Introduction
Data breaches and cyber attacks are becoming more common, causing consumers to lose trust in companies that fail to protect their personal information. Governments around the world have responded by implementing strict data protection laws that require businesses to beef up their cybersecurity practices. Encryption is one of the most important tools that allows companies to comply with these regulations and avoid massive fines for non-compliance.
What is Encryption and How Does it Work?
Encryption is the process of scrambling or encoding data so that only authorized parties can access it. It converts plaintext information into ciphertext that looks like gibberish to anyone who doesn’t have the decryption key. There are several types of encryption:
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Symmetric encryption uses a shared key to encrypt and decrypt data. Both the sender and recipient use the same secret key.
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Asymmetric encryption uses a public and private key pair. The public key encrypts data and the private key decrypts it.
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Hashing is a one-way function that converts data into a fixed-length value called a hash. It is impossible to reverse the hashing process to reveal the original data.
Proper implementation of encryption ensures that unauthorized parties cannot read sensitive data even if they manage to intercept it.
Major Data Protection Laws and Regulations
Businesses around the world must comply with various laws and regulations designed to safeguard consumer and employee data. Some major examples include:
GDPR
The General Data Protection Regulation (GDPR) went into effect in the European Union in 2018. It imposes strict rules on companies that collect, process, or store the personal data of EU residents. Fines for non-compliance can reach tens of millions of euros.
CCPA
The California Consumer Privacy Act (CCPA) gives California residents more control over their personal information. It also requires businesses to be transparent about data collection practices.
HIPAA
The Health Insurance Portability and Accountability Act (HIPAA) regulates the storage and transmission of protected health information in the United States. It applies to healthcare providers, insurers, and related businesses.
PCI DSS
The Payment Card Industry Data Security Standard (PCI DSS) is a set of requirements for merchants and payment processors to securely handle credit and debit card data.
How Encryption Helps Achieve Compliance
Encryption is not explicitly mandated by most data protection regulations. However, it provides an effective way for businesses to comply with fundamental requirements like:
- Safeguarding personal data
- Ensuring the confidentiality of sensitive information
- Protecting data integrity
- Implementing access controls
- Securing data transmission
Specifically, encryption helps with:
Data at Rest
Encrypting databases, files, backups and other data storage helps secure data at rest against breaches. Hackers cannot decipher encrypted data without the decryption key.
Data in Transit
Data in transit must be protected as it moves between systems and locations. Encryption secures sensitive data flowing over networks and the internet. Common examples include TLS/SSL, VPNs, and encrypted email.
Access Controls
Most data protection laws require limiting access to personal data only to authorized personnel. Encryption provides a method of enforcing access controls since only those with the decryption key can access the plaintext data.
Pseudonymization
Some regulations distinguish between regular personal data and pseudonymized data, which has identifiers removed or replaced. Encrypting identifiers is an approved method of pseudonymization.
Breach Notification
Encryption can minimize the impact of a data breach since compromised encrypted data is unlikely to lead to identity theft or fraud. Some breach notification laws exempt encrypted data.
Best Practices for Encryption
To maximize the regulatory compliance benefits of encryption, businesses should follow these best practices:
- Classify data to determine sensitivity levels and what requires encryption
- Encrypt data as close to the point of creation as possible
- Favor encryption methods that are certified to government standards like FIPS 140-2
- Use separate encryption keys for data and backups
- Store encryption keys securely using a key management system
- Document encryption usage, protocols and policies
- Train staff on proper encryption key handling procedures
- Rotate encryption keys periodically to reduce the risk of compromise
Conclusion
As data protection regulations expand in scope and impose heavier penalties, encryption provides an invaluable tool for demonstrating compliance. Proper key management and deployment allows businesses to effectively secure sensitive data at rest and in motion while meeting legal requirements for access control, data security, and breach notification procedures. Investing in enterprise-grade encryption shows regulators and customers a commitment to best practices for data protection.
