The 4 Biggest Data Privacy Risks of Non-Compliance with Regulations

Data privacy risks are no longer a back-office issue; they are a leading concern for organizations aiming to protect sensitive information and maintain compliance.

With strict regulations like the General Data Protection Regulation (GDPR), Health Insurance Portability and Accountability Act (HIPAA), and the Gramm-Leach-Bliley Act (GLBA) Safeguards Rule, non-compliance comes with costly consequences.

Which Regulations Cover Data Privacy Risks?

An important compliance shift for organizations handling U.S. consumers' financial data occurred under the GLBA, particularly its Safeguards Rule enacted in December 2022. The changes mandated essential practices like data encryption, risk-based data management, and secure lifecycle handling.

• Releasing periodic reports to boards of directors and governing bodies.
• Instituting secure software development practices.
• Identifying and managing data based on risk.
• Implementing and reviewing data access controls.
• Encrypting data both in transit and at rest.
• Establishing secure procedures for disposing data.

But GLBA is just the beginning. Consider global regulations like European Union (EU)’s GDPR and Digital Operations Resilience Act (DORA regulation), Brazil’s General Data Protection Law (LGPD), and the United States’ HIPAA. In our 2025 State of Data Compliance and Security Report, we found that 100% of respondents were subject to data privacy regulations — including these prominent laws. 

There are also emerging AI regulations to consider, like the EU AI Act, alongside nuances of existing regulations like GDPR for AI. These laws mandate that organizations within their jurisdiction employ effective data privacy practices to protect personally identifiable information (PII) or what the Safeguards Rule calls nonpublic personal information (NPI). 

4 Biggest Data Privacy Risks of Non-Compliance

The stakes for data privacy compliance are high, as non-compliance can result in devastating consequences. Organizations can expect to face four major risks for non-compliance with data privacy laws: inadequate cybersecurity, expensive fines, high individual penalties, and reputational damage.

The Compliance (Cyber)Security Blanket

Non-compliance often reflects inadequate cybersecurity, putting sensitive data (such as federal tax information) at risk. For example, you could be putting sensitive data in non-production environments without proper protection. Ensuring compliance means implementing robust data controls, such as secure encryption, key management, and data access monitoring. After all, a major component of data privacy on your compliance is ensuring that consumers’ data is safe from the hands of bad actors who could use the data nefariously.

For instance, the GLBA requires financial institutions to, “protect against any reasonably anticipated threats or hazards” as well as “unauthorized access to, or use of,” customers’ data. The Federal Financial Institutions Examination Council, which audits financial institutions, dictates that these institutions should use strong data encryption and key management practices. These practices, of course, improve compliance and security alike. So, even if your organization doesn’t get slapped with a data privacy lawsuit, non-compliance with data privacy regulations reflects poor data controls, a significant liability for your organization.

Data Privacy Risks Related to Non-Compliance

• Increased susceptibility to cyber breaches.
• A domino effect of poor data security that adversely impacts customers.

Actionable Measures

• Implement end-to-end encryption of data in transit and at rest.
• Regularly assess your data access controls for potential vulnerabilities.

The Financial Burden of Non-Compliance Fines  

Key Example

Meta Platforms incurred a whopping €1.2 billion GDPR fine for non-compliance, after transferring personal data to the United States and therefore violating the EU regulation. Even moderate GDPR fines can exceed $10 million. 

Individual Penalties and Accountability for Leadership

What’s more concerning than organizational penalties? Liability spread to individual employees and board members.

For instance, one individual who violated the U.K.’s Data Protection Act (DPA) in 2018 by stealing and selling customer records to rogue organizations incurred a 6-month prison sentence. Individual penalties under GLBA, meanwhile, are much higher—each violation of the Act can result in fines of up to $10,000 for directors and officers, license revocations, and up to five years of imprisonment. 

The new Safeguards Rule requires covered entities to report annually to their boards of directors, effectively putting the protection of PII/NPI directly onto board agendas. So, while prison sentences for GLBA non-compliance are rare, accountable organizations’ board members in particular should be concerned with upholding the interests of their stakeholders via compliance.

Critical Takeaway

The updated Safeguards Rule requires detailed reporting to boards, putting the onus of data compliance directly in their lap. Non-compliance is no longer just an organizational downfall; it’s personal.

Reputational Damage Due to Data Privacy Risks

Even if fines and security risks don’t manifest immediately, the reputational harm resulting from non-compliance can be equally catastrophic. Word travels far and fast when organizations break the law. 

As Warren Buffett famously said, “It takes 20 years to build a reputation and five minutes to ruin it.” Non-compliance tarnishes public trust and deters future collaboration opportunities.

Effects of Reputational Damage

• Lost customer confidence.
• Partnerships and alliances may dissolve.
• Diminished market share.

Mitigating Data Privacy Risks & Staying Compliant

The updated GLBA Safeguards Rule confirms two truths for accountable organizations. First, data privacy is a constantly evolving practice. And second, organizations cannot rest on their laurels when bringing their practices into compliance with these laws due to their evolving nature. 

Carrying out the necessary due diligence to ensure compliance with updated regulations is far less severe than risking penalties for noncompliance. 

Perforce Delphix data compliance solutions help many banks — and other covered organizations — ensure compliance with a variety of data privacy-related regulations, including the GLBA Safeguards Rule, while also bolstering data security. (See the GLBA datasheet to learn more.) 

How Delphix Customers Avoid Data Privacy Risks

GDPR: Sky Italia & The University of Manchester

• Sky Italia was under deadline to meet GDPR compliance requirements. With Delphix, they were able to achieve GDPR compliance in 5 months — ahead of the deadline and their expected schedule — so they could avoid data privacy risks.
• The University of Manchester wanted to pursue digital transformation but also needed to address the complexity associated with GDPR data sharing guidelines. Delphix's virtualization and self-service capabilities enabled faster access to secure data, to drop data refresh times from 16 days to 40 minutes.

HIPAA: Molina Healthcare & Delta Dental

• Molina Healthcare had strict HIPAA and security requirements, which put strain on the IT team. By using Delphix, they were able to avoid data privacy risks and ease the strain on the IT team. 
• Delta Dental wanted to migrate to cloud, but it had protected health information subject to HIPAA that created complexities. Delphix helped Delta Dental secure the data before the transition and reduced the time it took to move data from 8 weeks to hours.