Some companies are legally required to appoint a Data Protection Officer.

The General Data Protection Regulation (GDPR) mandates the designation of a DPO if a company's primary activities involve either: 

• large-scale monitoring of individuals, or
• large-scale processing of sensitive data.

Monitoring of individuals includes activities such as tracking and profiling on the internet, including for the purposes of behavioral advertising, or geolocation via a mobile app.

Sensitive data includes personal data revealing racial or ethnic origin, political opinions, religious or philosophical beliefs, trade union membership, genetic, biometric, health, sex life or sexual orientation, as well as data relating to criminal convictions and offences.

Additionally, national laws of some EU countries (e.g. Germany, Belgium, Spain and Italy) require companies to appoint a DPO under additional circumstances. 

Data protection laws are complex. A DPO brings specialized knowledge and provides expert advice on compliance issues and best practices, helping navigate legal requirements and minimize reputational and financial risks resulting from non-compliance. 

Many companies voluntarily designate a DPO to signal their commitment to protecting personal data to customers, clients, and partners. In some industries, demonstrating a strong commitment to data protection can enhance trust and provide a competitive edge, as customers may prefer to do business with organizations that prioritize their privacy and security. 

Please note that voluntary DPO must still comply with all the provisions of the GDPR on the tasks and position of the Data Protection Officer. 

DPOs have certain legally prescribed tasks:

• Informing and advising the company on its obligations under the GDPR and other relevant data protection regulations,
• Monitoring compliance with data protection laws and internal policies, including assigning responsibilities, conducting staff training, and performing internal audits,
• Advising on data protection impact assessments (DPIAs),
• Acting as the primary contact for data protection authorities and individuals whose data is processed, including employees, customers, and others.

DPOs must be able to directly report to the highest management. 

The DPO can be an external service provider, or an existing employee but it's crucial to ensure they are able to perform their tasks, and that they can do so without conflicts of interest and without receiving instructions with regard to the performance of their DPO duties, as the role of a DPO demands independence and impartiality.

DPOs cannot be dismissed or penalized by the company for performing their tasks, which is often why companies choose to designate a DPO externally.

The tasks and duties of DPOs must not create a conflict of interest with their other tasks.

Typically, conflicting positions are senior management roles such as Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Chief Technology Officer, Head of Marketing / HR / IT.

The DPO should be appointed based on their professional qualities, expertise in data protection law and practices, and ability to fulfill their legally prescribed tasks (as specified above).  

They must also have a full understanding of the organization's data processing activities and be able to effectively communicate with internal stakeholders, data subjects and regulatory authorities.  

Failure to appoint a Data Protection Officer as required by the GDPR or national laws may result in a fine of up to EUR €10 million or up to 2% of the company's total global annual revenue from the previous financial year, whichever amount is higher.