How does pseudonymization help privacy compliance?

Pseudonymization is a data management and de-identification process that removes or replaces identifiable information within a data set, allowing individuals' privacy to be better protected. The correct choice highlights that pseudonymization allows for the identification of individuals only when additional specific information is available.

In practice, this means that even though the data itself may contain pseudonyms instead of direct personal identifiers, it can be re-identified if someone possesses the corresponding key or additional context necessary to link it back to the individual. This approach enables organizations to process and analyze data without exposing personal identifiers, thereby supporting privacy compliance regulations, such as the GDPR, which emphasize the importance of protecting personal data.

This stands in contrast to the other options: entirely removing data from system records would not allow for any further analysis or use, major organizational restructuring could be excessive and impractical in the context of implementing pseudonymization, and ensuring data is always encrypted relates more to data security than privacy compliance specifically. Pseudonymization is thus a balanced approach that allows for both data utility and individual privacy preservation.