Companies can reduce the probability of a data breach and thus reduce the risk of fines in the future, if they chose to use encryption of personal data. The processing of personal data is naturally associated with a certain degree of risk. Especially nowadays, where cyber-attacks are nearly unavoidable for companies above a given size. Therefore, risk management plays an ever-larger role in IT security and data encryption is suited, among other means, for these companies.
In general, encryption refers to the procedure that converts clear text into a hashed code using a key, where the outgoing information only becomes readable again by using the correct key. This minimises the risk of an incident during data processing, as encrypted contents are basically unreadable for third parties who do not have the correct key. Encryption is the best way to protect data during transfer and one way to secure stored personal data. It also reduces the risk of abuse within a company, as access is limited only to authorised people with the right key.
The Regulation also recognizes these risks when processing personal data and places the responsibility on the controller and the processor in Art. 32(1) of the General Data Protection Regulation to implement appropriate technical and organisational measures to secure personal data. The GDPR deliberately does not define which specific technical and organisational measures are considered suitable in each case, in order to accommodate individual factors. However, it gives the controller a catalogue of criteria to be considered when choosing methods to secure personal data. Those are the state of the art, implementation costs and the nature, scope, context and purposes of the processing. In addition to these criteria, one always has to consider the severity of the risks to the rights and freedoms of the data subject and how likely those risks could manifest. This basically boils down to the following: The higher the risks involved in the data processing and the more likely these are to manifest, the stronger the taken security measures have to be and the more measures must be taken. Encryption as a concept is explicitly mentioned as one possible technical and organisational measure to secure data in the list of Art. 32(1) of the GDPR, which is not exhaustive. Again, the GDPR does not mention explicit encryption methods to accommodate for the fast-paced technological progress. When choosing a method one must also apply the criteria catalogue above. To answer the question of what is currently considered “state of the art” data protection officers usually rely on the definitions set out in information security standards like ISO/IEC 27001 or other national IT-security guidelines.
Encryption of personal data has additional benefits for controllers and/or order processors. For example, the loss of a state of the art encrypted mobile storage medium which holds personal data is not necessarily considered a data breach, which must be reported to the data protection authorities. In addition, if there is a data breach, the authorities must positively consider the use of encryption in their decision on whether and what amount a fine is imposed as per Art. 83(2)(c) of the GDPR.