Data Protection Impact Assessments (DPIAs) Under GDPR and NIS2

Created by Peter Bassill, Modified on Thu, 20 Mar at 6:38 PM by Peter Bassill

In an era of increasing cybersecurity risks and stringent privacy regulations, organisations must take proactive measures to protect sensitive data and ensure compliance with laws such as the General Data Protection Regulation (GDPR) and the NIS2 Directive. One crucial tool for achieving these goals is the Data Protection Impact Assessment (DPIA). DPIAs are designed to help organisations identify and mitigate risks to personal data, ensuring that security and privacy measures are built into business processes from the outset.

This article explores the role of DPIAs under GDPR and NIS2, including when they are required, how they should be conducted, and best practices for their implementation.

1. What is a DPIA?

A Data Protection Impact Assessment (DPIA) is a structured process for assessing and managing the risks associated with processing personal data. It is a key component of privacy by design and by default, a principle enshrined in GDPR and supported by NIS2. The primary objectives of a DPIA are to:

Identify potential risks to the rights and freedoms of individuals.
Assess the impact of data processing activities on privacy and security.
Implement appropriate measures to mitigate risks.

DPIAs are essential for demonstrating regulatory compliance, particularly when data processing involves high risks to personal data security and privacy.

2. Regulatory Context: DPIAs Under GDPR and NIS2

Although both GDPR and NIS2 address data protection and cybersecurity, their focus differs slightly:

GDPR prioritises the protection of personal data and the privacy rights of individuals.
NIS2 focuses on the security and resilience of critical infrastructure, including the protection of personal data held by essential and important service providers.

Despite these differences, both regulations require risk-based assessments to protect sensitive information, making DPIAs a key compliance tool.

2.1. DPIAs Under GDPR

GDPR requires organisations to conduct a DPIA when data processing is likely to result in a high risk to the rights and freedoms of individuals. Article 35 of GDPR specifies several scenarios where DPIAs are mandatory, including:

Processing involving systematic and extensive profiling.
Processing of sensitive data on a large scale (e.g., health data, biometric data).
Monitoring of publicly accessible areas (e.g., CCTV surveillance).

GDPR also encourages organisations to perform DPIAs even when not strictly required, as part of a broader risk management strategy.

2.2. DPIAs Under NIS2

The NIS2 Directive requires organisations providing essential and important services (e.g., energy, healthcare, transportation, financial services) to assess and manage risks to the security of their networks and information systems. While NIS2 does not explicitly mandate DPIAs, it emphasises the need for risk-based security measures, which can be informed by DPIAs in cases where personal data is involved.

By conducting DPIAs, organisations can strengthen their cybersecurity posture, reduce the risk of regulatory penalties, and ensure compliance with both NIS2 and GDPR requirements.

3. When Should a DPIA Be Conducted?

Organisations should perform DPIAs during the early stages of projects or initiatives involving data processing, particularly when new technologies, services, or systems are introduced. Early assessments allow organisations to embed privacy and security measures into their processes, reducing the risk of costly rework or compliance failures later.

Key triggers for conducting a DPIA include:

Implementing new IT systems that process personal data.
Launching data-driven products or services (e.g., mobile apps, customer analytics platforms).
Introducing surveillance technologies (e.g., cameras, employee monitoring tools).
Expanding data processing activities, such as increasing the volume or scope of data collection.

Both GDPR and NIS2 emphasise the importance of continuous monitoring and periodic reviews, meaning that DPIAs may need to be updated as business needs and risks evolve.

4. Steps to Conduct a DPIA

A comprehensive DPIA involves several key steps, from risk identification to documentation and reporting. Below is a detailed breakdown of the process:

4.1. Identify the Need for a DPIA

The first step is to determine whether a DPIA is required. This involves assessing whether the data processing activities are likely to pose high risks to data subjects. Organisations can use regulatory guidance, such as the European Data Protection Board (EDPB) guidelines, to help make this determination.

Questions to Consider:

Does the processing involve sensitive or special category data?
Is large-scale data processing taking place?
Are new technologies being used that may increase risks?

If the answer to any of these questions is "yes," a DPIA is recommended.

4.2. Describe the Data Processing Activities

Organisations must provide a detailed description of the data processing operations, including:

The types of personal data being processed (e.g., names, email addresses, biometric data).
The purposes of the processing (e.g., marketing, fraud prevention, customer support).
The data flows, including how data is collected, stored, transferred, and accessed.
The parties involved, such as data controllers, processors, and third-party service providers.

This information serves as the foundation for risk assessment and control selection.

4.3. Identify Risks to Data Subjects

Organisations must identify and assess the risks that data processing poses to individuals' rights and freedoms. Common risks include:

Unauthorised access: Data breaches or leaks caused by inadequate access controls.
Data misuse: Improper use of personal data by employees, contractors, or external partners.
Loss of data integrity: Errors, system failures, or malicious attacks that compromise data accuracy.
Loss of availability: Service disruptions or ransomware attacks that prevent data access.

Each risk should be evaluated based on its likelihood and impact.

4.4. Implement Mitigation Measures

Based on the risk assessment, organisations must implement measures to reduce or eliminate risks. These may include:

Technical controls: Encryption, access controls, intrusion detection systems.
Organisational measures: Security policies, employee training, incident response plans.
Contractual safeguards: Data protection agreements with third-party processors.

The effectiveness of each control should be documented and monitored over time.

4.5. Consult Stakeholders

Stakeholder consultation is a key component of the DPIA process. Depending on the scope of the processing activities, organisations may need to consult:

Internal stakeholders, such as legal, IT, and compliance teams.
External parties, such as data processors, partners, and regulators.
Data Protection Officers (DPOs), who provide expert guidance on risk management and regulatory compliance.

In some cases, organisations may need to seek input from data subjects or their representatives.

4.6. Document and Report the DPIA

Organisations must maintain detailed records of the DPIA, including:

The risk assessment methodology and findings.
The mitigation measures implemented.
The rationale for decisions regarding data processing and security.
Any consultations or approvals obtained during the process.

These records serve as evidence of compliance and may be requested by regulators during audits or investigations.

5. DPIA Best Practices

To maximise the effectiveness of DPIAs, organisations should adopt the following best practices:

5.1. Integrate DPIAs into Project Management

Incorporate DPIAs into the early stages of project planning to ensure that privacy and security are built into new initiatives. This approach supports both privacy by design and security by design principles.

5.2. Use a Risk-Based Approach

Focus on identifying and addressing high-impact risks. Tailor mitigation measures to the organisation’s risk appetite, regulatory requirements, and operational constraints.

5.3. Collaborate Across Departments

Ensure that all relevant departments, including IT, legal, compliance, and business units, are involved in the DPIA process. Cross-functional collaboration enhances risk identification and mitigation efforts.

5.4. Regularly Review and Update DPIAs

As data processing activities evolve, risks may change. Organisations should periodically review and update their DPIAs to reflect new threats, technologies, or regulatory requirements.

5.5. Leverage Automation and Tools

Use tools and templates to streamline the DPIA process. Automation can help organisations track data flows, assess risks, and generate reports more efficiently.

6. Regulatory Enforcement and Penalties

Failure to conduct DPIAs when required can lead to regulatory penalties under both GDPR and NIS2. Penalties may include:

Fines of up to €20 million or 4% of global annual turnover under GDPR.
Enforcement actions, such as service restrictions or mandatory security improvements, under NIS2.

Non-compliance can also damage an organisation’s reputation and erode customer trust.

7. Conclusion

Data Protection Impact Assessments (DPIAs) are essential for managing privacy and security risks in today’s regulatory environment. By identifying potential risks early, organisations can implement effective controls, reduce the likelihood of data breaches, and demonstrate compliance with both GDPR and NIS2. DPIAs are not just a regulatory obligation—they are a critical component of a comprehensive cybersecurity and privacy strategy.

For expert guidance on conducting DPIAs, regulatory compliance audits, or risk assessments, contact our data protection specialists today.