Manufacturing firms risk damaging fines by ignoring implications of new data protection rules, says survey

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The majority of UK manufacturing businesses are unaware of the new wide-ranging data protection rules which come into force in less than a year's time - despite 18% admitting the maximum fine for non-compliance would force them out of business and 14% saying it would lead to large scale redundancies.

According to a YouGov survey of 300 manufacturing businesses, which was commissioned by national law firm Irwin Mitchell, only three in every 10 firms have started preparing for the new General Data Protection Regulation (GDPR) which commences on 25 May 2018.

GDPR represents the biggest change in 25 years to how businesses process personal information and it replaces existing data protection laws.

Under the new rules, the maximum fine for certain data breaches in the UK will rise from £500,000 to €20million or 4% of global turnover, whichever is larger. Despite this and the fact that virtually all businesses will be affected, only 36% admit to being aware of the rules.

Seventy one per cent of manufacturers are unaware of the new fines and 18% say they would go out of business if they received the maximum punishment. Fourteen per cent think they would need to make significant job cuts with a further 20% admitting that smaller scale headcount reductions will be necessary.

Joanne Bone, partner and data protection expert at Irwin Mitchell said: "These results are concerning because with next May's deadline fast-approaching and with so much at stake, our study reveals there's a very real possibility that the majority of manufacturers will not be compliant in time."

The notification of certain data breaches where there is an impact on privacy, such as a customer database being hacked or a letter being put in the wrong envelope, must be given to the Regulator within 72 hours under the new regime.

However, Irwin Mitchell's survey found that only one quarter (24%) of manufacturers are certain that they would be able to detect a data breach within their organisation. Just 28% say they are confident they would notify the relevant stakeholders within the required timescale of three days.

Other changes under the GDPR include an obligation to be more transparent about how personal data is used. Businesses will also need to have processes in place in case an individual asks for all their personal data to be erased.

Irwin Mitchell believes the low level of awareness of GDPR is caused by a number of misconceptions that exist about the new rules and say this has led to a level of complacency.

This view is supported by 34% of businesses claiming that GDPR will have no impact, claiming that GDPR is not an issue for their sector. Twenty eight per cent claim it isn't relevant to their business as they are not a consumer business.

The reality is that the rules encompass a wide range of personal data including employee data, payroll and pension records. They also apply to data in a business context where individuals are concerned, such as sole traders and partnerships.

Irwin Mitchell's Joanne Bone added: "Contrary to popular belief personal data is not just consumer information. It is hard to think of a business today that does not use personal data. Whether you have employee data, customer data or supplier data – if the data relates to an individual you will be caught by the new data protection laws."

The survey revealed that only 18% of manufacturing businesses view the new data protection rules as an opportunity and 11% said the rules will have a positive impact on their organisation.

Dorrien Peters, partner & manufacturing sector specialist at Irwin Mitchel, said: "It is important to recognise that taking a proactive approach towards GDPR compliance will potentially reap financial benefits.

"The opportunities for manufacturers to take advantage of the Big Data Revolution and embrace Industry 4.0 to become more profitable are real and this is forcing manufacturers to improve the connectivity of their businesses. Good data governance is a crucial part of this, indeed it will be essential to achieve the future state of a digitally integrated supply chain."

About the research

Irwin Mitchell's GDPR survey was completed by 2,129 senior decision makers within businesses and the sample included 299 manufacturers. The fieldwork was undertaken between 18-27 April 2017 and carried out online by YouGov. The figures have been weighted and are representative of all GB businesses in terms of size (i.e. employees).

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