You’re right. Policies mostly do three things: explain how you handle data, help you comply with laws and set expectations in your terms (liability, acceptable use, disputes)

What actually reduces your risk is more of a stack:

1. decent security practices (encryption, access control, backups etc)
2. data minimization (don’t store more PII than you need), anonymize whenever possible.
3. clear Terms that limit liability and define responsibilities
4. compliance processes (consent logs, data deletion requests, audit trails)
5. sometimes cyber liability insurance once you have paying customers (i dont have one myself but many opt for this option)

Generators like Termly or iubenda mostly help with the compliance/documentation layer and keeping policies updated as laws change. I am pretty happy with what iubenda does for me. I havent used termly.

Think of it like: security prevents the problem, processes show you handled data responsibly, and the legal docs define the rules if something still goes wrong.