Investors today increasingly want evidence that companies they are considering backing have good data security and privacy practices, as there are many examples of public companies experiencing data breaches. Further, consumer protection efforts are driving international and US regulators to continue introducing new data privacy regulations which increase the potential for violations that can impact a publicly traded company’s financial health and brand image.
The benefits of taking data privacy seriously extend to companies at every stage. Mitigating risk for regulatory violations, increasing consumer protections and trust, and establishing data privacy as a differentiator makes good business sense in general.
However, companies preparing for an initial public offering (IPO) have additional factors to consider, like the confidence level of investors and the heightened privacy and security measures they’ll be subject to once they go public. In other words, shoring up data privacy practices with a comprehensive privacy program can help companies in the short and long term when preparing for an IPO.
Data privacy should matter for all organizations, but this article outlines its importance for companies that are considering going public and breaks down some privacy best practices that can strengthen an IPO.
Data Privacy Matters for Companies Looking To Go Public
Ensuring investor confidence is naturally a major priority for companies filing for an IPO, as investor demand and satisfaction are key factors in determining a public company’s success. Given the frequency of data breaches and privacy violations, and the substantial fines and financial consequences they carry, investors are more conscious of data privacy and how it affects an organization’s bottom line than ever before.
Investors aren’t the only ones scrutinizing public companies’ data privacy practices, as publicly traded companies are subject to increased SEC cybersecurity reporting rules, which go hand-in-hand with data privacy. Further, existing consumer data privacy regulations like HIPAA, FERPA, US state laws like CCPA/CPRA, and the GDPR may apply immediately or in the future if companies expand their operations. Companies can mitigate the risk of non-compliance penalties by prioritizing data privacy during the IPO process and proactively ensuring regulatory compliance from the outset.
Finally, investing in data privacy measures shows customers that their data is handled carefully and their concerns are taken seriously. Consumers are becoming increasingly concerned about sharing their personal information, and 74% of people surveyed in 2022 said they wouldn’t shop at their favorite retailers if they found out their personal data wasn’t kept safe. Establishing data privacy as a core company value during the IPO process helps build trust and differentiate an organization as a trusted data steward.
Data Privacy Measures To Strengthen an IPO
Taking the steps to understand and adopt these privacy measures can help ensure data privacy is a standout element of a company’s IPO strategy:
- Understand the reality of organizational data processing: It’s important to start by getting a clear sense of how an organization processes and handles data. Conduct exercises like data mapping to help identify data flows across internal and external systems and assess potential vulnerabilities. Identify and assess privacy risks relating to data processing activities and take action to develop risk mitigation strategies.
- Get ISO certified: The International Organization for Standardization (ISO) developed standards to provide guidance and requirements for managing privacy-related processes and implementing privacy and security management systems. ISO 27001 (dedicated to data privacy) and ISO 27701 (dedicated to information security management) are worth special attention.
- Comply with relevant international and US privacy regulations: Partner with legal and security teams to ensure compliance with international regulations like the GDPR, and US state-specific laws like the CCPA.
- Measure company privacy posture and privacy maturity against industry benchmarks: Evaluating privacy practices against industry standards and benchmarks can provide insights into potential areas for improvement. Share company updates and guidelines to communicate a commitment to data privacy for all stakeholders, including staff, leadership, customers, and vendors. DataGrail’s 2023 Data Privacy Trends Report is a great benchmarking tool.
- Get control over shadow IT and shadow SaaS: The sooner a company implements measures to monitor and manage the use of unauthorized software or hardware across the organization, the better it can ensure all systems and applications meet necessary privacy and security standards and minimize data privacy risks.
- Implement Privacy by Design: Establish a company-wide commitment to building data privacy into products, services, and systems from the very start. This ensures a proactive approach to data privacy rather than a reactive approach.
- Prioritize a repeatable, comprehensive privacy program: Establish and implement privacy policies and procedures that align with industry best practices and ensure that employees receive ongoing privacy training. As a best practice, regularly review and update the company privacy program to ensure quick and easy compliance with evolving privacy regulations.
DataGrail Helps Ensure Data Privacy Is a Standout Strength of an IPO Strategy
DataGrail understands data privacy’s critical role in the initial and continued success of companies going public. Our privacy management software provides a comprehensive solution to help organizations maintain compliance, mitigate risks, and build investor confidence and customer trust.