Centralized vs. decentralized: Two paths to successful data protection in corporations

Data protection organization in corporations is a strategic management task. The larger the corporate structure, the more complex the requirements: international subsidiaries, complex IT infrastructures, and diverse legal jurisdictions require a well-thought-out organization that is both legally compliant and practice-oriented.

At the heart of the corporate data protection strategy is a fundamental structural decision:

Should data protection processes be managed according to the unified model, in which a central data protection officer is responsible for all companies, or should the decision be made in favor of the coordination model, in which several local data protection officers work together via corporate coordination?

In practice, many companies also rely on hybrid models that combine elements of both models, depending on the size of the company, industry, and governance structure.

Important: both models can be designed to comply with data protection regulations. However, this is only possible if basic requirements such as independence, sufficient resources, and clear responsibilities are met.

Ultimately, it is not the model that is decisive, but the quality of its implementation. The GDPR (in particular Articles 37 to 39) provides the legal framework. It also deliberately allows for flexibility, but requires clear organizational implementation to ensure accountability and effectivity.

According to Article 37(2) GDPR, a data protection officer may be appointed for several companies within a group, provided that he or she is accessible from each branch. However, there is no obligation to centralization.

Article 38(3) GDPR also stipulates that the function of the data protection officer must be exercised independently. He or she must not receive any instructions and must not be disadvantaged because of the performance of his or her tasks. The specific tasks are listed in Art. 39 GDPR. These include monitoring compliance with data protection regulations, providing advice and training, and cooperating with supervisory authorities.

The group management, in turn, is responsible for ensuring that the data protection officer can effectively fulfill his or her role. This includes sufficient human resources, legally compliant structures, and early involvement in decision-making processes. Only when these conditions are met can the data protection officer effectively perform his or her role.

The effectiveness of a data protection organization hinges on the quality of its governance. Clear responsibilities, defined reporting lines, and documented processes are essential for effectively implementing data protection requirements not only on paper but also in day-to-day work.

According to Art. 5 (2) GDPR, controllers must be able to demonstrate compliance with data protection principles.

The record of processing activities pursuant to Art. 30 GDPR plays a central role in this.

In the context of corporate data protection, the following questions arise:

• Who maintains the record of processing activities?
• How is it ensured that it remains up to date?
• How are data protection responsibilities between parent companies and subsidiaries regulated?

It is equally important to clarify the roles under data protection law: if several companies jointly make decisions about the purposes and means of processing, there is joint responsibility under Art. 26 GDPR. If the processing is carried out on behalf of a central unit, it is considered processing on behalf of another entity under Art. 28 GDPR.

This distinction affects both internal authority to give directives and external liability issues.

An internal data protection policy can serve as a central control instrument. It creates transparency regarding roles, reporting lines, and escalation paths and should be reviewed and adjusted regularly. Documented governance structures are particularly important in the event of audits and incidents. Supervisory authorities expect reliable evidence in this regard.

For corporations based outside the EU, it is advisable to appoint a central data protection officer within the EU to ensure accessibility and communication channels with European supervisory authorities. Violations of Articles 37 to 39 GDPR may be subject to fines under Article 83(4) GDPR.

However, the most suitable organizational structure for corporate data protection depends on various factors, such as the corporate organization, IT systems, and geographical distribution. In the following sections, we present two models that companies can use to make data protection within the group legally compliant and practical.

The unified model is based on the appointment of a central group data protection officer who is responsible for all group companies. He or she is supported by a central data protection team that standardizes processes and bundles communication with supervisory authorities.

As a rule, this requires a head office within the EU from which key decisions are made. The objective of the model is to achieve a consistent level of data protection throughout the group, combined with clear coordination channels, common guidelines, and central tools that facilitate control and thus ensure greater transparency.

The unified model offers many advantages: expertise is consolidated, synergies are more easily leveraged, and internal and external communication can be streamlined.

At the same time, this high degree of centralization poses challenges: the operational distance from the individual companies can mean that local particularities are not sufficiently taken into account.

In the absence of a headquarters in the EU, national supervisory authorities must be involved individually, which significantly increases the coordination effort in the event of incidents or country-specific reporting requirements.

Even in the event of the central data protection officer being unavailable, accessibility must be ensured in order to reliably meet deadlines and communication obligations.

A viable governance structure is the foundation for the success of the unified model. This includes, among other things, documented deputization arrangements, legally compliant reporting in accordance with Art. 37(7) GDPR, and the avoidance of conflicts of interest in accordance with Art. 38(3) GDPR.

The model is particularly well -suited for corporations with highly centralized IT and decision-making structures—such as homogeneous groups of companies based within the EU. In such cases, the single entity model enables efficient control and uniform standards. However, this requires the consistent operational integration of subsidiaries to ensure the effectiveness of data protection.

The coordination model is based on local data protection officers in the individual group companies, supplemented by a central coordination office at the group level. This office coordinates group-wide data protection issues, develops uniform guidelines, and organizes exchange formats for knowledge transfer.

The result is a structure that combines local autonomy with central orientation. This model allows national and cultural characteristics to be taken into account without compromising on a group-wide minimum level of data protection. Regular coordination and shared tools ensure a healthy balance between autonomy and harmonization.

The coordination model's biggest advantage lies in its practicality:

Data protection is implemented where data is actually processed. This not only increases acceptance, but also allows for specific consideration of local legal requirements and operational particularities.

At the same time, decentralization increases organizational complexity. The absence of clearly defined responsibilities bears the risk of duplicate structures or conflicting interpretations of the GDPR.

A high level of coordination between local data protection officers and group coordination is therefore indispensable and requires well-established communication channels and committees to ensure consistent standards.

For the coordination model to function effectively, clear governance structures are needed: group-wide guidelines, uniform reporting formats, and regular coordination meetings.

A documented role and escalation concept ensures transparency, supports the flow of information, and maintains the independence of local data protection officers.

The model is particularly suitable for international corporations with differing jurisdictions and a high degree of local autonomy. It offers flexibility while also enabling group-wide control, provided the governance structure is clearly defined and actively implemented.

Data protection within a corporation is not a concept set in stone, but must be continuously adapted to new legal, technological, and organizational requirements. Whether centralized or decentralized, both models can work if the governance structures are clearly defined in advance and actively implemented.

Particularly in corporations with complex matrix structures, international locations, and differentiated role models, the question arises as to how data protection responsibility can be effectively distributed and controlled. The answer therefore lies not only in the chosen model, but in its consistent implementation.

An enterprise-ready data protection software such as the caralegal platform helps companies make data protection processes transparent across the corporation, manage them centrally, and document them in an audit-proof manner—regardless of whether a unified or coordination model is used within the organization. This ensures that data protection is not only implemented in compliance with the law, but also consistently embedded in the operational data protection practices of the individual companies.