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Supplier Data Processing Agreements are crucial for data controller businesses to ensure compliance with the UK GDPR. These agreements specify how third-party suppliers acting as processors will handle personal data for your business. Such scenarios and agreements introduce several risks your business must carefully manage to protect personal data. This article explores some key risks to look out for in supplier Data Processing Agreements.
What is a Data Processing Agreement?
A Data Processing Agreement is a legally binding contract that governs the relationship between a data controller (your business) and a data processor (for instance, a supplier). Data controllers need to exercise caution when engaging processors.
The document lays out rules for how the processor will handle the personal data it receives from your business to ensure compliance with data protection laws, such as the UK GDPR.
A Data Processing Agreement must lay out key details such as the scope of data processing activities, security measures, incident response procedures, and terms around data transfers and deletion. This document is mandatory for UK GDPR compliance, and businesses should take notice to implement it.
Which Risks Could a Supplier’s Data Processing Agreement Present?
As a data controller, your suppliers may often present their own Data Processing Agreement for your business to sign. They may claim that the terms are non-negotiable, but it is crucial to review them thoroughly. You must ensure you understand the terms and that they comply with UK GDPR.
Here are some key risks to watch out for:
Lack of Clarity on Which Personal Data They Will Process
One of the primary risks in a supplier Data Processing Agreement is that the agreement does not clarify which personal data the supplier will process. Ambiguity in a contract can lead to unauthorised data processing, breaching UK GDPR principles, and potentially exposing your company to significant fines and reputational damage.
This factsheet sets out how your business can become GDPR compliant.
You must ensure the Data Processing Agreement clearly defines the types of personal data the supplier will process. Specify categories and all kinds of data you permit the supplier to process, such as names, addresses, contact details, financial information, and particular category data strictly where required. You should also outline the scope, nature, and purpose of the data processing activities in your agreement.
Essentially, your business must ensure that it is comfortable with the agreement’s terms regarding the data processing activities that the supplier will carry out. This is also vital for compliance purposes.
Inadequate Security Measures
Inadequate security measures pose a significant risk in a data processing arrangement. Suppliers might not align their security practices with the stringent requirements of the UK GDPR, leading to potential data breaches and non-compliance problems.
Your business can also be liable for a supplier’s omissions, for instance, if you share data with a supplier who does not secure it, leading to a data breach.
This is often a negotiable point, but you should push for the agreement to include the measures your business needs to safeguard personal data appropriately.
Sub-Processing Risks
Suppliers often engage sub-processors to process data on behalf of a data controller, thereby introducing additional risk.
If such subprocessors do not adhere to the same data protection standards, this can result in data breaches.
As a controller, you should seek total control of the engagement of third-party sub-processors.
For instance, push for the Data Processing Agreement to include clauses requiring suppliers to obtain written consent before engaging sub-processors. As such, you will have complete control of the process. Your business should have the chance to assess the data protection measures of any proposed sub-processors to ensure they meet your company’s standards for protecting personal data.
Data Deletion Risks
Appropriate data deletion at the end of the contract is crucial to prevent unauthorised access or breaches. Inadequate data deletion provisions can expose your company to significant risks.
The Data Processing Agreement should not be vague on this point. Instead, clear procedures should be set out for data return or deletion upon contract termination. For instance, you may request that the supplier provide certificates of data destruction or detailed records of data returned. You also seek to include clear timelines for data deletion and outline consequences for non-compliance.
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Why Is Legal Advice on These Risks Important?
Navigating and negotiating the terms of a supplier Data Processing Agreement can be complex. Aside from the risks above, several other risks may be inherent to a supplier’s Data Processing Agreement. Seeking legal advice can help you effectively approach these points and protect your business from pitfalls.
Legal experts in data protection law can help you understand the implications of each term. Lawyers can negotiate better conditions that align with UK GDPR requirements and your company’s specific needs from a supplier.
Key Takeaways
Supplier Data Processing Agreements are vital for ensuring UK GDPR compliance and protecting personal data in data-processing agreements. However, these agreements introduce several risks that businesses must manage carefully.
Clarifying which personal data will be processed, ensuring adequate security measures, managing sub-processing risks, and defining clear data deletion procedures are essential in mitigating these risks. By taking these proactive measures, your company can maintain robust data protection standards and ensure your Data Processing Agreement is compliant. If you require support with understanding and tackling the risks in a Supplier Data Processing Agreement, you should seek legal advice from a data protection lawyer.
If you need help with a Data Processing Agreement, LegalVision’s experienced data, privacy and IT lawyers can assist you as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
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