With increasing digitization, businesses often rely on multiple partners to manage and process data. This is especially common with services like cloud storage, email marketing platforms, and analytics tools. When a company shares data with a service provider called a “processor,” that processor may work with other vendors to handle specific tasks. These vendors are known as “sub-processors.”

 

Understanding sub-processors can help businesses that deal with sensitive customer information. For example, under the General Data Protection Regulation, 80% of European enterprises must ensure that every processor and sub-processor they use complies with strict data protection laws. Failing to manage sub-processors properly has led to fines, such as the €746 million penalty imposed on Amazon for GDPR violations in 2021.

 

Let’s explore sub-processors and how they fit into the data processing chain. We will also discuss why managing them can help to maintain compliance and trust.

 

What is a sub-processor?

 

A sub-processor is a third party that a data processor hires to help with specific tasks related to data processing. To understand this better, let’s break it down:

 

• A data controller is the company that owns the data and decides how it should be used.
• A data processor is a company or service that processes data on behalf of the controller.
• A sub-processor is someone the processor works with to handle a part of that work.

 

For example, imagine an eCommerce company (controller) sending newsletters through an email marketing platform (processor). If the platform stores customer email addresses in a cloud storage provider, that cloud provider becomes a sub-processor.

 

Sub-processors are commonly used in industries like technology, healthcare, and finance, where specialized services are needed. However, involving sub-processors adds complexity regarding data protection. That is why businesses need to know who their sub-processors are and ensure they follow privacy rules like the GDPR.

 

Legal framework governing sub-processors

 

Understanding the legal framework around sub-processors is essential for businesses that handle personal data. This framework ensures that all parties involved in data processing follow the rules set by data protection laws. Two key components of this framework are the GDPR and contractual obligations.

 

GDPR and data protection laws

 

The GDPR is a detailed law that governs how personal data is collected, processed, and stored in the European Union (EU). It sets clear rules for data controllers and processors, including sub-processors. Here are some important points about GDPR:

 

• Consent: The GDPR requires that individuals give explicit consent before their data is processed. This means that data controllers must inform users about how their data will be used.

 

• Accountability: Both data processors and sub processors are accountable for protecting personal data. They must ensure that they have appropriate security measures in place.

 

• Transparency: Companies must be transparent about their use of subprocessors. This includes informing data controllers about which sub processors they use and what tasks they perform.

 

• Data subject rights: Individuals have rights under GDPR, such as the right to access their data and request deletion. Both processors and sub processors must respect these rights.

 

Contractual obligations

 

In addition to legal requirements, there are contractual obligations between the parties involved in data processing. Here are some key points:

 

• Written agreements: Data controllers must have written agreements with their processors. These agreements should specify how personal data will be handled and what security measures will be taken.

 

• Sub-processor agreements: If a processor uses a sub-processor, they must also have a written agreement with them. This agreement should outline the responsibilities of the sub-processor and ensure they comply with GDPR standards.

 

• Key elements of contracts: Contracts should include details such as:

 

• The scope of work for the sub-processor
• Security requirements
• Procedures for reporting data breaches
• Terms for terminating the agreement

 

 

Responsibilities and obligations of a processor regarding sub-processors

 

When data processors work with a sub-processor, they have several essential responsibilities to ensure data protection. These responsibilities help prevent risks like data breaches or misuse.

 

1. Due diligence

 

Before hiring a sub-processor, the data processor must carefully check that the sub-processor can meet the necessary data protection standards. This includes ensuring they have proper security measures in place to protect data.

 

2. Transparency

 

The processor must inform the data controller about which sub-processors are being used. The controller should know exactly who is handling the data at all times.

 

3. Compliance

 

The processor must ensure that the sub-processor follows the same privacy rules. This means the sub-processor should handle data like the processor, with strong protections.

 

4. Accountability

 

If something goes wrong, such as a data breach, the processor is responsible for the actions of the sub-processor. This is why choosing the right sub-processor and setting clear rules in the contract is crucial.

 

By following these steps, processors can help protect the data they manage and stay compliant with laws like the GDPR. 

 

Challenges and risks of using sub-processors

 

While sub-processors can help businesses handle data efficiently, they also bring certain challenges and risks. Understanding these risks is essential to avoid problems and maintain trust.

 

• Data breaches: Sub-processors may not always have strong security measures in place. This can increase the risk of data breaches or unauthorized access to sensitive information.

 

• Compliance issues: If a sub-processor does not follow data protection laws, the processor and the data controller can face legal penalties. For example, under the GDPR, businesses can be fined heavily for non-compliance.

 

• Lack of control: Once data is shared with a sub-processor, it can be harder to control how it is used or stored. This can create challenges in ensuring data is handled correctly.

 

• Cross-border data transfers: If sub-processors are located in different countries, especially outside the EU, additional rules like GDPR’s transfer requirements apply. These transfers can create compliance challenges.

 

To address these risks, businesses must carefully select their sub-processors, monitor their activities, and ensure that proper agreements are in place. Taking these steps helps minimize risks and maintain compliance.

 

Secure your data with CyberArrow: Simplify sub-processor management today!

 

CyberArrow offers a powerful compliance management platform that takes the guesswork out of managing sub-processors. With tools designed to simplify data processing workflows, monitor third-party compliance, and ensure end-to-end data security, CyberArrow is your trusted partner in complying with changing regulations. It also automates up to 90% of compliance tasks and supports over 50 cyber security standards like ISO 27001, GDPR, and PCI-DSS. 

 

Why Choose CyberArrow for Sub-Processor Management?

 

• Stay compliant: CyberArrow ensures that all your sub-processors align with data protection regulations like GDPR, HIPAA, or CCPA, reducing the risk of penalties.

 

• Streamline oversight: Easily track sub-processor relationships, cross-border data transfers, and performance through a centralized platform.

 

• Automate processes: Save time by automating compliance tasks, such as monitoring sub-processor activities and generating reports for audits.

 

• Enhance security: Benefit from advanced security features that protect sensitive data throughout the processing chain.

 

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