Black Tiger Insights
3
min read

Why do so many companies gamble with compliance?

Black tiger

The real cost of data privacy shortcuts

It was a warm May morning in Washington. And a day that Erin Egan, Meta’s Chief Privacy Officer will remember forever. Just before lunch, the news spread around the world: Meta was slapped with a record-breaking €1.2 billion GDPR fine. WhatsApp was hit with a €225 million penalty. And the board rooms of major companies were filled with concerned discussions asking: ’’Who will be next?’’.

And from that moment, until today... not much has changed. The penalty hasn't triggered the major shifts that regulators hoped for. Despite the mounting evidence that non-compliance can devastate both finance and reputation, many organizations continue to gamble with data privacy regulations.

The real price of non-compliance

According to Gartner, 75% of the world's population have their personal data protected by privacy regulations by the end of 2024. Yet the same research shows only 23% of companies fully comply with existing regulations.

"It's not that companies want to break rules," explain the experts. "They simply underestimate the risks while overestimating the costs of compliance."

When organizations save on compliance, they're often focusing on the wrong numbers. While implementing top-notch data protection technology and policies might seem expensive, the cost of non-compliance can be catastrophic:

  • The average GDPR fine now stands at €4.7 million (EU Commission, 2023)
  • Reputational damage can erase up to 54% of a company's market value (MIT Technology Review)
  • Customer trust loss: 83% won't deal with breached companies (Deloitte)

 

So why companies take these risks?

Three key factors drive such behavior:

1. "It won't happen to us" syndrome

Many companies, especially smaller ones, believe they're too small to attract regulators' attention. "This is dangerous thinking," warns Delloitte Research. Regulators more and more often target mid-sized companies to set examples.

2. Complex implementation

Companies often face a maze of requirements. Common challenges are:

  • Multiple jurisdictions with different rules
  • Legacy systems with embedded personal data
  • Unclear data ownership across departments

3. Capacity constraints

According to IBM's report reveals that while a robust compliance program averages $3.5 million, the cost of non-compliance can be significantly higher. Yet many organizations focus on this upfront investment while ignoring the potentially catastrophic risks.

Beyond the obvious financial penalties, non-compliance hits other aspects:

  • Lost business opportunities, particularly in privacy-conscious markets
  • Damaged partner relationships and ecosystem trust
  • Employee morale and retention challenges
  • Increased insurance premiums and financing costs

But. Not all companies view compliance as a burden. It can be transformed into a business accelerator. Harvard Business Review reports that companies with strong privacy practices enjoy:

  • 23% higher customer satisfaction rates
  • 31% better employee retention
  • 47% fewer data breaches

What are the next steps for me?

  1. Start with visibility
       
    • Map your data landscape comprehensively
    •  
    • Understand cross-border data flows
    •  
    • Document all data processing purposes and legal bases
  2.  
  3. Automate and integrate your data
       
    • Automate your consent management
    •  
    • Automate processes for your DSR (Data Subject Requests)
  4.  
  5. Create a privacy-first culture
       
    • Invest in regular training and education
    •  
    • Develop clear, actionable policies
    •  
    • Make privacy everyone's responsibility

 

To summarize

The question facing companies today isn't whether to comply. But whether to do proactively and win. Or reactively and suffer. A solid technology can help you manage and automate all your data flows and use them to your advantage. In this high-stakes game, the house always wins. And the house is the regulatory framework that's here to stay.

Written by Michal KOLATAJ

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