Data is being generated, shared, and stored exponentially, and businesses rely on technology more than ever to connect with customers and deliver products and services. Now, both public and private companies across all industries are failing to protect critical and sensitive data. With inadequate infrastructure, little to no training, and non-existent compliance regulations, business and customer information is extremely valuable.
Governing bodies have unleashed a mountain of policies, procedures, and legislations that aim to standardize security and minimize risk. Now, companies are faced with a new challenge – IT regulatory compliance management.
What Is IT Regulatory Compliance?
Today, relatively every business is an IT business. The amount of data generated, transmitted, and stored is growing at an exponential rate. Every day, we produce quintillions of bytes of data, some of which contain personal or highly sensitive information, that we wouldn’t want in the hands of a malicious actor.
IT compliance involves protecting digital information and controlling how it is gathered, stored, and shared (both internally and externally). Businesses must enforce internal compliance functions while satisfying regulations that protect both the company and the end user.
Why Is Regulatory Compliance Used?
The vast majority of companies operating in the US are subject to at least one external IT security regulation. Here are a few of the reasons why regulatory compliance is used:
1. Regulatory compliance enhances security
Cybersecurity is an incredibly important aspect of modern-day technology use. In short, cybersecurity involves the protection of computer systems, networks, and data from theft or damage. It also helps prevent the disruption of services these systems deliver. By setting minimum standards within industries, regulatory compliance significantly enhances security across the board. This establishes an expectation that protects both businesses and customers from data theft, mishandling, and loss.
2. Regulatory compliance reduces the risk of data loss
Data is one of a company’s most valuable assets. Enhanced security helps mitigate the risk of unauthorized breaches, which can be incredibly costly (on average, more than $1.6 million).
3. Regulatory compliance ensures standardization
Big or small, public or private, no business is immune from compliance obligations. By standardizing specific requirements, all organizations are required to undertake the same precautions and risk mitigation strategies.
4. Regulatory compliance earns customer trust
If customers are going to trust a business with their personal data, businesses must honor that trust with the proper protections. Regulations, laws, and guidelines give customers peace of mind knowing that their information is unlikely to end up in the wrong hands.
5. Regulatory compliance helps businesses meet consumer expectations
End users expect a lot. They want personalized experiences and flawless performance — and they want it now. Regulatory compliance standards help businesses meet these expectations and secure a competitive advantage. How? By supporting data security, which then gives organizations the freedom to collect and use more data. And more data means more personalization, less friction, and better overall experiences.
6. Regulatory compliance minimizes human error
With firm-wide systems and processes in place, employees are less likely to make errors that result in a security breach or data loss. Even things as simple as a shared password can spell disaster for entire companies.
What Are the Risks of Non-Compliance?
Failure to meet compliance obligations can be devastating for businesses. Here are a few things that can happen if you’re non-compliant:
1. Severe penalties
Companies can be penalized in several ways for non-compliance, including fines, barriers to approval, and, in some cases, prison. Even if you are awarded a minor fine or warning without penalty, an investigation carried out by a government body into your company will cost you hours of work, legal fees, and contractor fees.
2. Poor reputation
Regulatory compliance helps secure customer trust. Failure to comply can break this trust and result in severe reputational damage. Think about how you would feel if your bank mishandled your internet banking credentials or your healthcare provider allowed your records to be leaked. You’d be hesitant to do business with either again.
3. Delays and limitations on activity
Let’s say you’re developing a new product. You’ve laid the groundwork, built a prototype, refined your design, and are now ready to launch. But right at the last minute, you realize your product does not meet all compliance regulations. You’re unable to go to market — it’s back to the drawing board for now.
4. Difficulty maintaining staff
Employees serious about their career do not want to work for a company that has a reputation of non-compliance. If involved with a publicized breach, team members may quit or become disgruntled. People are the heart of any business, and keeping them happy is crucial to success.
5. Ongoing attacks
Unfortunately, some businesses have become accustomed to large-scale security breaches that expose millions — if not billions — of records. If they are able to bounce back unscathed, they continue business as usual unaware that, for those whose records were exposed, the worst is yet to come. Many of the most significant risks associated with security breaches resulting from non-compliance come when the data that is lost is leveraged to launch secondary attacks. Personal details are used to target individuals with malware.
Ransomware, for example, can arrive in the inbox of stolen email addresses. These infected emails can appear legitimate — perhaps even from the company that experienced the initial breach. What’s more, details uncovered from a breach can be correlated with those stolen in previous attacks. For example, in one attack, the cybercriminal might learn an individual’s email address, and in another, they might learn their birthday or preferred password.
In summary, the damage caused by security breaches is ongoing. Even if your business manages to recover, it’s already too late for those who have had their credentials exposed.
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