India established a framework for protecting and processing personal data called the Digital Personal Data Protection Bill. After passing both houses of Parliament, this bill evolved into the Digital Personal Data Protection Act (DPDP) in 2023. This act creates a robust and comprehensive framework to protect sensitive information while supporting India's economic growth and digital transformation.
The DPDP extends beyond primary entities or data fiduciaries to their third-party service providers or data processors—making Third-Party Risk Management a critical part of complying with the act.
In this blog, we’ll cover how to adapt common TPRM strategies to India’s Digital Personal Data Protection Act, focusing on how to lower your third-party risk while maintaining compliance with the privacy law.
Key components of India’s Digital Personal Data Protection Act
India’s Digital Personal Data Protection Act includes key benchmarks that highlight the protection and processing of personal data. These key components include:
- Consent: Organizations are mandated to obtain explicit consent from individuals before collecting or processing their data.
- Data localization: Outlines provisions for storing copies of certain types of personal data within India’s borders.
- Data Protection Authority: The Act establishes a Data Protection Board in the central government that oversees and enforces data protection regulations.
- Rights of individuals: Individuals (data principals) are granted specific individual rights under the bill, including the right to access, correct, and delete personal data held by data fiduciaries.
- Data fiduciaries and processors: Organizations handling personal data (called “Fiduciaries”) must adhere to obligations regarding processing and protecting personal data, including appointing a Data Protection Officer (DPO).
- Penalties: The Act outlines non-compliance penalties, which could be substantial for different circumstances, like serious data breaches.
India modeled the DPDP after the European Union’s General Data Protection Regulation (GDPR), which includes broad definitions of “personal data,” including various applications and exemptions across Europe. Other similar regulations include California’s Consumer Privacy Act (CCPA).
Third-party risk in India’s Digital Personal Data Protection Act
There are many circumstances within India’s Digital Personal Data Protection Act where third-party risk may occur. Strict measures to protect personal data extend beyond primary organizations to their third-party service providers, such as data processors.
Under this Act, data fiduciaries are responsible for ensuring their third-party partners adhere to the same required data protection and privacy standards. Inadequate standards can result in regulatory risk and non-compliance for both the third party and the data fiduciary, making Third-Party Risk Management very important.
Other areas of third-party risk include:
- Contractual and operational oversight: Inadequate due diligence and data protection agreements (DPAs), lack of regular audits and monitoring, ineffective incident response and breach notification, escalation and remediation process failures
- Data security and transfer compliance: Poor data security safeguards, non-compliance with data transfer restrictions, non-adherence to “privacy by design” principles
- Training, awareness, and documentation: Inadequate employee training and awareness, insufficient documentation, and poor record-keeping
Third-party risk management programs help organizations minimize these risks by giving them full visibility of their vendor risk. Organizations in India that do not yet have a TPRM program should develop a cohesive third-party risk management plan to ensure compliance with the DPDP.
UpGuard Vendor Risk provides organizations with automated third-party risk assessment workflows and instant notification about their vendors’ security, all in one centralized dashboard. Learn more here.
TPRM strategies to comply with India’s Digital Personal Data Protection Act, 2023
To minimize third-party risk and maintain compliance with India’s Digital Personal Data Protection Act, consider the following categories of TPRM strategies:
- Pre-engagement evaluation and agreement structuring
- Ongoing monitoring and compliance
- Incident management and security measures
- Training, remediation, and escalation processes
Each category includes specific strategies to minimize third-party risk and ensure third-party vendors’ data security standards are up to par with the Act’s requirements.
Pre-engagement evaluation and agreement structuring
This category applies to the procurement and onboarding process for third-party vendors. Organizations should implement a specific risk analysis process before signing contracts with potential vendors. This process helps identify third-party vendors who will maintain compliance with India’s DPDP and prevent regulatory risk.
This category includes TPRM strategies such as:
- Due diligence and assessment: Assess a potential vendor’s data handling and protection practices, ensuring they align with the Digital Personal Data Protection Act. Be sure to evaluate the vendor’s security measures, privacy risks, data processing policies, and compliance history.
- Data processing agreements: Include clauses regarding sensitive data protection and compliance with the Digital Personal Data Protection Act in any contracts or agreements. Cover aspects like data collection purposes, data security measures, reporting data breaches, and handling data subject rights.
- Risk assessment of third-party vendors: Conduct risk assessments for all third-party vendors who handle personal data, evaluating potential data privacy and security risks that could impact your compliance with the Act.
UpGuard Vendor Risk simplifies third-party vendor risk assessments with automated workflows. Customize risk assessments based on a vendor’s risk exposure to your organization. Conduct initial assessments using security ratings, deep-dive using our library of industry-standard security questionnaires, and easily incorporate additional security evidence from SOC-2 audit reports.
Ongoing monitoring and compliance
Third-Party Risk Management requires diligent monitoring and compliance of third-party vendors, ensuring they maintain data protection and security standards throughout the vendor lifecycle. Both monitoring and compliance are crucial for ongoing compliance with India’s Digital Personal Data Protection Act, which third-party vendors can impact if they do not adhere to required security standards.
TPRM strategies for ongoing monitoring and compliance include:
- Regular audits and monitoring: Conduct regular audits and monitor the data protection practices of third-party vendors through periodic reviews, compliance checks, and security audits.
- Privacy by design: Encourage third-party vendors to adopt a “privacy by design” approach, integrating data protection into their technology and business processes.
- Compliance documentation: Keep comprehensive records of third parties' compliance efforts and data processing activities. Clear records are crucial to demonstrate compliance during audits or investigations.
UpGuard’s compliance reporting feature lets users view their or vendor’s risk details (including web risks) mapped against recognized security standards or compliance frameworks like NIST CSF or ISO 27001.
Incident management and security measures
When working with third-party vendors, data breaches may occur without the knowledge of the primary entity. In the event of a cybersecurity incident, India’s Digital Personal Data Protection Act requires organizations to follow specific procedures. This category covers strategies focused on incident management and security measures, ensuring organizations prepare for potential cybersecurity incidents.
TPRM strategies for incident management include:
- Incident response and breach notification plans: Collaborate with third-party vendors to develop and agree on incident response plans, which are crucial for timely breach notification to authorities and affected individuals.
- Data transfer restrictions: Communicate with third-party vendors regarding restrictions on cross-border data transfers to countries not on the Act’s approved list.
- Cybersecurity insurance: To add an extra layer of protection, consider requiring third-party vendors to have cybersecurity insurance that covers data breaches and privacy violations.
UpGuard Vendor Risk helps organizations manage cybersecurity incidents in various ways, including step-by-step processes to close data leaks. Review findings within the platform, remediate leaks, and get notified in-app and via email when leaks are closed.
Training, remediation, and escalation processes
Ongoing relationships with third-party vendors must include clear communication channels for issues or remediation. This category contains strategies for open communication and employee awareness of third-party risk across their organization.
TPRM strategies for training, remediation, and escalation processes include:
- Escalation and remediation processes: Establish a clear escalation path for data protection and compliance issues. Including remediation processes in your third-party contract agreements is vital.
- Employee training and awareness: Prioritize training programs for employees in data management, information technology, and procurement roles. Employees in these roles must be aware of the Digital Personal Data Protection Act requirements, including the importance of data privacy and risks associated with third-party data processors.
UpGuard Vendor Risk accelerates the remediation of cybersecurity risks from your third-party vendors. Use real-time data to provide context to your vendors, utilize automated workflows to track progress, and get notified when issues are fixed.
Elevate your third-party risk management with UpGuard
If you want to expand your Third-Party Risk Management beyond compliance with Indian data protection laws, consider UpGuard's industry-leading TPRM product, Vendor Risk.
Vendor Risk is our all-in-one TPRM platform that allows you to assess your organization’s Vendor Risk Management ecosystem. With Vendor Risk, you can automate your third-party risk assessment workflows and get real-time notifications about your vendors’ security in one centralized dashboard. Additional Vendor Risk features include:
- Security Questionnaires: Automate security questionnaires with workflows to gain deeper insights into your vendors’ security and utilize templates (NIST, GDPR, HIPAA, and more) and custom questionnaires for your specific needs.
- Security Ratings: Instantly understand your vendors' security posture with our metric-driven, objective, and dynamic security ratings.
- Risk Assessments: Let us guide you each step of the way with streamlined workflows that encompass gathering evidence, assessing risks, and requesting remediation.
- Monitoring Vendor Risk: Monitor your vendors daily and view the details to understand the risks impacting a vendor’s security posture.
- Reporting and Insights: UpGuard’s report templates provide tailor-made reports for different stakeholders.
- Managed Third-Party Risks: Let our expert analysts manage your third-party risk management program.
