What it means
Personal data is any information that can identify a living person, from a name and email address to payment details and online identifiers. Laws in many countries now regulate how organisations may use it and give individuals rights over it.
The DPO's job is to help the organisation follow those laws and to show that it does. Under the European regulation, appointing a DPO is mandatory for certain organisations, including public authorities and those whose core activities involve large-scale monitoring of individuals or large-scale processing of sensitive categories of data.
Other organisations may appoint one voluntarily. The role can be filled by an employee or an outside specialist under a service contract.
The DPO's tasks include advising on data protection duties, monitoring compliance, assisting with data protection impact assessments for risky projects, training staff and cooperating with the regulator. They are also the contact person for individuals who want to exercise their rights, such as asking for a copy of their data.
The role is advisory, so responsibility for compliance remains with the organisation. A key feature of the role is independence.
The DPO must be able to report to the highest level of management, must not be told how to carry out their tasks and should not be penalised for giving honest advice. They should also avoid conflicts of interest, which is why the head of marketing or IT is usually not a suitable choice.
For finance leaders, the DPO matters because penalties for serious breaches under the European regime can reach a percentage of worldwide annual turnover, and breach costs include investigation, notification and compensation. Budgeting for the role, tools and training is cheaper than paying for a failure.
The nuance is that rules differ by country, so check the law that applies to your business. Cross-border businesses face an extra layer of complexity.
A company that sells to customers in several countries may be subject to more than one regime, and transfers of personal data between countries often need a legal mechanism. The DPO is usually the person who keeps the map of where data flows and which rules apply.
In practice
Real-world examples.
Example
A hospital group that processes large volumes of patient records appoints a full-time DPO who reports to the chief executive. The DPO reviews new software projects for privacy risk, trains clinical staff and handles patient requests for their records. The board receives a quarterly compliance report.
Example
A mid-sized online retailer outsources the role to a specialist firm for a fixed monthly fee. The external DPO runs an annual audit, advises on the cookie banner and is named in the privacy notice as the contact. The retailer chooses this route because it cannot justify a full-time hire.
Example
A fintech start-up plans to launch a new credit scoring feature using customers' spending data. Its DPO insists on a data protection impact assessment before launch. The assessment leads to changes in how long data is kept and who can see it.
Case study
Seen in the real world.
Bramble and Co Insurance is an illustrative, fictional insurer that started using customer data to price policies in real time. The head of IT was acting as the informal privacy contact, but the board realised that this created a conflict, since IT also decided which systems to build.
The company appointed an independent DPO who reported directly to the board. In the first quarter she found that old quote data was being kept indefinitely, that a marketing tool was sharing email addresses with a third party without proper consent, and that the privacy notice was out of date.
The fixes cost about $60,000 in staff time and legal advice. In this illustrative story, a customer complaint to the regulator six months later was closed without action because the company could show a record of its compliance work.
Watch out
Common mistakes.
- Appointing someone with a conflict of interest, such as the head of IT or marketing, who would be reviewing their own decisions.
- Treating the DPO as personally responsible for compliance, when the organisation remains accountable and the DPO advises and monitors.
- Confusing it with days payable outstanding, which uses the same three-letter abbreviation in finance but measures how long a business takes to pay its suppliers.
Questions
People also ask.
Does every company need a DPO?
No, only certain organisations are required to appoint one, but many choose to name a privacy lead to coordinate compliance anyway.
Can a DPO be an outside consultant?
Yes, the role can be filled by an external specialist on a service contract, as long as the person has the knowledge, independence and access that the law requires.
Who does a DPO report to?
The DPO should report directly to the highest level of management, such as the board, and should not be instructed on how to carry out their tasks.
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