Data Privacy in Business: Why is it Important?

Posted on by Josh Burnham | Updated:
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Between analytics, user experience, and automated customer engagement, there seem to be new ways to turn data into money every day. But the more valuable a resource is, the more you need to protect your own. To that end, we’ll look at data/information privacy, public policy, and what it all means for the practicality of your privacy and security measures. 

What Is Information/Data Privacy?

Information privacy or data privacy (the terms are essentially interchangeable) means handling certain types of critical information carefully so that it is not inadvertently shared, stolen, or leaked. Most companies are primarily concerned with maintaining the privacy of Personal Health Information (PHI) and Personally Identifiable Information (PII), especially banking data, credit card data, health records, social security numbers, and financial information. 

However, we urge you to adopt a broader standard and one that is becoming the industry standard for best practices: applying data privacy principles to all of the information that your organization needs to operate. This includes the company’s financials, development data, proprietary or licensed research, and anything else you’d feel the loss of. 

The Importance of Information Privacy for Your Business  

Information privacy is somewhat instinctive – the phrase that’s none of your business comes to mind. Failing to control access to data critical to your business activities could put your organization, your business partners, and even your clients or customers at risk of fraud, identity theft, or simple public embarrassment.

A leak of your proprietary data could see your most important trade secrets fall into the hands of your competition. It could see your enemy using your playbook to outmaneuver your tactical or strategic business moves. 

Data protection and data privacy laws only go so far. Accordingly, you have to adopt a privacy policy that goes beyond the bare minimum established by laws and regulations. And consider adopting a policy privacy mindset where even the details of your policies are on a need-to-know basis.

Who Needs Data Privacy?

The short answer is everyone. By and large, you need some sort of information privacy for your business – even a lemonade stand has its secrets.

The longer answer is that even if you don’t think you have any data that would be attractive to scammers, thieves, and digital troublemakers (you’d be wrong, by the way), your clients, customers, suppliers, and business partners all expect the information you hold about them to remain private. Failure to do so can lead to a devastating loss of trust and goodwill. 

A worker secures data privacy for their business

Complying With Regulations

Information privacy compliance is a very big issue in the business world today. Every industry and every country has its own set of best practices and multiple, often overlapping, regulatory schemes with which they have to comply. Below is a brief description of each of the most widely applicable regulations:


The General Data Protection Regulation (GDPR) came into force across Europe in 2018. Significantly, it affects companies that merely do business in Europe, regardless of where that company is based. This gives it a truly worldwide scope. If a store in Canada ships an order to a customer in Ireland, they must comply with GDPR regulations.

The GDPR establishes principles that dictate how to store, transmit, and handle data. In the broadest sense, organizations that collect data must do so lawfully, fairly, and transparently. Data must be minimal, suitable only for certain purposes, accurate, and stored only for a limited time. It must be secure, and the company storing it is accountable for lapses in any of these principles. 


The California Consumer Protection Act (CCPA) protects the privacy rights of California residents. Like the GDPR, it reaches out to organizations doing business with California residents, no matter where they are. Its core principles include the right to opt out of data selling, the right to access and erase data about yourself, and the requirement to mitigate data system vulnerabilities. 


The Children’s Online Privacy Protection Act (COPPA) is enforced by the United States Federal Trade Commission. It sharply limits how app developers and online businesses can treat the information of users under the age of 13. At its core is the right of parents to control the collection of data on their children via apps. Again, this affects overseas companies that have an audience in the US.


The Personal Information Protection and Electronic Documents Act (PIPEDA) is a Canadian regulation that requires organizations to get a person’s consent before collecting, disclosing, or even using personal information about them. It allows people to view the personal information that the covered organization holds on them and to challenge it in terms of accuracy. PIPEDA also prevents organizations from using information for a new purpose without gaining new, specific consent and requires those organizations to keep the information safe. 

Data Security vs Data Privacy

Data privacy/information privacy is about making sure that individuals have and retain meaningful control over their data. It lets them limit how companies may share and use it. 

By comparison, data security means protecting data from being accessed, stolen, or corrupted for as long as your organization keeps it. 

Types of Data Security

There are seven core data security technologies in use today. These include firewalls, authentication and authorization measures, encryption, data masking, hardware-based security, data backup and resilience efforts, and data erasure.

Data security is more important than ever, and many technologies are leveraged to ensure that all data is secure.

For example, firewalls act as a barrier between the internal databases of sensitive information and the external environment. Authentication and authorization measures, as well as encryption, can be used to restrict access to only authorized personnel.

Data masking prevents unauthorized users from seeing confidential data while hardware-based security helps protect physical elements like computers or mobile phones.

Data backup and resilience efforts help restore lost or corrupted data. In contrast, data erasure promises true peace of mind. If the sensitive data is erased, no one can access, alter, or delete it in an unauthorized manner.

Data Privacy in Business: Final Thoughts

Data privacy is important for businesses of all sizes. Understanding what data privacy is and how it differs from data security can help business owners make sure they are taking the necessary steps to protect their customers' information. There are a number of laws and regulations governing data privacy, so it’s important to be aware of these when collecting and storing customer information.

Liquid Web takes data privacy and security seriously and offers a number of features to keep your data safe. To learn more about how we can help you protect your data, contact them today.

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About the Author

Josh Burnham

Josh has worked at Liquid Web for over 4 years, starting out in the support team and moving up to his current position as a Cybersecurity Engineer. Josh is always on the hunt for the latest security-related issues and loves to share his knowledge with others.

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