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Last month, I had the opportunity to speak to entrepreneurs at Launch Dayton's Startup Week regarding the positive effects that strong privacy and data governance practices have on business.
As regulations increase and complexity rises, many businesses remain hesitant to view privacy and security obligations as anything other than impediments to innovation. In practice, embedding privacy by design and developing strategic approaches to cybersecurity and artificial intelligence laws serve as valuable drivers for growth.
Navigating the Regulatory Landscape
The environment surrounding privacy and security law is dynamic. American companies must contend with a complex framework that includes numerous state privacy laws (Indiana, Kentucky, and Rhode Island will introduce new statutes in 2026) federal regulations such as HIPAA and GLBA, industry self-regulatory standards including PCI-DSS, and evolving market contractual requirements specific to artificial intelligence. International standards, most notably the GDPR, introduce higher expectations for data transfers, extraterritorial reach, and significant penalties, including criminal penalties in Switzerland.
Understanding Key Risks
Organizations face considerable risks due to compromised consumer data. Data breaches commonly diminish trust, and individuals may reconsider or end relationships with the affected business. Significant breaches often trigger declines in brand value and stock price, as well as substantial financial costs resulting from recovery activities, regulatory penalties, and legal disputes. These consequences extend beyond financial metrics, affecting reputation and attracting increased regulatory attention.
Security incidents can arise from multiple sources, such as brute force attacks, business email compromise, social engineering, and suboptimal website data management. Additionally, accessibility issues related to web compliance represent substantial risks; regulatory bodies closely monitor such requirements. Neglect of web accessibility may result in costly litigation and settlements, emphasizing the necessity of compliance.
Artificial Intelligence and Emerging Risks
Artificial intelligence further complicates the landscape. Organizations are increasingly implementing natural language processors, machine learning tools, and generative AI solutions, all of which create distinctive legal exposures. These include intellectual property risks, discrimination, bias, inadvertent data disclosures, and exposure of regulated information. A policy addressing artificial intelligence is necessary to facilitate effective risk management. Judicial bodies address new cases regularly, and the regulatory environment continues to develop at the federal and state levels.
Establishing a Proactive Plan
Taking prompt action helps alleviate digital concerns. Organizations of all sizes can strengthen privacy and security by focusing on several fundamental areas:
- Leadership commitment: Executive leadership must prioritize privacy; boards are expected to understand obligations and risks. Designating responsibility to a Chief Privacy Officer or department lead is advisable.
- Data classification: Personal data should be assessed and defined according to both external regulations and internal risk criteria.
- Data mapping: Understanding the location of data across physical servers, cloud environments, offices, third-party vendors, and artificial intelligence providers is essential for security.
- Risk assessments: Ongoing risk evaluations help maintain compliance with HIPAA, GLBA, NY DFS, insurance requirements, and government contracts, and should lead to prioritized risk mitigation.
- Governance and controls: Develop administrative, technical, and physical safeguards including policies, procedures, employee training, privacy statements, and formal agreements to create a multi-layered security structure.
- Privacy impact assessments: Evaluate risks associated with new products, system updates, or organizational changes prior to launch to promote purposeful progress.
Leveraging Trust for Business Growth
Organizations that protect consumer information consistently benefit from increased loyalty and trust. Many individuals prefer and are willing to support brands that prioritize privacy. Transparent and accessible privacy policies strengthen trust and improve brand perception. Privacy and cybersecurity serve as opportunities for organizations to drive positive momentum. Those that implement privacy in their strategy and invest in governance realize advantages that extend to both market performance and regulatory compliance. Taking immediate steps toward a privacy-first approach remains the most effective path forward.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
