As a UK data controller, you shoulder the critical responsibility of protecting personal data—whether it’s employee information or client details. Sharing this data with third-party suppliers comes with risks, making effective due diligence essential. This isn’t just a legal box-ticking exercise under the UK General Data Protection Regulation (UK GDPR)—it’s a practical strategy to safeguard your business from breaches, fines, and reputational damage.
In this guide, you’ll understand why due diligence is so important, how to pinpoint high-risk areas, and practical tips to make your processes more robust. With an efficient, risk-based approach, you can manage supplier relationships confidently and compliantly.
If your business needs support with understanding what your due diligence should look like, you can contact our data protection solicitors for specialist advice.
Contents:
Why due diligence can make or break your compliance
As a data controller, your legal responsibility to ensure processors protect personal data is crystal clear. But this goes far beyond a signed contract. If you fail to conduct proper checks, your business is at serious risk. Here are some important areas to consider:
- The UK GDPR requires your business, as a controller, to ensure that any data processors you use protect the personal data you share with them. This obligation involves more than just giving processors a contract to sign—it demands a thorough, proactive assessment to safeguard your data from risks, such as data breaches and their potential consequences.
- Contracts with data processors need to include specific terms (including about implementing appropriate security measures) but a contract alone is not enough, and due diligence is the first step.
- The law requires data controllers to demonstrate ‘accountability.’ Your business should establish clear, documented procedures to review and monitor your data processors continuously. The level of scrutiny you apply should match the level of risk associated with the data processing activities they’ll be performing. You should therefore keep detailed records of the checks you’ve conducted to show that a processor you intend to use can safeguard your company’s personal data.
Your business should already have a due diligence questionnaire to address any due diligence needs promptly (e.g. where you’re looking to work with a new supplier whom you need to share your customer details with). A comprehensive questionnaire allows you to systematically evaluate data processors. Without one, your business may struggle with administrative challenges and be unprepared when assessing processors, increasing your exposure to risk.
By conducting thorough due diligence, you not only meet legal obligations but also protect your business and its reputation.
The must-have checklist for supplier due diligence
When it comes to assessing suppliers, knowing where to focus can save you time and effort. Here are the non-negotiables:
- Evaluating processor security: Security is a key principle of data protection law, and it should be a top priority for your business when assessing data processors. Check whether your processors have robust security measures in place to protect your data. Your business can request evidence of these security measures, such as audit results, penetration tests, or certifications like ISO 27001 which can help with GDPR compliance. Many suppliers may already have security documentation available or may introduce you to their technical team for further details.
- Understand data handling processes: Your business should fully understand how a processor handles data— from collection and storage to deletion. They must process data according to your strict instructions. If their internal practices around data deletion can’t be adjusted for your needs, you’ll need to question if you’re comfortable working with them.
- International data transfers: If personal data is sent outside of the UK, your business should verify how these transfers comply with international data rules. Understanding where and how data flows across borders can help you identify any additional compliance requirements, such as the need for an International Data Transfer Agreement and Transfer Risk Assessment..
- Deletion practices: Your business should make sure your data will securely be deleted when no longer needed. If a processor can’t prove this, treat it as a red flag.
- Sub-processor transparency: The use of sub-processors adds complexity. Your business should vet these relationships carefully to know where your data is going and who else will access it. You can try to negotiate that processors must seek your specific approval before engaging sub-processors. Are there contracts in place with any sub-processors, to ensure that your data is protected? Ask if the processor conducts audits on their sub-processors and how they manage sub-processor compliance.
- Checking for a Data Protection Officer (DPO): Your business should ask if the processor has a DPO or a dedicated person to handle data protection matters. This can demonstrate a positive commitment to data protection.
- Assessing governance and transparency. Review the processor’s commitment to data protection. Does your processor train staff regularly, keep comprehensive records of processors, and have clear protocols for reporting data breaches that affect your data? It is also useful to check if there have been any breaches the business suffered from.
While these are some common questions, your business should avoid a one-size-fits-all approach and tailor your questions to address specific risks for each contract.
Don’t let due diligence drag you down: streamline your process
Due diligence doesn’t have to weigh you down. With a smart approach, you can save time without cutting corners. Here are some practical tips on how your business can make your efforts effective and practical:
- Tailor your questions and collaborate with processors: You can tailor your questionnaires to match the data processing activities of suppliers and the risk. For high-risk projects (e.g. where special category data will be processed), for instance, you can use in-depth questionnaires. For lower-risk ones where very minimal personal data is involved, you could use a shorter version to streamline the process if you are confident that certain in-depth questions need not be explored and will only slow matters down. Your business should consider having templates ready for different risk levels to save time. However, always think closely about the particular risk for each project before you roll out a questionnaire. Trusted suppliers you’ve worked with for years might only need a quick assessment, while new or less established ones may require a deeper review. Be prepared to adjust your approach based on the sensitivity of the data sharing involved.
You should also be aware that some suppliers may have their own due diligence information (e.g. questionnaires, pre-prepared compliance materials, or Q&A documents) that explain their data protection practices. Be prepared for this and approach the situation with an open and collaborative mindset. While you have a duty to ensure you get the answers needed to satisfy your UK GDPR obligations, you may find that these documents cover much of the information you require. However, it’s important to review them carefully and have an open discussion with the supplier if any of your specific questions remain unanswered or require further detail, or if you need them to complete your questionnaires. The aim here is to maintain a positive relationship but also make sure your compliance questions are fully addressed. - Ask for evidence: Verify supplier claims by requesting documentation, such as security audit reports or test results. This evidence can help you confirm that their security measures are more than just promises and help you justify why you’ve opted to work with them.
- Review regularly: Schedule regular assessments to keep your compliance up to date. A regular review schedule will help your business catch potential issues early.
Don’t leave your business exposed: Make due diligence work for you
Strong due diligence is about more than compliance—it's about protecting your business, your data, and your reputation. When evaluating processors, you must balance thoroughness with efficiency, focusing resources on key risk areas. If a supplier can't meet your standards, walking away early prevents costly problems later.
Our data protection team can help develop appropriate questionnaires tailored to your sector and risk profile. Having worked with controllers across various industries, we understand how to strengthen processor relationships while protecting your business interests.
