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Data sovereignty is becoming a bigger challenge than ever - so what steps can businesses take?

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  Published in Business and Finance on Friday, September 19th 2025 at 5:10 GMT by TechRadar
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Data Sovereignty: A Rising Threat to Global Business – What Can Companies Do?
(Inspired by TechRadar’s “Data sovereignty is becoming a bigger challenge than ever – so what steps can businesses take”)

In an era where cloud services, AI, and edge computing blur the boundaries between geography and infrastructure, the age‑old issue of data sovereignty has resurfaced with fresh urgency. Governments around the world are tightening the reins on where data can be stored, processed, and accessed – all for reasons ranging from national security to protecting consumer privacy. As a result, businesses that once operated under a “cloud is everywhere” mindset now face a complex, ever‑evolving regulatory landscape that can threaten everything from supply‑chain continuity to competitive advantage.

1. The Legal Landscape – Why It Matters

• GDPR – The Global Benchmark

The European Union’s General Data Protection Regulation (GDPR) remains the gold standard for data protection. Beyond privacy, the GDPR’s “data transfer” rules effectively require that data leaving the EU be transferred to a country that offers “adequate” protection or that businesses implement binding corporate rules or standard contractual clauses.

• China’s New Era of Data Security

China’s Data Security Law (DSL) and Personal Information Protection Law (PIPL) make it mandatory for foreign firms to store “critical data” – defined broadly – within Chinese borders. The law also introduces strict cross‑border data transfer rules, requiring a security assessment and often an official data‑transfer license.

• The U.S. and the CCPA

While the U.S. has a patchwork of state‑level privacy laws, California’s Consumer Privacy Act (CCPA) sets a minimum standard for consumer rights. Meanwhile, federal legislation such as the CLOUD Act creates a legal framework that can override certain foreign restrictions, but it also introduces new compliance layers for data held abroad.

• Australia, Canada, and Beyond

Australia’s Data Sovereignty Act, Canada’s Digital Charter, and the EU’s Digital Services Act (DSA) all push for localized data storage and tighter oversight of cross‑border data flows. The overarching theme: where data lives matters as much as who can access it.

2. The Business Implications

• Supply‑Chain Disruption: If a key supplier fails to meet data‑storage requirements, the entire chain can suffer.
• Compliance Costs: Building separate data‑processing hubs and maintaining compliance certifications can double or triple operational overhead.
• Competitive Lag: Companies that ignore sovereignty constraints risk being out‑of‑market or forced to shut down certain services in key regions.
• Reputational Risk: Breaches or non‑compliance can lead to loss of consumer trust, especially in privacy‑sensitive markets like the EU and US.

3. A Practical Checklist for Business Leaders

TechRadar breaks down a pragmatic approach into three pillars: Understanding, Aligning, and Executing. Below is a distilled, actionable version:

A. Understand Where Your Data Lives

1. Data Mapping: Conduct a full audit of data assets—what’s stored, processed, and transmitted—and the geographical location of each node.
2. Identify Critical Data: Highlight data that falls under “critical” definitions in local laws (e.g., personally identifiable information, national security data).
3. Know the Legal Definition: Different jurisdictions use terms like “personal data,” “sensitive data,” and “critical data.” Map these to your internal taxonomy.

B. Align Strategy with Regulation

1. Choose Cloud Providers with Local Data Centres: Major players (AWS, Azure, Google Cloud) now offer region‑specific services. Select providers that already have local data centres in the jurisdictions where you operate.
2. Adopt Data Governance Frameworks: Implement ISO 27001 or NIST CSF to embed compliance into your data handling processes.
3. Leverage Encryption and Tokenisation: Encrypt data at rest and in transit. Use tokenisation for highly sensitive fields to add an extra layer of protection.
4. Automate Compliance Monitoring: Employ policy‑as‑code tools to ensure your cloud resources adhere to region‑specific rules.

C. Execute a Robust Operational Plan

1. Data Residency Agreements: Draft and enforce contracts that stipulate where data can be stored, how it can be accessed, and the rights of each party.
2. Regular Audits and Pen Tests: Schedule periodic penetration testing and compliance audits to validate that your data residency practices hold up.
3. Incident Response & Business Continuity: Create response playbooks that consider jurisdiction‑specific incident reporting timelines and data‑transfer protocols.
4. Staff Training: Ensure that every team—from engineering to marketing—understands the legal and operational implications of data sovereignty.

4. Leveraging Existing Resources

TechRadar’s article references a suite of resources that can help. Here are a few highlighted links (summarised):

• “Data Sovereignty Explained” (TechRadar Guide): A concise primer on why data location matters, complete with a flowchart mapping common data‑safety scenarios.
• “Cloud Compliance Checklist” (PDF): A downloadable tool that walks you through the top compliance checkpoints for AWS, Azure, and GCP in various jurisdictions.
• “Privacy & Data Security in the Age of AI” (TechRadar Feature): Explores how emerging AI workloads compound data‑safety challenges and offers strategies to mitigate them.

5. The Bottom Line

Data sovereignty is no longer a niche concern—it’s a core strategic imperative. For businesses that rely on data for competitive edge, ignoring these rules can lead to regulatory fines, forced shutdowns, or loss of market share. On the flip side, proactive data‑safety measures can become a unique selling proposition, signaling trustworthiness to regulators and customers alike.

By mapping data flows, choosing region‑specific cloud partners, implementing robust governance, and keeping a finger on the regulatory pulse, companies can turn the tide from a compliance burden to a competitive advantage. The cost of inaction far outweighs the investment required to build a resilient, sovereign‑aware data architecture.

In the coming years, as new laws like the EU’s Digital Services Act and China’s evolving DSL continue to tighten the net, the businesses that thrive will be those that view data sovereignty not as an obstacle, but as a catalyst for innovation—ensuring that data is secure, compliant, and strategically positioned across the globe.