Data privacy and security are not new themes for businesses, especially those that take advantage of cloud-based solutions. However, as data privacy concerns continue to rise, many countries (and some states) are clamping down on how and where consumer data can be collected and stored.
If you’re operating across borders, the term ‘data sovereignty’ is likely on your radar. If not, now’s the time to reevaluate your privacy and security practices for collecting, storing, and managing consumer data across the countries where you do business.
In this post, we will discuss the concept of data sovereignty and highlight strategies to address challenges and manage compliance demands relating to data sovereignty requirements.
What is data sovereignty?
Data sovereignty is the concept that data collected in a specific country is subject to the laws and regulations of the country from which it’s collected.
This means, for example, if you operate out of the US and are collecting consumer data from somewhere in Europe, you will be subject to the GDPR. Or, if you operate out of Canada and are collecting consumer data from California, you will be subject to California’s CCPA, as well as the CPRA if you are using that data for targeted advertising purposes.
Data sovereignty laws will vary from location to location. These laws insist that companies develop sound business practices that ensure they have control over their data and infrastructure. Companies are obligated to closely monitor compliance with all relevant regulatory laws. Failure to comply can result in significant fines and loss of business.
What is required for data sovereignty?
Data sovereignty helps protect consumers’ personal and sensitive information by dictating how companies must govern and secure data that is collected, processed, and stored. But what exactly are the requirements for data sovereignty?
The primary requirement for data sovereignty comes down to obtaining and maintaining full control over how sensitive data is accessed and used. We can divide it into five components:
- Regulatory compliance: A complete understanding of local and global laws that you have to adhere to for both your and your client’s operations locations. Ensure that your data practices comply with these regulations, including requirements for data storage, transfer, consent, and security.
- Data processing: A transparent overview of how you use and share data.
- Data access: A complete picture of how access levels are established and what’s done to prevent unauthorized access. This includes defining roles and permissions for data handling, implementing secure authentication protocols, and encrypting data during transit and storage. Data should only be accessible to authorized individuals or entities.
- Data protection: Security protocols that are in place from your and your vendors’ sides, encryption practices for both at-rest and in-transit data, to protect data from unauthorized access, breaches, and cyber threats.
- Infrastructure control: You should have full ownership over your data stack, being able to affect change and fix issues if and when they appear, as well as the full lifecycle of the physical servers, storage systems and network equipment where your data is hosted.
Challenges of Data Sovereignty
The ease with which organizations are able to target and acquire foreign customers poses new data challenges. When operating in international markets, you need to rethink your strategies for managing consumer data in order to meet these challenges.
Let’s explore the four most pressing issues that arise.
Tightly scoped solutions
Since there’s not one overarching set of guidelines, and over 100 countries have their own data sovereignty laws, companies that operate across multiple territories may struggle to understand which laws apply to them. This creates new compliance challenges like data privacy regulations, such as GDPR in the European Union, data localization laws where some countries require certain types of data to be stored within the country’s border, and other industry-specific requirements which will force companies to adopt more stringent solutions and strategies for managing consumer data like strict access controls, classify consumer data based on sensitivity and regulatory requirements, maintain detailed audit trails and processing activities, implement a consent management system, and establish an incident response plan.
The challenge of data sovereignty may include issues with data interoperability, how you’re able to move data across countries, and getting data when and where you need it. Transferring data across international borders can be subject to restrictions and legal requirements.
Compliance with these requirements can be complex and may involve mechanisms like Standard Contractual Clauses (SCCs) or Binding Corporate Rules (BCRs) to ensure data protection during cross-border transfers.
Data sovereignty regulations in different jurisdictions can sometimes conflict with one another. For example, one country’s data privacy laws may require certain data protection measures, while another country’s laws may require the opposite. Organizations may face challenges in determining which regulations take precedence and how to achieve compliance.
Cloud deployments can oftentimes be dispersed across multiple countries, possibly ones with different data sovereignty laws. Some of those regulations may further limit your choice of cloud provider by dictating where data is allowed to be processed.
When using cloud service providers or third-party vendors for data storage and processing, organizations must ensure that these vendors comply with data sovereignty regulations. Vendor contracts and service-level agreements (SLAs) should address compliance requirements.
Investing in a top-down culture of compliance can be a costly venture. You’ll need to implement additional processes to ensure the collection, storage, and processing of PII are all carried out in compliance with applicable data sovereignty laws.
This can involve the deployment of monitoring tools, security assessments, and audits, all of which come with associated costs. Developing and implementing data handling procedures, including encryption and access controls, can require significant investments in technology and personnel. Plus, compliance efforts, documentation, and reporting obligations will also require dedicated personnel and resources.
The adjustments to existing business processes, such as customer data collection, storage, and processing practices may involve changes in software, systems, and workflows, all of which can be costly.
Navigating the complexities of data sovereignty regulations often requires legal expertise. Organizations must invest in legal expertise to navigate these requirements and ensure that their data-handling practices comply with local laws and regulations.
Non-compliance with data sovereignty regulations can result in significant penalties and fines, which can be financially damaging and harm an organization’s reputation.
Data sovereignty solutions
Companies need to tackle these data sovereignty concerns. But what options are available to help ease the burden of compliance?
For your business, think about how you can best achieve control over your data. This will help you ensure you’re meeting all applicable laws and regulations.
To start with, you can consider the following database deployment solutions.
Multi-cloud deployments can help increase data sovereignty by increasing control over database environments, infrastructure, and technologies. A multi-cloud setup offers the added flexibility that keeps companies from ceding control over data end-to-end. Organizations may avoid vendor lock-in by using multiple providers, giving them more negotiating power and flexibility in choosing the most suitable services. By distributing workloads across multiple cloud providers, organizations can reduce the risk associated with a single provider’s technical issues, service interruptions, or security breaches. This diversification enhances overall risk mitigation strategies.
In terms of implementing multi-cloud deployments, there are more and more sovereign clouds popping up that enable organizations to choose providers with data centers located in regions that align with their compliance needs, helping them adhere to regulations like GDPR, HIPAA, or industry-specific standards.
Hybrid cloud deployments
Cloud providers only offer data localization and geographical control in certain countries or regions. On the other hand, hybrid cloud deployments allow organizations to adapt to data sovereignty regulations in almost all countries by establishing a presence in specific regions, partnering with local data centers, or utilizing cloud providers with a strong local presence.
Similar to multi-cloud setups, hybrid cloud deployments offer mix-and-match flexibility, where you can choose which data is best fit for a particular environment. This gives you the choice to store certain sensitive data on-premises while utilizing the scalability and cost-efficiency of the cloud for non-sensitive data. This data segmentation approach allows organizations to comply with data sovereignty requirements while still taking advantage of public cloud benefits for other data types.
Sovereign DBaaS is a newly emerging concept that leverages the public cloud’s computing advantages with increased control and portability of data. This approach enables you to reliably scale open-source database operations without vendor or environment lock-in and without giving up control over your data to third parties.
With Sovereign DBaaS, you retain a far greater level of ownership with a higher amount of independence, improved cloud cost predictability, and more cost-efficient deployment options. You stay in control over security needs and frameworks relating to applicable regulatory and compliance requirements and can influence exactly where your data resides.
A Sovereign DBaaS implementation uses intelligent automation software with open-source tooling and scripts to replicate the DBaaS experience. It results in database scalability and reliability within environments that satisfy sovereignty requirements.
As data privacy regulations continue to evolve, companies will need to rethink their database deployments and privacy practices to better protect consumer data and comply with data sovereignty laws.
Go to our Sovereign DBaaS resource page to learn more about getting more control over your data stack.