The Legal Digital Health Check – setting up legally complaint digital processes and avoiding liability risks

What is a Legal Digital Health Check?

Digital business models and IT-enabled processes play a key role today in being successful in business. And the regulatory requirements are constantly increasing at the same time – particularly in data protection law, cyber security and in the use of artificial intelligence (AI).

Unclear responsibilities, uncoordinated processes and unstandardised technical solutions regularly lead to legal risks and unnecessary extra work.

So it’s good to know that our Legal Digital Health Check brings clarity to the legal and organisational status of selected digital processes. It points out where there are risks, where responsibilities have not been completely fulfilled or processes are unnecessarily complicated.

Our Legal Digital Health Check is a structured, risk-based stocktake of selected digital processes, business models and implemented systems. As well as a legal evaluation, such as an impact analysis of the NIS 2 rules or the requirements of the AI Regulation (the EU AI Act), there is also the question whether potential for digitisation is being properly exploited.

The goal is:

• To review how internal processes comply with legal requirements
• How up legal, organisational and technical vulnerabilities and
• Identify specific approaches to make processes more clearly structured, efficient and auditable before an audit, complaint or security incident happens.

Why is a Legal Digital Health Check particularly relevant?

Legal requirements concerning data protection, the use of AI and IT security are developing at a fast pace. The Health Check provides a structured view of:

• Which areas need to be resolved short-term
• In which areas the company is already well set up and
• Where regulatory requirements can be integrated into existing processes without creating parallel processes.

Liability, legal and efficiency risks

Data protection infringements, unauthorised use of AI and failure to implement NIS 2 requirements can results in large fines and legal risks.  Avoidable friction also often occurs when processes are unclear, redundant or doubled up.

The Legal Digital Health Check makes these areas of risks and inefficiency visible and allows you to prioritise action in a targeted way.

The areas checked in a Legal Digital Health Check

Data protection processes

Key data protection processes are checked, including:

• Legal bases, purpose limitation and data minimisation
• Technical and organisational measures
• Rights of data subjects and erasure and storage processes
• Processing and data transfer, including to third countries
• Data protection governance, roles and responsibilities
• Training, awareness and documentation (accountability)

Alongside legal risks, inefficient processes, discontinuity between media and redundant responsibilities are identified, things that in practice often turn out to be time and cost factors.

AI Health Check (EU AI Act)

Analysis of the use of AI systems and related business processes, especially:

• identification and classification of the AI systems in use
• AI governance, risk management and responsibilities
• Data quality and handling of training and test data, bias controls
• Transparency and documentation responsibilities
• Human oversight
• Inclusion of AI in existing processes

The goal is to reduce legal uncertainty and create clear, solid structures for using AI.

NIS 2 Health Check (cyber security & resilience)

Review of impact and implementation obligations under the NIS 2 Directive, including:

• Analysis of impact under the new version of the Federal Office for Information Security Act [Gesetz über das Bundesamt für Sicherheit in der Informationstechnik–BISG].
• Gap analysis on meeting the legal minimum requirements
• Risk analysis of technical and organisational security measures taken
• Processes to identify, handle and report security incidents
• Emergencies, service recovery and business continuity plans
• Governance structures and the involvement of management

Alongside legal certainty, the main question here is how to make security and crisis processes efficient and clearly structured and practicably implement them.

The Legal Digital Health Check combined with other Health Checks

Many legal and organisational risks arise at interfaces, such as those between data protection, AI, IT security, compliance and tax law. The combined Health Check takes a look at all these areas together and bundles them in an integrated approach.

The focus is on:

• Clearly coordinated processes instead of isolated individual measures
• Clear governance structures and responsibilities
• Transparency concerning compliance, liability and legal risks
• Prioritising measures by issue and risk
• Solid bases for decision-making for management and directors

Data protection is found in nearly every area of business – in dealing with the data of staff, suppliers and customers, in payroll processes, tax reports, evaluating data related to company events, and internal investigations and compliance issues.

But dealing with this data in a legally compliant way is in practice often not clearly arranged.

The value to you at a glance

• Identify legal and organisational risks quickly
• Reduce liability and legal risks
• Increases efficiency through optimised and clearly designed processes
• Identifies interface risks that are often overlooked in individual checks
• Avoids unnecessary parallel structures and extraneous work
• Be better prepared for audits and security incidents

Conclusion

The Legal Digital Health Check helps companies design their digital processes to be legally watertight, efficient and resilient. It enhances transparency, reduces unnecessary complexity and provides a solid basis for long-term compliance and efficiency structures – practically and in a way that other measures can connect to.

Outlook

Other topics in our Health Check series you can look forward to include:

• Withholding taxes
• Transfer pricing
• International tax law
• Insurance tax
• Health Checks in the public sector
• VAT and customs between Germany and Switzerland

Also read:
Our health Checks so far and the health check hub.