Organizations store sensitive customer information, and if there are security breaches, it can cause major financial and reputational harm. To prevent this, compliance management becomes crucial. It ensures that proper security measures are in place, safeguarding sensitive data from unauthorized access, theft, or misuse.
Security compliance management definition
Security compliance management helps ensure security measures align with established regulatory and industry standards. It's achieved through an implementation of a systematic compliance management system to meet compliance obligations and adhere to security guidelines.
Let's look at security compliance management's role in an organization.
Poor security compliance leads to increased business risks
Highly interconnected businesses that operate globally, particularly those with many remote employees, are exposed to many threats and risks. Ignoring them can result in dire repercussions.
Here are a few of the most serious dangers associated with inadequate compliance management:
Poor security measures can become hefty fines once authorities discover data violations and subpar practices. In these situations, the imposed penalties can be financially devastating and spell bankruptcy for smaller companies.
If you don't follow the US Health Insurance Portability and Accountability Act (HIPAA), you could face fines of up to $1.8 million each year. Similarly, not complying with the European Union's General Data Protection Regulation (GDPR) can lead to fines of 4% of a company's total revenue. Regulatory bodies are becoming stricter about data security, and they can impose these penalties at any time.
Reputation damage due to data breaches
Data loss is a significant risk caused by poor security and compliance management practices. Many businesses store records of their customers, suppliers, employees, and website visitors. However, if unauthorized individuals gain access, it can lead to a massive data leak.
Let's take a real-life example, MySpace. It used to be a top social media platform. However, in 2016, it faced a huge hack that exposed 360 million account details. Yahoo also went through a similar data security crisis with two breaches in 2013 and 2014, affecting around 3.5 billion accounts. Unfortunately, both companies struggled to recover because users lost trust in their security.
Organizations face more than just data breaches when it comes to cybersecurity compliance. Those with inadequate security become attractive targets for cybercriminals who use malware and various attack methods.
In 2021, the average ransom demanded by a ransomware attack was $570,000. This amount is far beyond what most small enterprises can afford. Attacks such as WannaCry have had a significant impact, leading regulatory bodies and organizations like the International Organization for Standardization to update their regulations.
By following the latest security advice, businesses can decrease their vulnerability to the most prominent threats and provide assurance to regulators and clients regarding data retention and protection.
System inefficiency due to non-compliance
Poor compliance also increases network security risks , inefficiencies, and maintenance complexity.
The way we work and do business has changed with the rise of remote work and e-commerce. As a result, business networks have become more complicated. However, even with these complexities, industry regulations still apply to them. This also means that we need to deal with the challenges of managing a growing number of access points and adopting new security tools to protect our networks.
To stay competitive, businesses must prioritize robust compliance management. Falling behind competitors who adhere to standards strictly can be a risk. Additionally, using outdated software solutions may make business operations less effective, while leaving unpatched flaws can lead to constant crisis management as new threats arise.
How can security compliance help your business?
A robust security compliance management approach brings value to organizations. Let's look at some of the benefits of security compliance management.
Increasing credibility among clients and partners
For any organization, credibility is crucial for attracting new employees, customers, and investors. Nowadays, customers are increasingly concerned about data threats and privacy issues, making them favor companies with clean records. This also holds true for businesses and government entities seeking to partner with compliant organizations.
Compliance with standards like ISO 27001 sends a strong message to clients and partners. To achieve this certification, companies must pass an external evaluation conducted by certified security specialists and meet strict risk management requirements. This dual approach, involving internal initiatives and external scrutiny, demonstrates the company's dedication to security.
Avoidance of sanctions for non-compliance
Naturally, one of the advantages of being in line with regulatory compliance is that it helps to evade penalties or legal action. Even on their own, data breach fines are substantial and represent more than just monetary implications. Their reports are public and signal to the world that a company has failed to uphold essential security standards.
For instance, consistent HIPAA penalties could deter clients from choosing your insurance offering in the healthcare industry. In the US, this can significantly cripple a business's growth. A reported 56% of US patients have distrusted healthcare companies' ability to safeguard personal information, which is alarming. Under such circumstances, compliance helps to stand out from the competitors especially for regulated industries, i.e. financial institutions.
Similarly, PCI-DSS violations openly suggest that companies can't safeguard payment details, and GDPR infringements indicate a disregard for confidentiality. In the modern world, the security ethos of an organization holds significant importance.
Enhanced data management procedures
Embracing compliance certifications brings positive outcomes for internal processes. Companies that comply often experience improved management, increased efficiency, and better decision-making with valuable information.
Let's take GDPR compliance as an example. By adopting comprehensive frameworks, companies gain a clearer understanding of how they handle customer data. This insight allows them to organize databases and bring structure to customer information.
Improved security technologies
Many organizations struggle to meet regulations due to a lack of necessary tools, skills, and policies. To address this, compliance requires a review of their security setup. This often involves investing in information security management systems, such as automated compliance tools, skills, and policies, to meet relevant regulations.
By taking these actions, organizations can advance their security compliance and allow their security team to modernize infrastructure across the board. Meeting regulatory requirements also empowers information security personnel to implement access control adjustments throughout the organization, bolstering security. Additionally, improvements like enforcing patching policies ensure that compliance management software remains up-to-date.
Invaluable operational understandings
Making sure your organization is compliant requires carefully examining all its processes. This thorough approach leaves no area unexplored, leading to exciting new insights. By gathering comprehensive information about your operations, making necessary improvements becomes much simpler.
For example, this process can also reveal valuable data about work habits, technology usage, and security protocols. The data collected during audits can help refine customer engagement and suggest ways to enhance data privacy. Additionally, when auditing remote work, it promotes flexible arrangements while bolstering security measures.
Enhanced organizational culture
Complying with security compliance frameworks can also affect a company's internal culture. Regulatory compliance isn't always focused on technology. People also play a critical role in ensuring that the organization is aligned. This means introducing security training exercises, training and adopting new ways of working.
These developments have a positive effect on organizational culture internally. Externally, recruitment might become easier if your company is known for maintaining high compliance standards. Perspective employees prefer working for trustworthy and reliable companies due to job security rather than picking those annually penalized for regulatory infringements.
Compliance management challenges
The fact remains that effective compliance management is challenging. One of the most difficult things to achieve is the ever-changing nature of compliance regulations and security standards. New directives are released constantly, and businesses must keep up and adapt their internal processes and setups to align with the current regulatory climate.
It also ties in with the second challenge of budget constraints. Compliance is a huge time-sink and is a pretty expensive endeavor. This makes it more difficult for businesses, especially smaller ones, to keep up. As a solution, many organizations are turning to compliance management software, automating various tasks of compliance processes and ensuring adherence to regulatory standards.
Compliance management best practices
Improving compliance management is crucial for any business. Here are a few best practices that can set your organization on the right track.
Prioritize proactivity in compliance and ethics management
Compliance issues have a significant impact on various aspects of businesses, such as strategies, workforce morale, retention, reputation, brand equity, and profits. To succeed, businesses need to adopt a forward-thinking approach. This involves setting up compliance controls and procedures, clarifying responsibilities, and efficient management.
In addition, compliance officers should work closely with other units, such as risk management, legal, HR, and audit teams. By collaborating effectively, they can competently administer compliance processes, controls, models, and schedules. This approach provides the compliance team with a comprehensive understanding of the organization's compliance performance and requirements.
Develop and share an ethical framework
An ethical work framework with clearly outlined standards and expectations is pivotal for an organization's effective and efficient functioning. With efficient ethics and compliance, the program's bedrock lies in a robust and openly communicated code of conduct, signifying the organization's norms and values through fundamental policies. Policy formulation should consider local cultures, customs and sensibilities to guarantee their applicability and adherence.
Deliver extensive compliance training to employees
Ensuring compliance is essential, and it relies on employees following organizational policies and processes. To achieve this, investing in employee training is crucial to align the staff with the key principles of the security policy. Once these boundaries are well-defined, employees should be educated about their specific compliance obligations according to their roles and locations. In some instances, creating compliance training programs becomes necessary to meet relevant regulations.
Incorporate whistleblower hotlines into the compliance program
Whistleblower hotlines function as secure and anonymous channels to report ethical and compliance issues, including unethical actions and other improper conduct. Establishing a hotline is legally obligatory for publicly listed companies in the US. This falls alongside compliance management instruments to manage investigations, evaluate and conclude cases to transparently showcase ethical and fair enforcement.
Adopt a risk-centric approach to compliance management
Implementing a risk-oriented strategy for compliance and ethics management involves recognizing, scoring, and prioritizing high-risk domains within the organization. The most pressing compliance risks can be pinpointed by employing a risk-centric approach throughout the enterprise, and proactive measures are taken to mitigate issues, violations, investigations and penalties.
Examples of compliance management
Integrating safety measures with regulatory compliance has many benefits. However, it requires more than just knowing the rules and following predefined steps. Achieving compliance involves a systematic approach aligned with your overall business strategy.
Because every enterprise operates under its unique set of rules and has diverse corporate structures and compliance requirements, there's no one-size-fits-all blueprint for achieving compliance. Here are some steps that you can consider including in your compliance management strategy.
Inspect your current security setup. Before taking any action, you should review all the security resources available. This includes antivirus software, VPNs, firewalls, password management tools, and all authentication systems.
Examine essential data exchanges. A significant portion of compliance involves gathering, preserving, and utilizing confidential information. This means conducting a comprehensive evaluation of the data your business is processing.
Identify relevant regulations. Compliance departments should note down all the regulatory standards that are included in your safety compliance plan. The specific combination will depend on your industry, size, and area.
Match regulatory prerequisites with existing systems. Combine the gathered data from safety tools and data processing with the distinct requirements of the relevant federal regulations. Audits and analysis of applicable rules enable you to discover deficiencies in your safety measures.
Implement measures to address non-compliance. Identified compliance gaps should be converted into tangible actions to rectify security problems. Each regulatory discrepancy should have a company-wide strategy about how it will be solved.
Validate compliance to ascertain efficacy. Compliance and security teams should join efforts to evaluate the current model's effectiveness. This can provide additional insights from a compliance perspective and new directions for security improvements.
What are the key components of a compliance management system?
A compliance management system includes risk assessment, policy and posture development, training and education, reporting and investigation lines, response and prevention, and monitoring and auditing.
What are the consequences of non-compliance?
Non-compliance can lead to severe consequences, including hefty fines and penalties, legal ramifications, loss of customer trust, and damage to the company's reputation. In severe cases, it can even lead to business closure.
What are the 4 phases of the compliance process?
The compliance process typically involves four steps:
Risk assessment to identify potential areas of risk
Compliance program development and implementation to address these risks
Communication and training to ensure employees understand and adhere to the program
Monitoring and auditing to ensure continued compliance
In summary, security compliance management is crucial for every business, particularly in heavily regulated industries. Although there are challenges, adopting best practices and using compliance management software can greatly simplify compliance processes. By promoting a culture of compliance, businesses can fulfill their compliance obligations, prevent security breaches, and improve their reputation.