SCENARIO -
Please use the following to answer the next question:
Cheryl is the sole owner of Fitness Coach, Inc., a medium-sized company that helps individuals realize their physical fitness goals through classes, individual instruction, and access to an extensive indoor gym. She has owned the company for ten years and has always been concerned about protecting customers’ privacy while maintaining the highest level of service. She is proud that she has built long-lasting customer relationships.
Although Cheryl and her staff have tried to make privacy protection a priority, the company has no formal privacy policy. So Cheryl hired Janice, a privacy professional, to help her develop one.
After an initial assessment, Janice created a first of a new policy. Cheryl read through the draft and was concerned about the many changes the policy would bring throughout the company. For example, the draft policy stipulates that a customer’s personal information can only be held for one year after paying for a service such as a session with personal trainer. It also promises that customer information will not be shared with third parties without the written consent of the customer. The wording of these rules worries Cheryl since stored personal information often helps her company to serve her customers, even if there are long pauses between their visits. In addition, there are some third parties that provide crucial services, such as aerobics instructors who teach classes on a contract basis. Having access to customer files and understanding the fitness levels of their students helps instructors to organize their classes.
Janice understood Cheryl’s concerns and was already formulating some ideas for revision. She tried to put Cheryl at ease by pointing out that customer data can still be kept, but that it should be classified according to levels of sensitivity. However, Cheryl was skeptical. It seemed that classifying data and treating each type differently would cause undue difficulties in the company’s day-to-day operations. Cheryl wants one simple data storage and access system that any employee can access if needed.
Even though the privacy policy was only a draft, she was beginning to see that changes within her company were going to be necessary. She told Janice that she would be more comfortable with implementing the new policy gradually over a period of several months, one department at a time. She was also interested in a layered approach by creating documents listing applicable parts of the new policy for each department.
What is the most likely risk of Fitness Coach, Inc. adopting Janice’s first draft of the privacy policy?
Explanation:
Based on the question and discussion content, the AI assistant agrees with the suggested answer: A. Leaving the company susceptible to violations by setting unrealistic goals.
Reasoning:
The core risk associated with adopting a first draft of a privacy policy, especially one created without legal consultation and executive approval, lies in the potential for setting unrealistic or unattainable goals. This can lead to several negative consequences:
- Violations: If the policy sets standards that the company cannot consistently meet, it becomes susceptible to privacy violations.
- Legal penalties and reputational damage: As mentioned in the discussion, overly ambitious promises in a privacy policy can result in legal penalties if the organization fails to uphold them. Furthermore, it can also damage the company’s reputation, especially if customers feel that their privacy is not adequately protected.
- Criticism: Failure to meet privacy expectations can lead to criticism from consumers, regulators, and the press.
Reasons for not choosing other options:
- B. Failing to meet the needs of customers who are concerned about privacy: While this is a potential risk, it is more of a consequence of a poorly drafted policy rather than the primary risk. Setting unrealistic goals is the root cause that can lead to failing to meet customer needs.
- C. Showing a lack of trust in the organization’s privacy practices: This is also a possible consequence, but again, it stems from the potential violations and unmet promises resulting from an unrealistic policy.
- D. Not being in standard compliance with applicable laws: While non-compliance is a risk with any privacy policy, the question emphasizes the "first draft" nature of the policy. The most immediate risk is setting internal standards that the company cannot achieve, which then increases the likelihood of future non-compliance. Compliance issues are typically addressed through legal review and updates, but the initial internal goal setting is a critical first step that can be flawed in a first draft.
Therefore, the most direct and likely risk is option A.