In one of our most recent posts, we discussed the importance of data privacy and the best practices organizations should employ to ensure that sensitive information are kept safe and secure. We also discussed the principles and regulations that govern data privacy. Here, we are going to be discussing data compliance. Data compliance is the practice of ensuring that entities follow regulations to ensure the sensitive data they possess are organized, stored, and managed so that they are guarded against loss, corruption, theft, and misuse.
Read on to learn about data compliance regulations, solutions, and standards.
Read Also: DATA PRIVACY: Importance & Best Practices For Organizations
What is Data Compliance?
As previously said, data compliance refers to the regulations and standards that a company must follow in order to protect the sensitive digital assets at its disposal – typically personally identifiable information and financial information—from loss, theft, and misuse. These regulations take several forms. They specify what data must be protected, what practices are acceptable, and the penalties for failing to follow the standards.
Although data compliance and data security may sound similar, they are not the same thing. While both data compliance and data security aim to reduce and manage the risks involved with collecting, keeping, and handling data, data compliance merely ensures you satisfy the bare minimum of legal obligations. Data security, on the other hand, encompasses all of the processes and technology used to protect sensitive data, such as firewalls, encryption, and password protection protocols.
What Are The 3 States of Data Compliance?
They are:
- Data on rest
- Data on motion
- Data on use
Data Compliance Regulations And Solutions
#1. HIPAA
The Health Insurance Portability and Accountability Act of 1996 specifies how entities in the United States in possession of individuals’ healthcare and medical data must maintain the safety and confidentiality of these records.
Considering these are some of the more sensitive records, the penalty for failing to preserve them can be heavy on the organization. There have been instances where a corporation was forced to pay millions of dollars. For example, in 2018, a certain insurance company agreed to pay a $16 million fine after a hacking attempt exposed the health information of over 79 million customers.
Furthermore, HIPAA requires that all electronic health records be accessible only to those with legitimate reasons, so encryption and strong access restrictions are essential. The rules apply not only to records within the database, but also to those that are shared, thus steps must be taken to guarantee that actions such as emails and file transfers are thoroughly monitored, safeguarded, and managed.
#2. PCI DSS
The PCI-DSS is the second on the list of data compliance solutions. The Payment Card Industry Data Security Standard (PCI DSS) is an important aspect of any compliance process for organizations that deal with consumers’ financial information since it establishes regulations for how corporations manage and safeguard cardholder data such as credit card numbers.
Unlike GDPR, PCI DSS is an industry-standard rather than a government regulation. However, this does not diminish its significance, since any company found to be in violation of its data compliance standards may face severe fines or even have its relationships with banks or payment processors terminated, making it extremely difficult for businesses to take card payments.
Even if a company uses third-party services to process card payments, as many do, it is still the business’s obligation to ensure the security of any credit or debit card data it collects, transmits, or keeps.
The specific procedures that organizations must take will vary depending on how many transactions they process – those with larger customer bases will face considerably more strict data compliance regulations – but ultimately, PCI DSS standards require businesses to ensure a particular level of security.
It’s worth mentioning that, the Payment Card Industry Security Standards Council outlines a series of measures that businesses must take to comply with these standards. These measures range from installing a sufficient firewall to periodically testing systems and processes to secure cardholder data. Obviously, there can be no excuse for not having a clear plan in place to achieve these standards.
#3. GDPR
GDPR is one of the most recent and comprehensive data regulations. Since its enactment on May 25, 2018, GDPR has established a number of solutions concerning people’s right to know what data entities hold on them, how firms should go about processing this data, and tighter laws for reporting data breaches.
Interestingly, these regulations do not only apply to companies established in Europe. If you conduct business with any individual subject to the jurisdiction of the EU, you must adhere to the GDPR’s rules. While the law contains many requirements, the majority of them may be filtered down to three basic principles: getting consent, reducing the amount of data held, and protecting data subjects’ rights.
Though it may appear to be a minor step, the first thing every company must do to ensure compliance with GDPR legislation and standards is to appoint someone to oversee its activities. This person, known as a data compliance officer, is required in certain firms that use vast amounts of data, and their duty is to oversee data protection strategy and implementation to ensure GDPR requirements and regulations are met.
#4. CCPA
This is one of the most strict consumer protections that many US-based companies will encounter. It has been dubbed as California’s GDPR, and while not as strict in areas such as reporting requirements as GDPR, it is in some ways much more than its European counterpart.
For example, it includes any information from which inferences can be drawn to create a customer profile that reflects a person’s “preferences, characteristics, psychological trends, predispositions, behavior, attitudes, intelligence, abilities, and aptitudes” in its definition of private data.
CCPA compliance will not be required for every firm. It only applies to enterprises with gross annual revenues of more than $25 million; those that acquire, receive, or sell the personal information of 50,000 or more individuals, households, or devices; or businesses that generate 50% or more of their annual revenue by selling customers’ personal information.
While this excludes many smaller businesses, it does mean that practically any medium or large enterprise working with clients in California will be covered. This may make it more relevant to many US firms than GDPR, because while some organizations chose to stop doing business in Europe entirely to avoid this regulation, it may be much more difficult for them to avoid the CCPA, because they do not have to be based in California, or even have a physical presence in the state, to be subject to its provisions.
#5. SOX
The Sarbanes-Oxley Act of 2002 (SOX) was enacted to prevent a recurrence of the corporate accounting scandals that enveloped Enron, WorldCom and others. As a result, because it focuses on financial reporting rather than data protection, IT professionals may consider it less vital than some of the other standards they must comply with. On the contrary, this is not the case. IT departments have distinct duties to play in ensuring that these needs are met.
To begin, they must comply with the CEO and CFO by ensuring they receive real-time financial reporting on the organization. This entails putting mechanisms in place to automate reporting and configuring alerts to be triggered when critical events occur that deserve closer scrutiny.
Additionally, IT personnel must also guarantee that all records are appropriately stored. As a result, effective and timely backups of critical information and document management systems are critical for maintaining compliance with these rules. To be effective, they must also ensure complete visibility into every aspect of their company’s digital assets. Instant messages, emails, recorded phone calls, and financial transactions must all be kept for at least five years in case auditors want them, hence, proper management systems must be in place.
Finally, IT professionals must ensure that recordkeeping and audits go as smoothly as possible when complying with SOX. Tools for automating activities, managing and monitoring data flow, and swiftly archiving and retrieving information will all play important roles in this.
The Benefits of Data Compliance for Organizations
When your organization prioritizes data security and compliance, you should expect to see financial rewards. For one thing, you will be able to reassure clients that they can leave their data with you. This goes a long way to guarantee customer retention and a positive image
Furthermore, taking the effort to design and record protocols for how your company manages sensitive information, protects personal privacy, and responds to security breaches allows your organization to remain resilient and adaptable when your environment changes and the unexpected occurs.
Finally, implementing security compliance standards thoroughly will assist your firm in reducing the risks of reputational and financial harm caused by data breaches.
While it is important to demonstrate to auditors that your firm meets certain requirements (e.g., SOX, HIPAA, CCPA), you must remember that maintaining a data protection compliance policy is actually for your benefit. A systematic approach to compliance can help you reduce the likelihood of occurrences that expose your customers’ data, corporate intellectual property, and business operations.
How Do You Maintain Data Compliance?
As a business owner, follow these control measures to maintain compliance with data security standards and regulations:
#1. Maintain accurate records of data security measures and audit procedures.
For the following reasons, it is critical to retain a record of all of your data protection and audit procedures:
To begin, this record will ensure that no single person has detailed knowledge of your company’s compliance actions. Without this record, your firm may be in the dark, and an audit may reveal glaring weaknesses in the data security and compliance program.
Furthermore, this compliance activity record will demonstrate your organization’s good faith efforts to comply with each set of requirements. Many regulations have good-faith exceptions that allow authorities to reduce penalties for organizations that have solid compliance processes in place or are actively striving to develop one.
Lastly, in order to pass an audit, you must show the auditor that you take data security standards seriously. Auditors want extensive records to determine whether the procedures you have in place are adequate for protecting the data you’re storing or processing. Working with the requirements of auditors in mind can help you stay focused on those key items.
#2. Employ CCF Measure.
A Common Controls Framework (CCF) is a complete set of control criteria derived from a wide range of industry data security and privacy standards. Using a CCF allows a company to meet the standards of security, privacy, and other compliance procedures while limiting the risk of being “over-controlled.”
#3. Ensure that your data privacy precautions are up to date.
These standards place a premium on data security. So, in addition to ensuring that you have a strong security compliance procedure in place, ensure that you also have current data compliance solutions in place. These data compliance solutions are crucial for reducing the likelihood of a data breach in your organization.
If your company’s data management and protection measures are weak, it will be considerably more difficult to meet data security and compliance standards designed with today’s technologies in mind.
#4. Designate an officer for data security and compliance standards.
With the preceding factors in mind, you may be wondering who is in charge of data compliance. Your data security and compliance process, like any other, requires a single point of contact—an officer to handle all of the moving parts. This individual should have direct access to executives and the credibility and power to persuade others throughout the organization to satisfy data security and compliance standards.
What is the Role of a Data Compliance Officer?
The data compliance officer’s major responsibility is to ensure that her organization processes the personal data of its employees, customers, providers, or any other individuals in accordance with the applicable data protection requirements.
Wrapping Up
To avoid fines or damage to their reputation, organizations should have a strong compliance program and data protection policy in place. Otherwise, they run the risk of losing customers or, worse—paying a huge fine.
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Reference
- IPF
