What is pseudonymization and how does it relate to vendor data processing?

• A. Encrypting data with a key.
• B. Secret splitting of data across servers.
• C. Replacing identifiers with pseudonyms to reduce identifiability.
• D. Deleting identifiers immediately.

Answer: (C)

Pseudonymization means replacing direct identifiers like names or emails with substitute values (pseudonyms) so the data no longer directly reveals who it belongs to. In vendor data processing, this allows the vendor to work with the data to perform tasks or analytics while reducing privacy risk, because the data no longer exposes real identities. The mapping between pseudonyms and the actual identifiers is kept separately and access to it is tightly controlled, so re-identification is possible only for authorized parties under strict protections. This approach helps meet privacy requirements by enabling data use with less identifiability, unlike encryption, which hides data but can be reversed with a key. Deleting identifiers entirely or anonymization removes the ability to re-identify, which is a different approach.