2023 is the year of big data and scaling development of data residency requirements that are becoming more complex and intricate. The reason is not far-fetched. Nowadays, nearly all services are digital and require massive amounts of personal information, to the point where private details about a person can be accessed across multiple devices and locations. This possibility poses significant risks to personal safety that must not be overlooked. Additionally, new technologies like machine learning (ML), the Internet of Things (IoT), and artificial intelligence (AI) increase the potential for cyberattacks.
Countries are defining and refining regulatory measures to forestall the danger of these digital attacks. These data residency laws by country exist to protect their citizens and residents. Companies impacted by these changes are responsible for keeping up with these new laws because they impact domestic and international businesses.
This guide outlines the key business data residency issues and demonstrates how to quickly and easily meet all data residency requirements.
Data residency issue examples
First of all, what is data residency? It is all about keeping personal data in the country from which it was obtained and according to the rules of that country. Data residency’s importance lies in the fact that, without it, data is vulnerable to theft and other unauthorized access.
The laws governing data residency are constantly changing, making compliance difficult. New localization requirements may require routine updates or a complete overhaul of internal policy measures, including storage, access control, backup and replication adjustments, networking infrastructure, and transition processes. All of these equipment configurations can significantly increase operating costs.
The following are some examples of data residency issues that businesses face when conducting global operations:
- inadvertent violations of data laws that may result in severe penalties;
- access by unauthorized parties to private data belonging to the business and its customers;
- being spied on by a foreign government or organization;
- loss of clientele to rivals as a result of worries about data management;
- being unable to work on projects where data residency compliance is essential;
- vulnerability to cyberattacks, such as when attacks are launched against locally run data centers with less advanced security;
- huge expenses associated with trying to follow compliance procedures;
- a stall in business expansion abroad because of worries about non-compliance;
and many more.
While these issues may appear serious, and truly they are, InCountry’s data residency-as-a-service eliminates them by providing businesses with a quick, efficient, and permanent compliance solution.
Cloud data residency issues
Without a doubt, cloud technologies have improved the computing paradigm, enhancing how businesses plan, develop, and meet the needs of their customers. However, it has also impacted their level of control over customer information. Using a cloud platform or service requires controllers to cede data custody to the provider, a major concern for cloud users.
Data residency calls for keeping personal information within the boundaries of a nation or its jurisdiction. However, the cloud enables data to be easily transferred across international borders and stored, handled, or backed up in multiple locations worldwide. These options make it more problematic to comply with data residency requirements.
Many processors acknowledge that they need to be more apprehensive about storing information in the cloud due to worries about cloud data residency. These concerns include the fact that, once their data is in the cloud, they are unsure of the country where it will be stored, making it difficult to know what regulations to comply with. Using cloud services also entails other risks that may occur at different stages of the data journey, such as transit, storage, and use. Multinational corporations must be careful when using cloud servers, choosing only those that can protect data throughout its entire lifecycle.
Salesforce users are also affected by these concerns. Recent and ongoing changes in residency laws have caused many to review their cloud implementation strategy for Salesforce data residency.
Due to the difficulties associated with data residency compliance in the cloud, many businesses now avoid cloud applications altogether. Some others use them only in specific situations or a mere portion of their functionality.
Data residency requirements
These local laws specify rules for collecting, processing, and storing data belonging to a country’s citizens and residents within its borders. Residency rules, for example, require businesses to keep data within the country’s borders, a concept known as “data localization.” In compliance, some enterprises have adopted tactics such as having data centers in each country where they do business or using single-gateway procedures. However, these strategies fall short because they need to fully address data residency compliance or offer data protection from cyber risks. They also come with high costs for managing multiple data centers or synchronizing large data repositories over long-path networks.
Data residency limits transfers outside the territory to fulfill certain specific preconditions. For example, most laws require businesses to notify their clients and obtain their consent before collecting and transferring their information.
Let’s quickly review the GDPR and the PIPL as two important data residency laws currently in force to provide context.
GDPR data residency
The GDPR came into effect in 2018, setting up stringent rules for protecting personal data in European Union member countries. Its extensive provisions, widespread application, and stringent enforcement standards account for its stellar reputation among residency laws.
The GDPR makes it very difficult for data to leave the EU. It mandates that all data gathered in Europe be kept on local servers and that it may only be transferred to non-EU nations if those nations provide an adequate level of data protection. These rules apply to controllers and processors alike.
Given that Europe is, in many ways, the most economically advanced continent, it is essential for companies with headquarters or operations there to comprehend the implications of GDPR data residency to operate profitably.
PIPL data residency
The PIPL is the main law governing data residency in China. It creates the framework for China’s personal data protection by setting rules on how companies must handle and store customer data. It provides guidelines for transborder sharing and describes the rights of people to consent to the use of, access to, rectification of, and deletion of their personal information.
Although the PIPL borrows some ideas from the GDPR, it is also very innovative in many ways. It emphasizes concepts like sensitive personal data and critical information and other conventional data protection elements, such as principles and grounds for information processing, mechanisms for cross-border transfer, and the subjects’ rights.
Businesses that generate and process regulated information in the course of their operations are required to store it in China. They must pass a rigorous cybersecurity evaluation before making outbound transfers. Those who deal with “critical information,” also called (CIIOs), are subject to even more requirements. These are intended to encourage data residency and also guarantee that exported data is secure upon arrival.
The PIPL data residency rules apply to all businesses that handle data from Chinese citizens, whether local or international.
InCountry approach: How can businesses mitigate data residency risks?
Multinational corporations need help keeping up with the constantly changing data residency requirements. Still, the risks of failing to comply are enormous. For example, fines imposed by the GDPR could amount to up to 4% of the company’s annual global profit, not to mention other risks such as client loss, the inability to expand globally, and massive overhead expenses.
Using InCountry is the most straightforward way for multinational corporations to reduce the risks of non-compliance, fully utilize cloud computing, and stay ahead of various data residency requirements by country. Data localization by InCountry is a quick, ready-made compliance solution. It cuts the red tape of residency and localization laws, so businesses can address issues without interrupting regular operations.
InCountry is the most efficient way to avoid the dangers and difficulties related to cloud data residency. Here, we follow industry best practices in law and technology to guarantee data security across all political regions and help companies focus on global operations and expansion without fear of violating data regulations.
Leading experts are available at InCountry to answer all your questions with first-rate consultation services. Schedule a demo to speak with our experts.