of data that ensure that it only be used for specified
purposes
s Rights of audit and investigation
s Liability for data breach
The purpose of the vendor contract is to make certain that all vendors are in
compliance with the requirements of your organization’s privacy program.

2.7 Marketing/Business Development

Aligning marketing/business development means that any activities where information
is collected and shared as a function of marketing must conform to regulatory privacy
practices.

2.8 Finance/Business Controls

Finance is linked to many of the other organizational functions discussed in this chapter.
Finance will typically control the money and budget of an organization, including
employee payroll, investments, expenditures and many other sensitive key business
indicators that may or may not be within the scope of privacy. Financial functions
should align with requirements in the privacy framework and legal, security, risk and
many other governance factors of the organization. Internal lines of communication and
control are necessary to establish and observe privacy practices to ensure organizational
objectives and goals.
Finance must have some effective means to track any changes to regulatory
requirements and to update finance employees’ awareness of those changes. All financial
functions must handle financial information that aligns with current regulatory
requirements) and the overall privacy program.
Examples of financial functions include:
s Accounts receivable
s Accounts payable
s Payroll
s Securities
s Investments

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Don’t be reluctant to phone a friend. Conducting a gap analysis using some or all of
someone else’s maturity model is not necessarily an intuitive activity. Professionals usually
study and pass exams in their chosen subject fields—it takes time to become proficient. If
you’ve never conducted a review before, ask relevant and experienced colleagues for help and
advice.The IA function may have templates you can adapt and use.You may be lucky, and
they may offer to partner with you in conducting the assessment. Use the internal resources
and skills available to you; they know your business best.You don’t necessarily have to hire
expensive internal consultants.

All processes in the above functions should undergo a privacy assessment if/when
personal information is handled.

3. Summary
Assessment of your organization’s privacy program is one stage of the privacy operational
life cycle. There are a variety of models and frameworks—including maturity models—
that provide guidelines for measuring and aligning privacy activities. These models can be
used in whole or in part to help your organization conduct an effective assessment.

Endnotes
1 AICPA/CICA, Privacy Maturity Model, March 2011, www.aicpa.org/InterestAreas/
InformationTechnology/Resources/Privacy/DownloadableDocuments/10-229_AICPA_
CICA%20Privacy%20Maturity%20Model_FINALebook_revised0612.pdf.
2 Id. at 2.
3 Id. at 3.
4 Id. at 2.
5 Information and Privacy Commissioner, Executive Summary, www.ipc.on.ca/site_documents/
achieve-goldstnd_execsumm.pdf.
6 Federal Trade Commission, Protecting Consumer Data in an Era of Rapid Change:
Recommendations for Businesses and Policy Makers, p.iii, p. vii, March 2012, http://ftc.gov/
os/2012/03/120326privacyreport.pdf.
7 Information and Privacy Commissioner, Ontario, Canada, Privacy by Design: From Policy to Practice,
September 2001, www.ipc.on.ca/images/Resources/pbd-policy-practice.pdf.
8 Counterparty: commonly used in the financial services industry to describe a legal entity,
unincorporated entity or collection of entities to which an exposure to financial risk might exist.
9 Ernst & Young, Executive Summary: Internal Audits Evolving Role: A Proactive Catalyst of Business
Improvement (2011), www.energycollection.us/Board-Of-Directors/Audit/Internal-Audits-
Evolving.pdf.

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