Preparing Boards & CXOs for the DPDP Era: Strategic Governance, Enterprise Risk, and Leadership Duties Under India’s New Data Protection Regime

Posted On - 21 November, 2025 • By - Jidesh Kumar

Introduction

The enforcement of the Digital Personal Data Protection Act, 2023 (DPDP Act) and the operationalisation of the DPDP Rules, 2025 mark a defining moment for corporate governance in India. What began as a compliance exercise for privacy and IT teams has now evolved into a board-level strategic issue, comparable to financial governance, ESG mandates, cybersecurity oversight, and corporate risk management.

In an era where data breaches, algorithmic failures, cyberattacks, and public trust crises can destroy organisational value overnight, boards and CXOs must oversee DPDP readiness with a level of seriousness usually reserved for financial audit committees. The Act establishes penalties of up to ₹250 crore, imposes strict disclosure duties, demands strong oversight of third-party processors, and requires risk-based governance.

Why DPDP Compliance Is Now a Board-Level Issue

Financial Exposure: Penalties under the DPDP Act, particularly for security safeguard failures and children’s data violations, are high enough to affect earnings and investor confidence.

Reputational Exposure: Breaches must be disclosed to affected users and the DPB, making failures public and immediately visible.

Operational Exposure: Non-compliance can lead to processing restrictions, mandated remediation, external audits, and even platform blocking under Section 37.

Regulatory Scrutiny: The Data Protection Board (DPB) has wide powers to seek documents, logs, architectures, and audit trails. Boards can no longer treat privacy as a back-office issue; it is a strategic enterprise risk.

Duties of Company Leadership Under the DPDP Regime

The DPDP Act does not directly impose liability on directors, but the obligations imposed on Data Fiduciaries require board oversight for legal defensibility.

Key leadership duties include:

  1. Ensuring the organisation adopts reasonable security safeguards under Rule 6.
  2. Reviewing and approving data governance policies, retention frameworks, and deletion workflows.
  3. Overseeing incident response readiness under Rule 7.
  4. Supporting cross-functional teams responsible for implementing Rules 3, 4, 5, 6, 7, 8, 10, 13, 15, and 23.
  5. Ensuring the appointment of qualified privacy, cybersecurity, and compliance leadership including the DPO (mandatory for SDFs).
  6. Ensuring processor and vendor compliance.
  7. Supporting DPIAs, algorithmic audits, and annual data audits, especially for Significant Data Fiduciaries.
  8. Integrating DPDP compliance into enterprise risk frameworks.

Boards must be able to show that DPDP compliance had oversight, budget, monitoring, documented review, and governance accountability.

Board Committees and Reporting Structures for DPDP Compliance

Boards should adapt their committee structures to embed DPDP governance. Common models include:

1. Audit Committee-Led Oversight: The audit committee supervises compliance risks, audit reports, DPIAs, breach notifications, and security posture reviews.

2. Technology or Risk Committee Oversight: For companies with high digital exposure (fintech, telecom, e-commerce), the Risk or Technology Committee may lead oversight.

3. Central Privacy Steering Committee: A cross-functional committee reporting quarterly to the Board comprising legal, Information Security, Technology, Data Science, HR, operations, and compliance.

4. DPO Reporting: If the organisation is designated an SDF, the DPO must have independence, access to management, authority to act, and visibility to the Board.

Enterprise Risk Management (ERM) Under the DPDP Regime

Boards must embed DPDP compliance into the organisation’s ERM framework.

Key risk domains now include:

  1. Security risk – breaches, ransomware, insider threats.
  2. Privacy risk – non-compliant data processing, unlawful retention.
  3. Algorithmic risk – biased or harmful model outputs (relevant for Rule 13).
  4. Vendor and cross-border risk – failures at offshore or cloud vendors.
  5. Regulatory and enforcement risk – DPB investigations and penalties.
  6. Operational risk – system downtime, notification failures, data loss.
  7. Reputational risk – public disclosure of breaches and non-compliance.

Boards must direct management to maintain risk registers, conduct risk reviews, and document mitigation steps.

Budgeting and Resource Allocation: A Critical Leadership Responsibility

DPDP compliance requires sustained investment in:

  • encryption and key management systems,
  • SIEM, SOC, DLP, IAM, and monitoring tools,
  • automated deletion engines,
  • consent and notice compliance systems,
  • log retention infrastructure,
  • DPDP-integrated customer communication systems,
  • DPIA and audit functions,
  • cybersecurity personnel,
  • staff training programs,
  • processor governance programs.

Boards must approve budgets that match the organisation’s scale, exposure, and risk profile.

Overseeing Security Safeguards Under Rule 6

Boards must ensure the adoption of Rule 6 safeguards:

  • encryption,
  • masking and pseudonymisation,
  • access control and role segregation,
  • continuous monitoring,
  • log retention for at least one year,
  • breach-prevention systems,
  • backup and recovery measures,
  • processor-level security compliance.

These are statutory minimums, not optional best practices.

Incident Response Governance: What Boards Must Demand

Rule 7 creates strict obligations for notifying users and the DPB without undue delay. Boards must ensure:

  • a 24/7 incident response team,
  • periodic breach drills,
  • escalation protocols,
  • approved user communication templates,
  • forensic partners on retainer,
  • a Board-level breach reporting workflow.

Boards must also review post-incident reports, ensuring lessons learned are documented and integrated.

Preparing for SDF Designation and Algorithmic Accountability

If the organisation is or is likely to be classified as a Significant Data Fiduciary, boards must anticipate:

  • annual DPIAs,
  • algorithmic fairness reviews,
  • independent data audits,
  • AI governance frameworks,
  • enhanced documentation,
  • DPO-led oversight.

Algorithmic governance has become a board-level issue due to risks involving:

  • discrimination,
  • harmful content,
  • financial exclusion,
  • safety implications,
  • reputational crises.

Boards must require management to establish AI ethics committees and documentation practices.

Vendor and Third-Party Risk: A Leadership Blind Spot

Most breaches and compliance failures emanate from the vendor ecosystem, including:

  • cloud providers,
  • SaaS platforms,
  • offshore processors,
  • analytics partners,
  • marketing vendors.

Boards must ensure management implements:

  • strict DPDP-aligned vendor contracts,
  • mandatory indemnities,
  • audit rights,
  • breach notification timelines,
  • cross-border compliance safeguards,
  • onboarding and periodic security reviews.

Vendor governance must become a continuous monitoring function, not an annual checkbox.

Aligning Global Privacy Programs With DPDP Requirements

Multinational groups must integrate DPDP compliance with

  • GDPR,
  • CPRA/US privacy laws,
  • China’s PIPL,
  • Singapore PDPA,
  • Brazil’s LGPD,
  • industry-specific regimes.

Boards must ensure global teams:

  • adjust global DPAs to Indian rules,
  • harmonise cross-border transfers with Rule 15,
  • adapt retention and deletion workflows to India’s 48-hour notice requirement,
  • ensure offshore vendors meet DPDP standards.

Consistency across jurisdictions reduces operational risk.

Cultural Transformation: How Boards Shape a Privacy-First Organisation

Boards must direct management to embed privacy and security practices into daily operations.

Key cultural changes include:

  • training frontline employees,
  • designing privacy-by-default systems,
  • discouraging data hoarding,
  • monitoring data minimisation,
  • implementing secure coding practices,
  • maintaining clear internal communication on privacy obligations.

A privacy-first culture reduces breaches, improves compliance, and strengthens user trust.

18-Month Leadership Roadmap for DPDP Readiness

Phase 1 (Months 1–6): Strategy & Governance

  • Establish board oversight mechanisms.
  • Approve DPDP budget.
  • Appoint DPO or designate privacy leadership.
  • Begin risk assessments.

Phase 2 (Months 6–12): Systems & Architecture

  • Implement Rule 6 safeguards.
  • Establish deletion and retention engines.
  • Integrate breach-notification workflows.
  • Start vendor governance upgrades.

Phase 3 (Months 12–18): Operationalisation

  • Conduct DPIAs.
  • Perform internal and external audits.
  • Conduct breach simulations.
  • Finalise documentation for DPB inquiries.
  • Boards must actively monitor progress at each phase.

Conclusion

India’s DPDP regime elevates privacy and data governance to a critical leadership and board priority. The Act and Rules place data protection at the intersection of legal compliance, cybersecurity, risk management, digital strategy, and corporate governance. Boards must take ownership of DPDP readiness not just as a compliance requirement, but as a fundamental business imperative.

Companies that embed strong governance, allocate adequate resources, modernise systems, prepare for breaches, implement algorithmic accountability, and foster a culture of privacy will not only comply they will gain a competitive advantage in an increasingly trust-driven digital economy.

Contributed by – Aurelia Menezes