In the 1990s, Dr. Ann Cavoukian introduced Privacy by Design (PbD), a revolutionary framework that embeds data protection into the very fabric of technological systems and business processes. Unlike reactive approaches that address privacy concerns only after a breach occurs, PbD is inherently proactive, ensuring that privacy and security are foundational elements in every stage of product or service development.
Over the past three decades, digital transformation has accelerated at an unprecedented pace, bringing with it a surge in cyber threats and an exponential growth of sensitive personal and organizational data. In response to these challenges, regulatory frameworks have evolved to meet the demands of modern cybersecurity. Among the most impactful is the NIS2 Directive (EU 2022/2555), which expands upon the original NIS Directive and elevates Privacy by Design from a recommended best practice to a legal requirement for critical sectors across the European Union.
Effective as of October 2024, NIS2 represents a paradigm shift in how organizations must approach cybersecurity. It mandates secure-by-design principles, robust risk management practices, and comprehensive end-to-end data protection strategies. For businesses operating in essential sectors, such as energy, healthcare, finance, transport, and digital infrastructure, compliance with NIS2 is no longer optional; it is a strategic necessity.
In this article, I will try to explore 5 key points:
- The seven core principles of PbD and their relevance in today’s digital ecosystem
- How the NIS2 Directive extends cybersecurity obligations across more than 15 critical sectors
- The real world challenges organizations face when implementing PbD under NIS2
- Key compliance requirements and the strategic benefits they offer
- Why is PbD not just a legal obligation, but also a competitive advantage
The Seven Foundational Principles of Privacy by Design
At the heart of Pb lies a set of seven interrelated principles that guide the integration of privacy into technology, policy, and business practices. These principles ensure that privacy is embedded by default, proactively managed, and made transparent to users.
Proactive, Not Reactive
The first principle emphasizes the importance of anticipating and preventing privacy risks before they materialize. Organizations must conduct Privacy Impact Assessments (PIAs) early in the design phase to identify potential vulnerabilities and implement mitigations accordingly.
For example, a software company developing a new mobile app should incorporate encryption and access controls during the initial coding stages rather than adding them post launch. This proactive stance reduces the likelihood of breaches and supports compliance with evolving regulations such as the GDPR and NIS2.
Privacy as the Default Setting
Users should not be required to take action to protect their data; instead, strong privacy protections must be enabled automatically. This principle ensures that individuals are protected even if they are unaware of privacy settings or choose not to adjust them.
A real-world implementation can be seen in some companies’ App Tracking Transparency feature, which requires apps to request user consent before collecting tracking data. By making opt-in the norm rather than opt-out, companies empower users and reduce the risk of unauthorized data sharing.
Privacy Embedded into Design
Rather than being an add-on or afterthought, privacy must be integrated directly into the architecture of systems and services. This includes designing databases with data minimization, applying least privilege access models, and using Zero Trust security frameworks.
For instance, cloud service providers can embed privacy into their platforms by offering built-in encryption, automatic anonymization tools, and granular access controls. This ensures that data remains secure throughout its lifecycle without requiring additional layers of protection.
Full Functionality – Positive-Sum, Not Zero-Sum
Privacy and usability are often mistakenly viewed as opposing goals. However, PbD asserts that both can coexist without compromise. Systems should maintain full functionality while ensuring robust privacy protection.
For example, some messaging platforms provide end-to-end encryption without sacrificing performance or ease of use. Users enjoy seamless communication while benefiting from one of the strongest privacy protections available today.
End-to-End Security – Full Lifecycle Protection
Data must be safeguarded at every stage, from collection to deletion. This includes secure storage, transmission, processing, and eventual erasure of personal information. PbD encourages the use of strong encryption, secure APIs, and regular audits to ensure ongoing protection.
Under the GDPR, the ‘right to erasure’ grants users the ability to request that their data be permanently deleted. PbD supports this right by embedding automated deletion mechanisms into system designs, ensuring compliance and reducing the risk of retaining data beyond necessity.
Visibility and Transparency
Organizations must clearly communicate how they collect, use, store, and share user data. Transparency builds trust and empowers users to make informed decisions about their privacy.
Clear, layered privacy notices, rather than dense legal jargon, are becoming standard. Companies now provide interactive dashboards where users can view and manage their data preferences in real-time.
Respect for User Privacy – Keep It User-Centric
Ultimately, PbD places the user at the center of all privacy considerations. Organizations must prioritize user control, obtain meaningful consent, and allow individuals to easily modify or withdraw consent as needed.
Companies’ initiative exemplifies this principle by aiming to reduce third-party tracking while still enabling personalized advertising through on-device processing. This balances business interests with user privacy expectations.
The NIS2 Directive: A Turning Point for Cybersecurity and PbD
While the original NIS Directive (EU 2016/1148) was a significant step toward improving cybersecurity across EU member states, it faced limitations in scope and enforcement. The NIS2 Directive (EU 2022/2555) addresses these shortcomings by expanding the number of regulated sectors, introducing stricter compliance requirements, and reinforcing the principles of Secure by Design and Privacy by Design.
NIS2 applies to a wide range of critical sectors, including: energy, healthcare, transport, digital infrastructure, banking and finance, public administration, manufacturing, postal and courier services, waste management, water supply, wastewater, digital service providers, ICT products and services, research, and space.
Each of these sectors plays a vital role in national and economic stability, making them prime targets for cyber-attacks. NIS2 ensures that organizations within these domains implement robust cybersecurity measures to prevent disruption and protect sensitive data.
Key NIS2 Requirements Impacting PbD
Secure by Design and by Default (Article 21)
One of the most significant changes introduced by NIS2 is the legal obligation to embed security into products and services from the outset. Article 21 explicitly requires organizations to adopt Secure by Design methodologies, ensuring that security is not an afterthought.
The Secure Future Initiative (SFI) of some companies is a notable example. It integrates advanced security features such as AI-driven threat detection and continuous code analysis throughout every phase of software development. This aligns perfectly with NIS2’s vision of proactive cybersecurity.
Risk Management and Incident Reporting
NIS2 requires robust risk management frameworks and real-time threat monitoring. Organizations must report incidents within strict timelines and demonstrate the implementation of adequate mitigation strategies.
The EU’s Computer Security Incident Response Team (CSIRT) network plays a crucial role in coordinating rapid responses to major breaches. This collaborative approach enhances cross-border incident handling and improves overall resilience.
Supply Chain Security
With increasing threats from third-party vendors, NIS2 imposes strict supply chain security requirements. All entities involved in the delivery of services must adhere to the same cybersecurity standards.
The infamous 2020 SolarWinds hack serves as a stark reminder of the dangers posed by insecure supply chains. NIS2 aims to prevent such incidents by mandating thorough vendor vetting and continuous monitoring.
Accountability and Governance
Top-level executives are now legally accountable for cybersecurity compliance under NIS2. This includes appointing dedicated cybersecurity officers and establishing clear governance structures.
Non-compliance can result in fines of up to €10 million or 2% of the global annual turnover, depending on the severity of the violation. This financial incentive drives organizations to treat cybersecurity as a board-level priority.
Data Minimization and Encryption
NIS2 reinforces the need for data minimization, collecting only what is necessary and mandates the use of strong encryption for data at rest and in transit.
Some organizations use a privacy-focused email service, which uses zero-access encryption, meaning even the provider cannot access user data. This approach meets and exceeds NIS2’s expectations for data protection.
Real World Challenges of Implementing PbD Under NIS2
Despite its clear benefits, many organizations face significant obstacles when integrating PbD into their operations under the NIS2 Directive.
Legacy Infrastructure
Many enterprises rely on outdated systems that were not designed with modern privacy and security standards in mind. Replacing or upgrading legacy infrastructure can be costly and complex.
Recommendation: Gradual modernization using microservices, API gateways, and hybrid architecture allows organizations to introduce PbD principles incrementally without disrupting existing workflows.
Balancing Security and User Experience
Enhanced security measures can sometimes lead to poor user experiences, such as cumbersome authentication processes or restrictive permissions.
Recommendation: Implementing biometric authentication methods, such as Face ID or fingerprint scanning, can streamline access while maintaining high levels of security. Additionally, adaptive authentication based on user behavior further can improve convenience without compromising safety.
Lack of In-House Expertise
Many organizations lack the internal resources and knowledge to effectively implement PbD and comply with NIS2 requirements.
Recommendation: Partnering with Managed Security Service Providers (MSSPs) offers access to specialized expertise and scalable solutions. Furthermore, training programs and certifications can help build in-house capabilities over time.
Beyond Compliance: The Strategic Benefits of PbD
While compliance with NIS2 is mandatory, organizations that fully embrace PbD stand to gain far more than regulatory approval. They build trust, resilience, and long-term competitiveness.
Enhanced Customer Trust
Consumers are increasingly aware of privacy issues and prefer brands that respect their data.
Reduced Breach Costs
According to IBM’s Cost of a Data Breach Report 2024, organizations that adopted automation and AI reduced breach costs by an average of $2.22 million compared to the organizations that did not.
Competitive Advantage
In highly regulated industries, PbD differentiates organizations that prioritize privacy and security. Early adopters gain a reputation for reliability and innovation, attracting customers, partners, and investors.
The Time to Act Is Now
The NIS2 Directive marks a turning point in how organizations must approach cybersecurity. Privacy and security can no longer be treated as optional enhancements, they must be integral to every system and process.
By embracing Privacy by Design, organizations can not only achieve compliance but also strengthen their resilience against cyber threats, enhance customer trust, and unlock strategic advantages in a rapidly evolving digital landscape.
The best time to implement Privacy by Design was yesterday. The second best time is now.
