Compliance Management Definition
Every business must follow rules that require them to perform corporate activity ethically and safely. Compliance regulations overseeing data and IT infrastructure ensure that companies safeguard consumer data by using best practices laid out by professionals and provide employee and third-party access to this data in an ethical way. Compliance management involves the procedures and policies used to reduce the risk of violating regulations, which leads to hefty fines for any corporation that fails to comply.
The Importance of Compliance Management
For years, corporations just paid the non-compliance fines instead of doing the work to tighten procedures and eliminate violations. They did this because oftentimes, paying the fines was cheaper than incorporating the policies and procedures necessary to avoid violations. Additional regulations and laws increased the penalties for a security breach, potentially costing millions. For example, General Data Protection Regulation (GDPR), adopted in 2016 and enforced in 2018 in European Union (EU) countries, imposes hefty fines for violations. Violating GDPR requirements can cost millions of Euros for a single incident. British Airways paid £183 million for inadequate security controls resulting in a successful web-skimming attack affecting 500,000 customers.
British Airways is just one example of the fines charged to corporations that do not comply with regulations. Simply paying fines instead of changing corporate procedures is no longer a viable option, especially as new regulations are adopted at the state level. Several federal regulations such as the Health Insurance Portability and Accountability Act of 1996 (HIPAA), Federal Information Security Management Act (FISMA), and Sarbanes-Oxley Act (SOX) oversee business activity. States have also enacted their own regulations. For example, the California Consumer Privacy Act (CCPA) governs data protection for California residents. Businesses that don't practice compliance management risk hefty fines from several regulatory bodies, including state and federal fines. International companies face fines from EU organizations.
Examples of Compliance Management
Compliance management focuses on digital compliance risks that could affect either employees or customers. Many of the regulations overseeing data involve privacy to provide customers with the assurance that their data will not be used in unethical practices. For example, compliance management solutions ensure that healthcare providers keep patient data safe. Any access to patient data must be logged and audit trails made available after a data breach. Good compliance management means the organization practices appropriate authorization controls and logging procedures to ensure investigations into a data breach can be carried out. Without robust auditing, the organization could suffer from penalties and residual effects based on poor cybersecurity and data management.
One of the most significant issues in data privacy is phishing. Social media helps with marketing, but it can also be a source for phishing and social engineering. It’s also important for employees who manage corporate accounts to know what can and cannot be shared on corporate social accounts. With compliance management, employees sharing events and information on social media better understand data privacy. Employees familiar with social engineering and phishing have the tools and knowledge to avoid becoming victims and putting corporate data at risk.
GDPR and CCPA require documentation is available to EU and California residents informing them of data privacy and how their data will be used. GDPR requires that companies give EU customers the ability to have their data removed from the platform. Compliance management ensures that all regulatory requirements are met and procedures adhere to local and international laws.