It seems like every day there are news headlines about companies that have had their data breached. The fallout from these breaches, and the impact on the business and their customers, is severe. New compliance regulations are constantly being introduced to try to address cyber threats. As a business owner, it's imperative that you adhere to these security regulations. So, what exactly do you need to know about data security compliance?
What Is Data Security Compliance?
Data security is the process that a company uses to protect its accounts, databases, networks, files, and private information. This is done by adopting IT systems and processes relative to the data that is stored, how sensitive the information is, and compliance requirements to meet the rules of state and federal agencies.
Don’t confuse data security with data compliance, however. While the goal of both is to minimize the risks a business is exposed to, security is how a business protects its sensitive data and compliance is when a business meets the legally required minimum standards.
Data compliance refers to the regulations required by law to protect sensitive digital assets such as financial details, personally identifiable information (PII), and more. These rules come in a variety of forms. They may be standards specific to one industry, state-level laws, or federal regulatory compliance requirements. The one thing they all do is state the kinds of data that must be protected, what processes for protection are considered acceptable, and what the penalties are for failing to comply.
Data Regulations You Should Know for Security Compliance
With the increase in cyber threats, there are a variety of regulations and laws that focus solely on protecting sensitive data. Most of these regulations require businesses to track the types of sensitive data they have, be able to produce the data on demand, and prove to auditors that they have policies and procedures in place for consumer protection. Let’s take a closer look at some of the most common types of compliance regulations.
General Data Protection Regulation (GDPR)
This is one of the most wide-ranging, as well as newest, standards in data protection laws. The European Union’s GDPR was put in force in May 2018 and created a wide range of regulations regarding people’s right to know what private information a business has about them, how a company must process this data, and rules for reporting any breaches of the data.
Although it was created by the European Union, it doesn’t just apply to businesses in Europe. If you do business with an individual or business subject to the EU’s jurisdiction, you must comply with the provisions of GDPR, including ISO 27701 and NIST Cybersecurity Framework rules. While there may seem like a lot of rules contained in GDPR, there are three basic principles: obtaining consent to hold data, minimizing the amount of data you possess, and ensuring the rights of the subjects of the data.
Payment Card Industry Data Security Standard (PCI DSS)
If you are a business that handles sensitive customer financial information, the PCI DSS should be a vital part of your compliance process. This standard provides security requirements for how you must handle and protect cardholder data. The PCI DSS isn’t government-mandated, but rather an industry mandate. While this may make it seem less important, failure to comply can result in heavy fines or having payment processors or banks terminate their relationship with a business making it hard to process credit card payments.
The bigger the customer base is, the stricter the standards; however, the essential requirements include things like having an adequate firewall in place and regularly testing policies and procedures for protecting data. Fortunately, the Payment Card Industry Security Standards Council sets out detailed steps on what a business must do to meet its standards.
The Health Insurance Portability and Accountability Act (HIPAA)
Enacted in 1996, HIPAA defines how businesses –– particularly hospitals and healthcare companies –– in the U.S. must deal with the health information and medical data of individuals to ensure the information is kept safe and confidential. Because this information can be extremely sensitive, the penalties for non-compliance with HIPAA can be severe.
HIPAA compliance requires access control for private health information (PHI). This information should only be available to people that have a valid reason to view it. This is required for records both in the database and when they are shared. This means that file transfers and emails must be protected and monitored.
One of the main features of HIPAA is the requirement that an auditing trail can detail every interaction that anyone has had with the data. Event log management software ensures that records are automatically created each time a file is changed or accessed.
The California Consumer Privacy Act (CCPA)
The CCPA was put into force in 2020 and is one of the toughest regulations that a U.S. business must follow. While it isn’t as demanding as GDPR, there are parts of the act that can be tough. The CCPA creates a broader view of what should be considered private data to include information that may be connected to a customer profile. This may include things such as a person’s preferences, psychological trends, characteristics, behavior, intelligence, attitude, and abilities.
Fortunately, CCPA doesn’t apply to every business. It only applies to those with gross annual revenue over $25 million; those that buy, receive, or sell personal information of 50,000 or more households, consumers, or devices; and businesses that obtain 50 percent or more of the annual revenue from selling the personal information of consumers.
While some businesses were able to opt out of the GDPR by cutting ties with European businesses, the CCPA isn’t as easy to sidestep. It covers any medium or large company that does business with customers in California. Fines for data breaches can be as high as $7,500 per record.
The Sarbanes-Oxley Act (SOX)
This act was created to protect against repeat corporate accounting scandals and is more about financial reporting than protection of data. Although tech departments in a company may consider it less important, they still have a role to play in compliance with this act. They must ensure that all records are being properly retained and set up alerts when an event occurs that might require closer attention. They must also ensure that key information is routinely backed up. Spreadsheets, recorded phone calls, emails, financial transactions, and instant messages must all be retained for a minimum of five years for auditors.
Ultimately, to comply with SOX, recordkeeping must be compliant so that any audits go as smoothly as possible. There are helpful automation tools that make it easier to manage and monitor data workflow and retrieve information. This makes it less of a burden to follow regulatory requirements.
Why Data Privacy and Information Security Are Good for Business
Data privacy and security compliance isn’t just a legal obligation for your business. It also helps protect your customers and your business. Data breaches can harm your company's reputation and undermine the trust between your business and your customers. It can send the message that your business isn’t ethical and doesn’t take the steps necessary to protect private information.
Having good information security management systems and compliance measures can also improve your connections across industries. Other organizations may be hesitant to partner with a business that hasn’t taken the time to protect their private information. Being in compliance demonstrates that you have done your due diligence to protect the security of your data and that you would make a trustworthy partner.
5 Simple Ways to Adhere to Data Compliance Rules
You know that data security compliance is important, but how exactly do you become compliant and adhere to all the compliance rules? Fortunately, there are a few steps you can take:
- Understand the kinds of data your company has – The type of data your company has will determine what type of data security regulatory laws you will be subject to. Identifying what personal information you have is a common requirement of many of the regulations. This includes tracking the workflow of personal data as well as where it is stored and with whom it is shared.
- Conduct risk assessments – Routine risk assessments are a mandate of most compliance regulations. Risk management involves identifying risks, determining how likely they are to be victims of a data security breach and the impact if a breach occurs, as well as taking steps to prevent and/or remediate those risks.
- Get the right cybersecurity insurance – Cybersecurity insurance can be essential in helping your company recover if it falls victim to a data breach. There are policies that can help cover costs of business interruption, lost revenue, equipment damages, public relation expenses, legal fees, and more. Many insurance providers can also help you with risk management tools to protect your business before a breach ever occurs.
- Create your policies – Many businesses fail to have a strategy for ensuring they are compliant with data privacy laws. A business should have a set of principles and documentation that states what steps will be taken to protect sensitive information and how it will be handled if there is a breach. A compliant business provides solid technical, administrative, and physical safeguards to ensure confidentiality and availability of data. Your policies and procedures must continually be monitored, assessed, and updated as new threats and new regulations occur.
- Set up ongoing monitoring – Data breaches that go on for weeks or months are the result of poor monitoring and response plans. Cyberattacks can happen to anyone at any time, which means that ongoing, automated monitoring of private data must happen around the clock. Monitoring data security can prevent a breach and protect your company from serious fines or damaged reputations.
Seek Professional Guidance for Security Compliance
Your business operates and produces data, so it is vital that you keep the information secure. Your company should strive to identify, implement, and execute policies and procedures to protect that data. You should have both proactive and reactive strategies in place as well as insurance to mitigate a breach if one occurs.
The cyber insurance industry is growing, but it isn’t standardized yet. It can be challenging to determine how much liability coverage you need. Not all insurance service providers offer the same level of service or the same services, so be sure you choose a provider that can meet all the needs of your business whether you are a startup or have been in business for years. If you work with a credible, experienced insurance agency they can help you determine the coverage that you need, limitations, and factors that would be important in the event of a data breach. Speak with one of our advisors about solutions that can address your needs.