By Sam Castic
The California Privacy Protection Agency (CPPA) has adopted final regulations on privacy risk assessments, cybersecurity audits, and automated decisionmaking technology (ADMT), as well as amendments to existing CCPA regulations. Final publication of the regulations is pending review by the Office of Administrative Law, and depending on when that occurs, the regulations will likely take effect 10/1/2025 or 1/1/2026. Some key concepts from these regulations, and actions to consider, are below.
Privacy risk assessments
Article 10 of the new regulations contain requirements for risk assessments. Risk assessments will be required when any of the following triggers apply:
personal information is "sold" or "shared" (for cross-context behavioral advertising);
sensitive personal information is processed;
automated decisionmaking technology ("ADMT") is used for certain significant decisions;
automated processing occurs to infer or extrapolate certain matters or characteristics about a person based on systematic observation in their capacity as an educational program applicant, job applicant, student, employee, or independent contractor;
automated processing occurs to infer or extrapolate certain matters or characteristics about a person based on their presence in a sensitive location (e.g., medical facility, shelter, place or worship, etc.); or
personal information is processed for certain ADMT training purposes.
While the first three triggers are similar to ones in other states, they will have a broader impact since the CCPA also applies to personal information of employees, candidates, and B2B business contacts. The last three triggers are not similar to ones that exist in other states.
Documented risk assessments must cover a number of specific topics that are detailed in the regulations, including regarding the purposes, types of personal information, specific operational elements of processing, risks and benefits, safeguards, ADMT processing, assessment contributors and approver details. Companies may need to update privacy assessment processes to include this additional scope, and additional resources may be needed to support assessment processes.
There are some additional expectations for risk assessments under these regulations:
Risk assessments must be based on involvement of knowledgeable stakeholders at the organization.
Risk assessments must be approved by the business decisionmaker for the processing activity.
Risk assessments must be reviewed and updated at least every three years, and whenever there is a material change to a processing activity.
Unlike other states, California will also require proactive submission of certain assessment information to the State. The full assessments won't need to be submitted, but details on the number of assessments, processing activities involved, and types of personal information involved, will need to be submitted. Also, the executive team member with responsibility over the risk assessment process (like a General Counsel) must submit an attestation (under penalty of perjury) that risk assessments were conducted. This requirement must be complied with by April 1, 2028, and will apply for risk assessments conducted in 2026-2027.
In the months ahead, companies that are subject to the CCPA should consider:
Updating assessment triggers so that assessments are conducted when these risk assessments are required;
Validating that current assessment processes cover required components for risk assessments, and if not, planning to close any gaps by 2026;
Confirming business stakeholders understand when assessments are required, and that business processes trigger assessments when required, and
Socializing upcoming certification requirements with the executive team member that will be accountable, including any outstanding resource needs that will be required to support required certifications.
Cybersecurity audit regulations
Article 9 of the regulations contain the new cybersecurity audit requirements. For many companies, these may be the most comprehensive cybersecurity audit requirements required under U.S. law.
Cybersecurity audits will be required for businesses:
with $25M+ in global annual revenue that process: (i) personal information of 250k+ consumers/employees per year; or (ii) sensitive personal information of 50k+ consumers/employees per year; or
that make 50% or more of their revenue from selling or sharing personal information.
Audits must be independent, and conducted by an external entity or internal team that reports directly to an executive team member that does not oversee cybersecurity. Many companies' existing internal security assessment processes may not satisfy the independence requirements in the regulations.
Audits must cover eighteen components of the cybersecurity program noted in the regulation, including elements that may be beyond the scope of current security programs or audits. These include:
Multifactor authentication, authentication, and password requirements
Encryption of personal information in transit and at rest
Access controls, account management, and management of privileged accounts
Personal information and asset inventories
Hardware and software configuration and patch management
Vulnerability scanning and penetration testing
Logging and log monitoring
Network monitoring and intrusion defense
Antivirus and malware protection
Network segmentation
Port, service, and protocol management
Cybersecurity threat awareness and monitoring
Cybersecurity training and education
Secure development and coding protocols, reviews, and testing
Vendor management and monitoring
Personal information retention and deletion protocols
Security incident response processes, and
Business continuity and data recovery capabilities.
Audits must cover entire calendar years, starting with calendar year 2027 for some businesses, and 2028 or 2029 for others. Audit reports are required, and must include a number of details specified in the regulations.
Annual certifications that the audit has been completed, and was independent, must be submitted to the CPPA (under penalty of perjury) by the executive team member who was directly responsible for the business's audit compliance.
For next steps, companies should consider:
Determining whether they are in-scope, and if so, by when they must comply;
If in scope, assessing whether existing audit practices meet independence requirements;
Assessing whether each of the 18 domains the audit must cover are addressed in current audit practices, and for any gaps, planning to address by the end of 2026 or before the audit requirements apply; and
Socializing the requirements and any resource needs with the executive team member that will make the required certifications.
Automated decisionmaking technologies
Article 11 of the regulations contain requirements for companies that make certain uses of ADMT. The ADMT regulations won't impact all companies, but they should be reviewed to determine if they apply.
ADMT means technology that processes personal information and uses computation to replace or substantially replace human decisionmaking. Companies that use ADMT to make certain significant decisions have additional obligations under the regulations. These significant decisions include ones that result in the provision or denial of:
financial or lending services,
housing,
education enrollment or opportunities,
employment or independent contracting opportunities or compensation, or
healthcare services.
There are requirements for pre-use notices before these ADMT uses occur. Requirements for the notices include:
Presenting them where or before personal information used for the in-scope ADMT processing will be collected (or if already collected, before it is used for in-scope ADMT);
Including the specific purpose for using the in-scope ADMT;
Detailing how it the ADMT works to make decisions, and how outputs are used;
Disclosing alternative processes for making significant decisions if consumers opt-out; and
Listing how consumers can opt-out, and exercise their right to access.
Consumers have rights to opt-out of uses of ADMT to make significant decisions, subject to certain exceptions in the regulations. The regulations include a number of operational requirements for how businesses need to accept and honor these opt-out requests.
Consumers have rights to "access ADMT" by requesting details about its use to make significant decisions. The regulations have operational requirements for how these rights need to be offered and honored, and specify a number of details that need to be provided in response to the right.
Companies must come into compliance with these ADMT regulations by January 1, 2027.
As next steps, consider:
Assessing if existing company practices will be subject to these ADMT regulations;
Updating AI and/or privacy assessment processes to identify when new proposed AI or personal information processing practices will be subject to these ADMT regulations; and
If in scope for these regulations, beginning planning for how pre-use notices and individual rights will be addressed before the regulations become effective.
Additional CCPA regulation updates
In addition to adopting the new regulations above, the CPPA also approved amendments to the existing CCPA regulations. These amendments impact the regulations regarding:
obtaining consent;
practices that constitute dark patterns;
where and how connected devices and AR/VR providers need to inform people of their rights to opt-out of sales and "sharing";
where and how businesses need to inform people or their rights to limit uses and disclosures of sensitive personal information;
individual rights fulfillment obligations (including for correction, opt-out of sale/sharing via GPC or opt-out signal, and to know/access), which may require process or operational changes for some businesses;
New metrics reporting for ADMT related DSRs for certain businesses; and
Requiring businesses to display whether opt-out signals like GPC have been honored on a website.
As a next steps, consider:
Reviewing these updates, particularly your company seeks to obtain consent, offers choices regarding the processing of personal information, and for sensitive personal information usage and sharing;
Validating that individual rights processes address the updated requirements; and
Planning to display on your website that the GPC signal has been honored.
Companies that agree to act as service providers or contractors under the CCPA will also have obligations under the regulations (and independent of contract terms) to cooperate with their business customers in: (1) the business's completion of its cybersecurity audit (including providing all relevant information requested to complete the audit); and (2) the business's risk assessments (including providing all facts necessary to conduct the risk assessment).
Hintze Law PLLC is a Chambers-ranked and Legal 500-recognized, boutique law firm that provides counseling exclusively on global privacy, data security, and AI law. Its attorneys and data consultants support technology, ecommerce, advertising, media, retail, healthcare, and mobile companies, organizations, and industry associations in all aspects of privacy, data security, and AI law.
Sam Castic is a Partner with Hintze Law, chair of the firm’s Retail Group, and co-chair of the Cybersecurity and Breach Response Group and FinTech + Financial Services Group. As a former chief privacy officer, he helps companies build, scale, and right-size privacy programs and strategies.
