Privacy by Design: Understanding and Implementing the Framework

As of this writing, the CAM4 security incident remains the largest data breach in history. The attack on the website exposed nearly 11 billion records, including users' names, email addresses, sexual orientations, chat transcripts, and IP addresses.

As privacy violations go, this was massive—not only did CAM4’s lax security leave it vulnerable, but it likely did not need to process the massive amounts of user data exposed in the breach in the first place. 

Commensurate with its scope, the breach was also very expensive, which is not surprising. Data breaches cost businesses $4.88 million on average in 2024 globally. However, is it even possible to put a price on the loss of privacy for all those users?

Security is important to protect data privacy, but it’s just the tip of the iceberg when it comes to respecting privacy rights. You don’t have to experience a record-breaking data breach to get in trouble with data protection authorities, lose your consumers’ trust, or raise your risk profile. Mitigating these dangers is why you need privacy by design and default. 

By following privacy-by-design principles, you can reduce your risk of a data breach, minimize the scope of a breach should one occur, improve your relationship with your customers, keep your brand’s reputation strong, and maintain compliance. What’s more, you can accomplish all that without breaking the bank by taking privacy into consideration at the start (not the end) of your projects.

What is privacy by design? That’s what we’ll explain in this article, along with how to incorporate it into your operations.

Privacy by Design: Definition and History

You could build a technology and then try to retroactively ensure it preserves users’ right to privacy. Alternatively, you could take privacy into account throughout the design and engineering process. The privacy-by-design framework encourages the second approach.

Instead of implementing data privacy and security after an application, process, or software has been built, privacy by design asks you to integrate it, or “bake it in,” from the design stage through its entire lifecycle.

As it compels you to think of your processes and data flow at the inception, privacy by design helps you create inherently transparent, secure, and user-friendly technologies and systems that can protect your consumers’ data and their privacy rights. Privacy-by-design principles can apply to any number of initiatives, including:

• System designs
• Organizational priorities
• Project objectives
• Standards and protocols
• Business practices

The Origins of Privacy by Design

The privacy-by-design framework is particularly evident in the European Union’s (EU) General Data Protection Regulation (GDPR) of 2015. Under the GDPR, privacy by design is codified in Article 25, which is titled “Data Protection by Design and Default.”

However, the concept of privacy by design was originally developed by the Information and Privacy Commission of Ontario, Canada; the Dutch Data Protection Authority; and the Netherlands Organization for Applied Scientific Research in a collaborative project in 1995.

Ann Cavoukian, the Information and Privacy Commissioner of Ontario at the time, was responsible for popularizing it. She proposed the seven principles of privacy by design, which are reflected in many data protection regulations worldwide. 

The Foundational Principles of Privacy by Design

If you want to holistically build privacy into your systems, here are the seven principles you should keep in mind:

Principle #1: Proactive, Not Reactive; Preventive, Not Remedial

This principle essentially says that no amount of privacy measures after the fact can really keep a fundamentally non-private technology or system from enabling the misuse of personal data. Instead of scrambling to “shut the barn door after the horse has bolted,” it urges you to consider incorporating privacy and security from the ground up. 

This gives you a more resilient system—one where you don’t have to spend money first on fines for privacy violations and then on rebuilding your product or processes. It’s easier to use for your consumers because it doesn’t have inefficiencies caused by forcing disparate processes together.

It’s also easier for you because you aren’t always on the defensive, trying to mitigate the damage caused by privacy violations.

Principle #2: Privacy as the Default Setting

Businesses often expect their users to customize a given technology or account to suit their preferences, including their privacy preferences. But most users will likely follow the path of least resistance and stick to the default. Businesses hungry for consumer data benefit from this tendency by defining maximum data collection as the default.

Under the privacy-by-design framework, it should not be the consumer’s responsibility to go out of their way to choose a more private configuration.

Your users shouldn’t have to think about what information they’re comfortable with sharing when interacting with your website, application, or software. They should already have the highest privacy by default. Remember: the GDPR doesn’t just advocate for privacy by design, but rather privacy by design and default. As such, you need to consider:

Data minimization: Only collect, process, and store the minimum data you need to accomplish a specific, legitimate purpose.

Use, retention, and disclosure limitation: Don’t use the data for anything other than what the consumer has agreed to. Don’t hold on to it once its purpose has been served. Don’t disclose it to anyone without the permission of the data subject and only if it’s necessary to deliver a service.

Security: Invest in appropriate technical and organizational safeguards to maintain consumer data’s confidentiality, integrity, and availability.

Principle #3: Privacy Embedded Into Design

Start the privacy and security conversation when planning your system. You will find that it’s quite difficult and inefficient to try and add these features later in an already-built technology.

Trying to add security and privacy controls to an existing system can be complicated and inefficient, not to mention expensive. When you plan for privacy at the start of a project, you can incorporate these controls seamlessly, with less cost and effort and more functionality. 

Let’s say you have an app that has been in the market for a year and you realize it isn’t quite protecting consumer privacy the way it should. Here’s what you’d have to do to retrofit privacy.

First, you’ll have to audit existing processes to identify potential issues and redesign components to patch them up. Then, you’ll have to test everything to see if the added features haven’t broken any existing ones. If this regression testing shows faults, you’d need to fix them. 

Rinse and repeat, until you get the app working as intended while also following privacy regulations and best practices.

The audits, rebuilds, and testing cost money, and trying to add privacy might have resulted in some of the features not being as user-friendly. You might even discover that some of the processes’ privacy flaws are inherent to the approach you chose–had you considered privacy at the outset, you may have been able to choose an equally functional approach that also respects privacy rights.

At this point, it might just be easier to start from scratch.

Think of privacy when planning and building features, not after the fact, and you’ll be in a better position to protect user data.

Principle #4: Full Functionality—Positive-Sum, Not Zero-Sum

Some people don’t want to invest in privacy because they think it might affect the usability and functionality of their digital product. 

Don’t be one of those people.

Privacy doesn’t have to come at the expense of product benefits. If done properly, privacy-by-design principles could help you create a better, more user-friendly product. 

For example, your business might provide consumers with digital products. In order to access those products, consumers might need to provide certain information (such as their name, payment information, and the like). But there might also be information you don’t need to collect, like a physical mailing address. You might want to mail them marketing material, but gating your product behind this superfluous information goes against the principle of data minimization. Instead, you could optionally ask for that information, making it clear that it’s a separate type of data collection intended for the purpose of marketing and communication, rather than enabling the functionality of the product.

Now, not only do you not have to store personal information unnecessarily, but you’ve also created a more streamlined user experience, where they don’t need to type out their address when it’s not needed.

Privacy by design is not “privacy vs features.” It’s “privacy in conjunction with features.” If you truly think about privacy by design and default early in your design process, you’ll develop a stronger product that your users will appreciate.

Principle #5: End-to-End Security—Full Lifecycle Protection

The lifecycle of personal data starts at the point of collection and ends when it’s finally destroyed or deleted after you no longer need it. Consumer data should be protected right from the start and up until it’s been deleted.

This isn’t just a nice thing to do—privacy regulations require you to provide adequate security measures to protect consumer data. As we saw with the CAM4 incident, a data breach can be a massive privacy violation. 

It requires an interdisciplinary approach, with various teams collaborating to implement security best practices—encryption, access control, secure transfer protocols, regular audits, etc.—across the data lifecycle.

Planning security at the beginning instead of after helps you protect your data better. Modern data protection systems can provide you with more comprehensive security than traditional ones. It’s best to incorporate them into your system from the start instead of after a security incident.

Principle #6: Visibility and Transparency—Keep it Open

As an organization that collects user data, it’s important to treat user privacy as a shared value, not a compliance checkbox. That means being honest and open about how and why you use their data.

To build trust, you must give users this information upfront and in clear language. This means you should have a well-documented privacy policy and engage in transparent communication about the data processing and privacy-protecting activities you undertake.

Principle #7: Respect for User Privacy—Keep It User-Centric

According to the privacy-by-design framework, your users come first. They should have control over their information, including what they want to share, how they want it used, and whether or not they want you to disclose it to third parties. 

You can demonstrate true respect for user privacy by designing systems that have intuitive tools that enable users to manage their data. This includes mechanisms for managing consent, changing their consent preferences, exercising their rights as data subjects, and more. 

Benefits of Privacy by Design

Looking at the seven principles of privacy by design, you might think that the concept is purely for the benefit of consumers.

While it’s true that protecting consumer data is its main goal, privacy by design does offer some significant advantages to your business as well. 

Simplified Regulatory and Legal Compliance

As we mentioned earlier, privacy by design and default is a big part of data protection regulations like the GDPR and CCPA. By embedding it into your systems, you will naturally build compliance into your processes and systems instead of having to add it in as an afterthought. 

As a result, staying on the right side of these laws will become much easier.

Reduced Risk of Data Breaches

Did you know that the third quarter of 2024 saw 422 million records exposed in data breaches? The global average cost is $4.88 million, while the average cost for businesses in the United States reached $9.36 million per breach.

By adopting privacy-by-design standards, you can proactively reduce your risk. Not only does following these standards require you to pay attention to security early, they also require you to process less consumer data. If a breach should occur, it will likely be much smaller than if you hadn’t adopted privacy-by-design practices.

Enhanced Trust and Brand Reputation

Insincere data privacy claims eventually get found out, whether because a regulator audits your organization, people realize that their rights aren’t being respected, or a data breach reveals non-compliant data handling.

However, when you take consumers’ personal information privacy risks seriously, you gain their trust, which vastly improves your brand reputation. When your users know you value their privacy, they are more likely to give you their information willingly. 

Some organizations, such as Apple or Mozilla, make their stance on data privacy part of their brand values. If that’s an approach you’re interested in taking, you’ll naturally have to adopt robust data privacy practices like privacy by design.

Future-Proofing Against Changing Regulations and Threats

Consumers are already quite aware of their data protection rights, and this trend is expected to grow as legislation around it continues to evolve. 

In the United States, several states have already implemented their own data privacy laws, with more expected to follow. 

By adopting privacy by design and default now, you can position your organization ahead of the curve. This way, you’ll continue to meet current and future regulatory requirements and maintain consumer trust.

Cost-Effective Privacy Risk Management

Addressing privacy risks during the design stage is much cheaper than trying to remediate the fallout of a data breach. At that point, you’ll have to pay for costly fixes, along with fines and legal fees. That’s not even counting reputational damage. 

Even if you’re fortunate enough to avoid a data breach, not taking any measures to protect privacy will eventually come to light through regulatory audits or consumer complaints, as we described earlier. Retro-fitting privacy practices onto existing systems may compromise functionality or require costly redevelopment. 

While privacy by design and default might lead to some additional upfront costs, following its principles and implementing them will also deliver considerable savings in secure data and reactive spending.

Stronger Data Protection Practices and Culture

Privacy by design allows you to create a stronger data protection foundation for your business. When you absorb its foundational principles into your business culture, you’ll find yourself handling all data securely and responsibly at every stage of its lifecycle.

If you consciously think about risks and vulnerabilities when planning your digital product, you can design it to be more mindful of the privacy rights of the consumer. Even when you can’t mitigate a risk, just being aware that it exists will help you monitor it better. 

You’ll be less likely to be surprised by violations and better positioned to train employees to be risk-aware. It will help you create a better product and reduce incidents where consumer privacy is compromised.

As a result, privacy and data protection won’t just be regulatory boxes to be checked; instead, you will have created a more resilient infrastructure that prioritizes data privacy.

Competitive Advantage

Research shows that 90% of American internet users think privacy is important. Another 81% want to know more about how their data is used.

With consumers being very aware of the risks to their personal data, a company that can give them comprehensive, transparent privacy protection has an advantage over competitors.

All that to say, a strong data privacy program can help create loyal consumers.

Supporting Ethical Data Use

Ethical data use is more than just compliance with data laws; you need to be invested in your user’s best interests, which means you need to prioritize their consent and use their personal information according to their preferences.

User-centric design can help you achieve that, as can designing your operations to align with secure data practices, which include policies like data minimization, responsible data sharing, and obtaining user consent.

Resilience to Changing Legislative and Cyber Threat Environments

Even with all the forethought and preplanning, it’s not always possible to anticipate and mitigate all possible risks. However, privacy by design and default does put you in a better position to react and respond quickly to both threats and legislative changes. It gives your systems and processes enough flexibility to keep your organization agile and prepared for unforeseen challenges.

How to Embed Privacy into Your Technology and Business Processes

Ideally, privacy should be a part of your product or offering’s “genetic code.” However, you can incorporate it into your existing technology or systems. Whether you’re developing a new product or making your existing processes more private, here’s how you can include privacy-by-design principles:

Conduct Privacy Impact Assessments

A privacy impact assessment (PIA) analyzes your data-handling practices and identifies potential risks and vulnerabilities. It might look at how you handle personal data, if you comply with regulatory requirements, or if there are any risks in your IT systems and how to mitigate them.

It’s important to remember that a privacy violation doesn’t always mean a data breach. For example, if you disclose personal information to a third party without the data subject’s consent, you’ve violated their privacy.

A PIA will help you identify any gaps in your data storage and handling processes that might lead to such an inadvertent violation. This activity tells you where your privacy and security processes are lacking so you can devise strategies to reinforce them.

PIAs should not be confused with DPIAs, though they are quite similar.

A PIA is a general term given to assessments applied to any kind of data processing. PIAs are meant to provide insight into the nature of risks, any tradeoffs, or requirements associated with processing personal data. 

Data protection impact assessments (DPIA), on the other hand, are a more prescriptive requirement of the GDPR. They analyze the risk data processing poses to individuals’ rights and freedoms and are required when a processing activity may pose a “high risk” to data subjects’ rights. 

Choose the Right Framework for Your Needs

Now that you’ve got a clearer picture of where you need to improve your data handling processes, you must implement privacy and security controls. For this, you need to identify a framework that will help you best. 

For GDPR compliance, you might want to follow the ISO 31700 standard. This provides a framework for implementing privacy by design best practices. Combined with ISO/IEC27001:2022, these standards can help you with comprehensive data privacy and security.

If your business collects and stores payment details of consumers, you may also follow the PCI DSS standards. Any health information of consumers is sensitive and as such, must be handled extremely responsibly. If you store or process such data, you must also comply with HIPAA regulatory standards.

Embed Privacy in Design and Development

If you’re starting the process of building your process or technology, start by proactively considering privacy and security from the design stage. Think of potential risks and how you would go about reducing or eliminating them. Consider how you might incorporate privacy-friendly features, such as default privacy settings, data anonymization and pseudonymization, and data minimization, into your product and processes.

In case you aren’t familiar with the terms, anonymization refers to the process of stripping away any direct personal identifiers from and applying generalizations to data. If someone does manage to look at a piece of information, they won’t be able to tell who it belongs to.

Pseudonymization also replaces direct identifiers. However, you can relink it to the original identity with a decoding key or additional information.

Both techniques can help protect the identity of your consumers to varying degrees if their information is deliberately or accidentally exposed.

Implement Strong Privacy and Security Controls

Part of your responsibility when you store and process personal information from consumers is to make sure it’s adequately protected. To do that, you need robust privacy and security controls.

Some of these include:

Data minimization and retention policies: As we discussed earlier, data minimization refers to the practice of collecting only the information you need to complete the specific purpose you conveyed to the data subject. It reduces the amount of personal information you collect, which means you have less to protect from accidental exposure or data breaches.

You should also retain the data only for as long as necessary. Once you’ve completed the processing and no longer need the information, you need a process for securely destroying it.

Data encryption: Hide all sensitive data in a coded form so that anyone who steals it can’t see it. This should be standard practice for storing or transferring sensitive data. 

Access control: Part of data privacy is ensuring even your own employees or vendors can’t access the personal data of consumers unless they need to. This requires you to restrict access based on need. 

Implement the principle of least privilege, enforced by methods like role-based access control (RBAC), multifactor authentication (MFA), and continuous monitoring to watch for unauthorized or unusual activity.

Incident response planning: Hope for the best but prepare for the worst. No one wants (or expects) a data breach, but you need to have a plan for it if it does happen. 

Time can be of the essence when you’re reacting to an incident, so having a plan that your employees are aware of and can follow will speed up the process of minimizing damage and recovery time.

You should also invest in training your staff on how to identify and respond to social engineering attacks.

Regular audits and assessments: Since your business is constantly evolving and growing, so are your privacy and security needs. You can’t rely on systems you set up to last you for years. It’s important to periodically reassess and test to see if they still work. If they don’t, you may need to revise your strategy.

Integrate Privacy Into the Company Culture

Privacy isn’t just for your IT staff and developers to manage. It should be a part of your business’s culture, from management to HR to marketing. Why? Because 74% of data breaches are caused by human error.

This is why you should invest in training your staff to handle data and IT systems responsibly. Having clear policies for data handling, incident response, and accountability will also help create a privacy-first culture.

Ensure Transparency and User Empowerment

Inform consumers about what data you collect, what your handling policies are, and who you share their data with. This should be communicated with them at the point of collection so they can consent.

You should also provide tools to allow consumers to manage their data, so they can make subject rights requests to, for example, access, delete, or modify their information. Your privacy policies should be easy to find and in clear language.

Continuously Monitor and Reassess Privacy Practices

As regulations evolve, review your privacy policies, processes, and practices to check if they’re aligned with business needs and regulations. Regular audits will help you identify any compliance gaps or emerging risks.

Use Privacy-Focused Solutions and Technologies

Implementing privacy by design into your systems can seem overwhelming. Gain time and clarity by automating and streamlining as many of your privacy tasks as possible.

Privacy management software like Osano can help you implement privacy-by-design principles into your organization. Our platform offers a centralized consent and preference management hub, which makes it easy for your users to tell you how they want you to use their data.

It also helps with data mapping and automating subject rights request responses, so you can quickly find data subjects’ personal information and handle it in compliance with regulations. To make assessments such as PIAs quicker and easier, the platform offers easily configurable, standards-based templates and guided workflows. In short, you get everything you need for privacy compliance in over 50 countries in one intuitive and easy-to-use solution.