What Is a Privacy Impact Assessment (PIA) and when is it necessary?

Organizations today process large volumes of personal data as part of their normal operations. Some of this processing is routine and low risk. Other activities, however, can have a significant impact on individuals’ privacy and require closer scrutiny.

One of the key tools for understanding and managing these privacy risks is the Privacy Impact Assessment, or PIA. International standards such as ISO/IEC 29134 provide structured guidance on when and how PIAs should be carried out.

Importantly, a PIA is not required for every situation where an organization processes personal data. Instead, companies are expected to evaluate whether a PIA is needed and to perform one where the processing is likely to present meaningful privacy risks.

What Is a Privacy Impact Assessment?

According to ISO/IEC 29134, a Privacy Impact Assessment is a systematic process designed to evaluate and manage privacy risks arising from the processing of personally identifiable information (PII).

While a general privacy risk assessment may look broadly at privacy risks across the entire organization, a PIA focuses on a specific processing activity. It examines how that processing might affect individuals and what measures are required to keep risks at an acceptable level.

In practical terms, a PIA helps an organization answer questions such as:

• What personal data is being processed, and for what purposes?
• How might this processing adversely affect individuals?
• What controls are needed to reduce these risks?

When should a PIA be considered?

ISO/IEC 27701, which is the reference standard for Privacy Information Management System (PIMS in short) states that the organizations must assess the need for, and implement where appropriate, a privacy impact assessment whenever new processing of PII (Personally Identifiable Information) or changes to existing processing are planned.

A PIA is particularly relevant when processing is likely to involve higher risks to individuals’ rights and freedoms. Common examples include:

• Automated decision-making that may produce legal or similarly significant effects on individuals (for example, credit scoring).
• Large-scale processing of sensitive PII (Personally Identifiable Information), such as health data, biometric or genetic information, data about children, financial account details, criminal history, religious or philosophical beliefs, sexual orientation, or other categories of personal information that could expose individuals to significant harm if misused.
• Systematic monitoring of publicly accessible areas, such as extensive video surveillance or smart-city systems.
• Deployment of new technologies or new ways of combining data that could change the organization’s privacy risk profile.

In some jurisdictions, PIAs are legally mandated for certain types of PII processing. In others, they are not explicitly required but are considered a best practice in situations where privacy risk is likely to be significant.

The key point is that the organization does not automatically need a PIA for every activity, but it does need a methodical way to decide when a PIA is required.

How does a PIA work? A high-level view

ISO/IEC 29134 outlines a structured approach to performing a PIA. While organizations can adapt the details, the core elements usually include:

1. Determining whether a PIA is needed

The organization screens any new or changed PII processing activities to decide whether a PIA is necessary. This screening takes into account the nature of the data, the scope, the context, and the potential impact on individuals.

2. Planning the PIA

If a PIA is required, the next step is to define its scope and objectives, identify stakeholders, and allocate responsibilities. Typically, this involves privacy specialists, legal advisers, information security professionals, and system owners.

3. Describing the PII processing

The organization then documents the processing in detail, including:

• What PII is collected and from whom
• For what purposes it is used
• Where and how it is stored
• Who can access it
• To whom it is disclosed or transferred, including third countries
• How long it is retained

Data flow diagrams and data maps are often used to make this step clearer and more comprehensive.

4. Identifying and assessing privacy risks

Once the processing is understood, the organization identifies potential adverse consequences for individuals. These might include loss of confidentiality, identity theft, financial loss, discrimination, reputational damage, loss of autonomy, or inability to exercise rights.

Each risk is then evaluated in terms of likelihood and severity of impact on individuals.

5. Identifying measures to address the risks

The organization proposes measures to reduce risks to an acceptable level. These may include:

• Data minimization (collecting and retaining less data)
• Stronger access controls and authentication
• Encryption or pseudonymization
• Changes to system design or business process
• Improved transparency and communication with individuals
• Additional governance and monitoring mechanisms

6. Documenting and approving the PIA

The findings and decisions are documented in a PIA report. This document should be reviewed and approved at an appropriate level of management before the processing begins or before significant changes are implemented.

7. Reviewing and updating

A PIA is not static. It should be revisited when there are material changes to the processing, to the technology, or to the legal and regulatory environment.

Why is a PIA useful, even when it is not mandatory?

Even in jurisdictions where a PIA is not legally required, it should be treated as a valuable risk management tool. That’s because it provides several key benefits. Among them:

• It helps the organization understand the impact of its decisions on individuals, not just on systems and processes.
• It supports accountability, showing regulators, auditors, and stakeholders that privacy has been considered carefully and systematically.
• It encourages privacy by design, integrating privacy considerations early in the lifecycle of projects rather than treating them as an afterthought.
• It reduces the likelihood of non-compliance, complaints, and reputational damage by exposing risks before they materialize.

A PIA is therefore best viewed not as a bureaucratic exercise, but as a structured decision-support tool that helps organizations balance innovation and privacy.

An example

Consider a hospital planning to implement a new patient portal that allows online access to medical records, appointment scheduling, and secure messaging with doctors.

• The hospital processes highly sensitive health data.
• The processing introduces new access channels (web and mobile).
• There is a risk of unauthorized access, data leakage, and misdirected communication.

In this context, the hospital should reasonably determine that a PIA is needed. Using the framework in ISO/IEC 29134, it can analyze privacy risks, implement strong safeguards (such as strong authentication, session management, encryption, and role-based access), and document its reasoning and decisions.

By contrast, for a small, internal, low-risk processing activity (for example, a basic internal contact list with minimal PII), a formal PIA may not be necessary, as long as the organization can still demonstrate that it understands the risks and has appropriate controls in place.

Conclusion

A Privacy Impact Assessment is not required for every organization in every situation, and it is important to avoid overselling it as a universal obligation.

However, it is an essential tool when processing is likely to create meaningful privacy risks, particularly in high-impact or complex scenarios.

Used correctly, a PIA:

• helps organizations understand and manage privacy risks
• supports compliance with laws and standards
• demonstrates accountability
• builds and maintains trust with PII principals

Rather than a checkbox exercise, the PIA should be seen as a disciplined, evidence-based way to make privacy-aware decisions about how personal data is processed.

More about a Privacy Information Management System (PIMS) and the requirements that organizations should implement to comply to the requirements in ISO/IEC 27701 you can find in our online course available here.