Startup legal playbook

Data governance strategies for founders


  • Torys’ Emerging Companies and VC Group

Read this if: you need a robust data governance plan in place for your startup

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Go deeper: Operating your startup

Your customers, investors and your board all want to be assured that you are managing data in a safe, efficient and transparent way. A strong data governance strategy requires organization, proactive defence measures and accountability. Your data governance framework should allow your team to be able to retrieve and leverage data as needed while safeguarding these assets from unauthorized access.

Keep these tips top of mind as you build out a data governance strategy.

Data protection should be built into the company culture

Build a data governance team.
  • Document who is responsible for different parts of managing data, from privacy and IT to HR and from the sales team to vendor management.
  • While most startups won’t have full-time data governance specialists, your designated data leads should work together to set out rules for interacting with data, identify helpful tools, mitigate risk and ensure your wider workforce is properly trained.
Train your employees on data ethics, privacy and cybersecurity.
  • Clearly describe data ethics, privacy and cybersecurity, and how your startup approaches each of these things, in accessible training materials.
  • In addition to conducting training during onboarding, have a structured plan to provide regular refreshers and ad hoc training.
  • Ensure your team knows who to go to if they have—or receive—questions on data security and privacy.

Follow the golden rules of data governance: quality, organization, security and accountability

Map a scalable data governance structure.
  • Identify exactly what data you have, where you get it, how you use it and who you share it with, as well as how long you need to keep it.
  • The processes for storing and managing this data should be scalable and should provide clear accountability, such as audit logs.
  • Data security is vital—limit access to various tiers of data and implement permission levels to keep it secure.
  • The data assets that you keep, such as customer profiles, financial records and employee compensation information, should be organized in an efficient and safe way with clear metadata and records of changes.
Identify your startup’s most valuable business assets and roadmap how your IT system interacts with them.
  • Map out what is considered your most valuable data, the channels from which it is collected and distributed, who has access to it and what it is used for.
  • Assess whether sufficient resources are given to protect the most sensitive data.
  • Review how different data sets are integrated—the goal is to have a snapshot of all relevant information presented in a clear way.
Regularly test data protection measures.
  • Designate an internal lead to regularly test technical and administrative safeguards around data, as well as whether data is updated and deleted on a defined schedule. 
  • Proactively audit the kinds of highly sensitive data you hold, and those who have access to it, to ensure only those with clear permission can view, edit and distribute it. 

Change is the one constant—so your data governance plan should adjust accordingly

Keep an open dialogue between your board and management about emerging cyber and data threats.
  • Proactively assess the industry you operate in, and the wider environment, for emerging strategies adopted by hackers, fraudsters and disgruntled employees. Identify how those strategies could be used to hurt your business.
  • Stay on top of the ever-evolving legislative landscape around data management, AI, IP and cybersecurity. Report on how those legal changes may affect your business or data strategy.
  • Inform your board of key risks to your company’s data and the proactive steps you are taking to mitigate those risks.
  • Engage external experts to educate and advise management and the board on data strategies and risk mitigation.
Consider how data plays a role in your major business decisions, such as M&A, partnerships and new product launches.
  • Analyze your data management processes to determine if they can be scaled to account for major business changes. 
  • Consider what company data may be requested by interested investors or partners as part of their due diligence and how you will present it securely, or how easily it can be integrated into another system.
  • Understand how the data you have informs your knowledge of the market and how it can be used to make sounder decisions around potential new products and their launches.

Prepare for the worst-case scenario

Have a crisis plan in place for incidents affecting business and personal data.
  • Build an incident response team and ensure all members clearly understand their roles.
  • Identify “hot spots” for potential breaches in your data assets and add additional security steps as needed.
  • Hire external legal, forensic, PR and governance advisors to help steer you through a crisis if it arises.
Make sure you have sufficient cybercrime insurance.
  • Take out insurance to protect the company from significant losses from data-related crime, such as ransomware, email account takeovers and fraudulent funds transfers.
  • Your insurer will likely ask for a summary of how you approach the data governance steps described above.

To discuss these issues, please contact the author(s).

This publication is a general discussion of certain legal and related developments and should not be relied upon as legal advice. If you require legal advice, we would be pleased to discuss the issues in this publication with you, in the context of your particular circumstances.

For permission to republish this or any other publication, contact Janelle Weed.

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