Regulatory compliance is a complex and ever-changing issue for businesses of all sizes. It can be challenging to keep up with the latest regulations, let alone ensure that your business is compliant. The exponential growth in cloud storage and services has contributed to the relevance of this topic.
Failing to comply with regulatory requirements can lead to costly fines, reputational damage, and even criminal prosecution in some cases. The risks associated with non-compliance are too great for any business to ignore.
And to make matters worse, achieving and maintaining compliance is now a critical factor in securing business. According to data, nearly 50% of firms are requested to provide proof of cybersecurity when submitting Requests for Proposals (RFPs).
For most organizations, achieving and maintaining regulatory compliance seems daunting. Fortunately, there are steps you can take to ensure you remain compliant with industry standards and avoid these risks.
By understanding what regulatory compliance entails and how it affects the entire organization, you can create strategies to help your company stay ahead of the curve in meeting legal obligations.
Read on to learn about regulatory compliance, how to achieve it, the risks of non-compliance, and how Veritas can help you navigate compliance requirements.
What Is Regulatory Compliance
A key enabler of service delivery is interacting with consumers and handling and storing their data. In recent decades, the advancement of technology has made this very easy.
However, all this comes with the trust of consumers that you'll use their data for authorized purpose and protect it from access by unauthorized persons. Due to negligence on this and malicious actors compromising the weak security systems, there are strict regulations that organizations must adhere to.
This is where regulatory compliance comes into play. It is the practice of adhering to laws and regulations that apply to the business environment, whether state, federal or international. The exact demands can fluctuate depending on both industry type and operation size.
Failure to comply with such regulations can cause firms to incur costly fines, jeopardizing their relationship with vendors. Regulatory compliance not only safeguards confidential information but preserves the safety of personnel as well.
Regulatory requirements can be seen in various forms, including the U.S. Health Insurance Portability and Accountability Act (HIPAA), the European Union's General Data Protection Regulation (GDPR) from 2016, and the Sarbanes-Oxley Act.
While it's easy to confuse regulatory compliance with corporate compliance, the two are separate. The latter deals with internal policies and procedures, and the former involves observing government, industry, and international regulations.
Why Is Regulatory Compliance a Big Deal?
In the last century, there has been an exponential rise in legal obligations, regulations, standards, and guidelines. And it's with good reason, as data security has become a significant issue.
As such, compliance is no longer just a concern for the financial services or healthcare industries. Instead, it is now an essential element of success across all sectors touching on essential operations.
Regulatory compliance is a big deal for businesses of all sizes. Not only does it help organizations pass audits and demonstrate due diligence, it also protects organizations from legal repercussions in a data breach or other incident.
In addition to this, complying with regulations helps foster customer trust as well. Customers want to know their data is secure and that businesses are taking the necessary steps to protect it.
Businesses get many other benefits from compliant data, such as improved performance and efficiency. For example, a company that is HIPAA-compliant will be able to share confidential patient information electronically in a secure manner.
When data is secure and backed up regularly, organizations can focus on streamlining operations and improving customer service. This will, in turn, increase the company's bottom line by making processes more efficient and cost-effective.
Why Regulatory Compliance Is an Important Part of Business
Staying on top of the unique regulatory policies in your industry is essential for more than just avoiding fines. Not only does it bring financial security, but it also ensures business continuity. Understanding the difference between compliance regulations and other legal issues will help you navigate them better and protect your business from any unexpected consequences.
To ensure your digital assets and data are compliant with all applicable regulations, here are some key reasons why you should prioritize regulatory compliance as you construct infrastructure and build corporate standards:
- Prevent unnecessary lawsuits- By neglecting to adhere to compliance guidelines, your business can be left exposed and vulnerable to future legal action. If a data breach were ever to occur, the organization could face large settlements that range into millions of dollars.
- Financial security- Ignoring compliance regulations can have staggering consequences for organizations; one mistake could cost a company millions of dollars in fines, as banking organizations discovered firsthand, with $11.39 billion paid out last year due to non-compliance.
- Protect brand reputation- If a data breach occurs, your organization's reputation could take a massive hit. Subscriptions to services you offer can decrease, or product sales may plummet as customers lose faith in your brand and become unwilling to make any more purchases from you. This is sure to have a considerable effect on the overall revenue of your business.
- Business continuity- Regulations ensure that your organization can quickly and effectively bounce back after a disaster. Without them, just one misstep could ruin your business, leaving you with costly fines, extended downtime, and lost customers. Therefore, implementing the proper regulations is critical to safeguarding long-term success.
- Protection from hackers- Implementing digital safety protocols for regulatory compliance is vital in securing your sensitive information from malicious outside forces. Cybersecurity standards protect data from hackers, malware, and employee misappropriation to ensure no confidential details are inadvertently revealed.
Risks and Cost of Failure to Comply
When organizations fail to abide by local, federal, and state regulations, they place themselves in a precarious position that can result in devastating consequences. Not only could numerous lawsuits be brought against them with hefty fines being imposed as punishment, but individuals implicated may even face jail time leading ultimately to permanent business losses or, worse yet, bankruptcy and closure.
To prevent such dire results, you must put deliberate and proactive efforts into ensuring your organization adheres strictly to necessary compliance regulations and implements the proper standards.
On average, the cost of a data breach rose from $4.24 million per incident in 2021 to $4.35 million in 2022, a record high. One incident, regardless of size, has the potential to wreak havoc on a company's finances. This is especially so during the growth stage. The moment one's reputation takes a hit from such an event, unforeseeable losses in sales arise and impede progress, potentially hurting continuity for the long haul.
Trust is a fragile asset that can have far-reaching consequences when lost. It affects customer loyalty and retention and your business's ability to secure goods, services, and financing from vendors.
A worrying side effect of experiencing data loss or breach could be the departure of employees who feel their private information was not adequately protected. Furthermore, this may damage your reputation as a brand and make recruitment even more difficult in future endeavors.
For instance, if you fail to comply with HIPAA and other regulations, the ramifications can be grave. Insurance companies may end their support for your business, and patients using those particular plans will no longer be able to pay you.
This would have a devastating effect on your revenues since it limits the number of people who could access your services. Similarly, several financial regulatory standards lead to punitive consequences, including barring certain credit cards from being used in billing for products or services.
After paying non-compliance penalties, your organization must dedicate significant resources to recover and address any issues that may have arisen. Not only is redesigning infrastructure and adjusting processes costly in itself, but it also requires you to continue doing business within an industry where a breach of compliance was found.
Compliance Across Industries
While there are regulations that apply across the board, most are industry-specific. Therefore, it is essential to thoroughly research the rules that are pertinent to your industry when it comes to regulatory compliance.
A variety of standards may govern how you manage data and conduct business, but uncovering those which directly apply to your organization's specific niche is key for meeting all requirements.
Some of the standard regulatory frameworks include:
- Health Insurance Portability and Accountability Act (HIPAA) - To ensure the secure and efficient handling of patient information, HIPAA guides healthcare organizations on storing, accessing, managing, and disclosing data.
- Sarbanes-Oxley (SOX) - Following the Enron disaster, SOX compliance was implemented to monitor the accounting procedures of publicly traded companies. If a business is unfamiliar with SOX specifications, an internal audit should be conducted to confirm that its practices follow the regulations set forth by this law.
- Payment Card Industry Data Security Standard (PCI-DSS) - As credit card fraud continues escalating, PCI-DSS safeguards merchants and payment processors by assisting them with properly storing financial information and transferring data securely across the Internet.
- General Data Protection Regulation (GDPR) - The General Data Protection Regulation (GDPR) is the European Union's version of the CCPA. The GDPR imposes strict regulations that grant EU consumers more authority over how companies gather and employ their data. Any corporation operating with EU consumer information must have procedures to enable customers to delete it upon request.
- California Privacy Rights Act (CPRA) - This is an expansion of the California Consumer Privacy Act of 2018 (CCPA) to ensure that California consumers are safeguarded. These rules dictate that any business managing consumer data from California must be transparent about how it uses said data and remove such information as soon as a customer requests it to do so.
- North American Electric Reliability Corporation (NERC) - As the incidence of malicious state-sponsored cyberattacks rises, NERC is determined to safeguard energy and utility companies from being preyed upon by criminals. By adhering to these standards, utility organizations have access to several strategies to minimize their risk of a breach and any subsequent fallout on citizens.
- Family Educational Rights and Privacy Act (FERPA) - Academic institutions that collect student data are expected to abide by the FERPA standards, ensuring they safeguard their students' information and put measures in place to prevent unauthorized access. Doing so will help keep student records out of the hands of malicious attackers.
Why You Need a Regulatory Compliance Strategy
Saying you want to achieve regulatory compliance and doing so are two different things. Considering the scope of work and what's at stake, your efforts must be strategic. And this is why having a regulatory compliance strategy is vital.
Your regulatory compliance strategy serves as a guide to ensure your company abides by the laws of each jurisdiction in which it operates. Instead of waiting for an issue to arise, then trying to figure out what went wrong and how you can fix it, having a robust strategy helps prevent problems from occurring in the first place.
Compliance teams must find ways to reduce the potential risks while helping the organization sustain growth that will not put them in conflict with regulators or lawmakers. This way, they can keep their business running smoothly and reach their long-term objectives.
When developing your compliance strategy, the size of your organization and sector in which you function, as well as any foreign countries with which you transact, will dictate what components should be included.
Steps to Develop Robust Regulatory Compliance Plan
Developing an effective regulatory compliance program requires a multi-step approach. The following steps will help you create a plan that works for your organization.
1. Align Corporate Culture with Compliance
Showcasing the advantages of compliance to each division and employee within your organization can assist with smoother acceptance of new policies. In addition, employees will be better equipped to grasp their significance more easily whenever you can make a convincing argument for why these protocols are necessary.
A successful risk management plan requires total buy-in from each level of the organization, from executives to temporary staff. To get this commitment, you must demonstrate how abiding by compliance regulations can reduce risks for your organization in every strategic area. In addition, everyone needs to understand why transparency is necessary if your policies and procedures protect against potential threats.
Therefore, aligning compliance with corporate culture is essential if you wish to create an environment where innovation thrives while still upholding set standards.
2. Be Proactive About Risk Detection
Risk detection should be one of the top priorities of any regulatory compliance plan. You must be proactive in identifying potential risks to your organization and have a process that ensures they're quickly identified and resolved.
To facilitate this, you should establish an incident response program. This includes designating a team who can monitor these situations while having procedures to respond when a violation is discovered. Doing so will also help you stay on top of compliance regulations and detect potential risks before they become a problem for your organization.
3. Establish a Functional Scope
As a compliance and ethics officer, it is now critical to take on an active role in prevention rather than being focused strictly on the retrospective. Foreseeing regulatory issues before they become apparent requires increased resources; thus, your strategy must factor in this growth trajectory. You will likely need to begin at a specific level and expand the scope over time.
When devising a comprehensive strategy to reach your objectives, consider that not all organizations can immediately incorporate robotic process automation and other AI advancements into their compliance budgets.
4. Be Familiar With Your Regulatory Ecosystem
It is paramount that your team stays abreast of the evolving regulatory environment and its legal alterations, not only in your current domain but also in those areas where you hope to do business. The most effective way to stay aware is by keeping track of draft bills until their enactment into law.
After that, you must be able to analyze the strategies and regulations so you can provide your staff with the necessary instructions for a successful compliance program.
5. Establish Explicit Policies and Protocols
Once you understand the regulatory ecosystem and its evolution, it's time to create explicit policies for navigating compliance requirements. This involves developing operational procedures, such as risk assessment protocols and specific steps to respond in certain situations.
6. Provide Training and Support
To ensure team members can understand their roles in the organization, you must be able to provide training and support throughout the process. This involves clear guidelines for employees on operating with the regulations that apply to their department or role.
7. Monitor Compliance and Take Action
Finally, you must have an effective system in place for monitoring and managing compliance within your organization. This should include regular assessments of your operations to ensure they remain compliant with applicable regulations and a process in place to take disciplinary action when violations are detected.
Veritas Solutions for Navigating Compliance Requirements
Organizations have to navigate a complex regulatory landscape if they wish to stay compliant. Veritas provides advanced compliance solutions to help companies develop and maintain effective compliance programs.
Veritas’s suite of products includes data protection, security, privacy, and risk management tools. These are all essential elements when it comes to complying with local regulations. Additionally, the platform offers a comprehensive governance solution that enables users to monitor and manage their compliance programs.
Veritas also provides advanced e-discovery tools which allow organizations to quickly and easily identify, collect, process, review, analyze and report on data in a compliant manner. This ensures businesses are always prepared for audits or litigation proceedings when needed.
With Veritas, organizations can have peace of mind knowing that their compliance programs are running smoothly and doing all they can to stay compliant with local regulations.
So, get in touch with us today if you want to implement an effective regulatory compliance plan. We can help you develop and maintain a robust and compliant program that will keep your organization safe and secure.
Veritas customers include 95% of the Fortune 100, and NetBackup™ is the #1 choice for enterprises looking to protect large amounts of data.
Learn how Veritas keeps your data fully protected across virtual, physical, cloud and legacy workloads with Data Protection Services for Enterprise Businesses.
Frequently Asked Questions