An Introduction to Data Compliance

What Is Data Compliance?

Data compliance is the way you store, process, organize, and manage sensitive data (like customer details) and personal data (like personally identifiable information) such that it adheres to industry standards and regulatory requirements. It helps maintain the availability and integrity of data and prevents it from misuse, theft, and loss.

Data compliance ensures that businesses abide by the rules and regulations set forth to protect data, ensure privacy, reduce penalties for noncompliance, and prevent data breaches. Examples of compliance regulations include Health Insurance Probability and Accountability Act (HIPAA), General Data Protection Regulations (GDPR), and California Consumer Privacy Act (CCPA).

Importance of Data Compliance

Not adhering to data compliance standards increases the risks of cyberattacks and can result in significant fines and penalties. Beyond those consequences, companies should also prioritize data compliance for the following reasons.

Protects Customer Data

With the surge in Big Data, businesses are processing and storing more data than ever. And while this data is incredibly valuable and provides insights that help them make more informed decisions, it also results in more vulnerabilities. This ultimately increases the risk of cyberattacks.

Data compliance mitigates these threats and protects customer data. By establishing standards that companies should adhere to when handling data, data compliance helps prevent data misuse. It also helps companies create policies to better handle data.

Increases Customer Trust

With the increase in cyber threats, companies must prioritize data compliance to prevent reputational damage, legal repercussions, and costly breaches. Plus, by adhering to these standards, they show their dedication to keeping valuable information safe. This fosters trust and loyalty with customers since they're sure their data is handled responsibly.

Improves Security and Operational Efficiency

Data compliance helps businesses improve their profitability, efficiency, and security. It helps them address vulnerabilities that increase the chances of a data breach. It also promotes best practices in security such as risk assessments and multifactor authentication, reducing the risk of data leakage and unauthorized access.

Implementing data compliance policies can also help companies streamline the data management process.

Key Principles of Data Compliance

Key principles of data compliance provide a framework that ensures companies handle data securely while adhering to compliance regulations. These include data minimization, data integrity and confidentiality, data fairness and transparency, storage limitation, and accountability.

Data Minimization

Only data necessary for the specific purpose should be processed and stored. Companies should avoid collecting excess data and limit the processing to what is relevant, adequate, and essential for the intended use. Data should also be stored for the shortest time period possible.

Data Integrity and Confidentiality

Maintaining data integrity and confidentiality is essential for preventing unauthorized access and data misuse. Companies should implement appropriate measures to make sure that the data is

• accurate,
• reliable, and
• protected from unauthorized modification and breaches.

Data Fairness and Transparency

Data should be processed fairly, lawfully, and openly. Customers should know how their data is collected, used, and shared. Information related to how personal data is processed should be easy to understand and easily accessible to build trust among customers.

Storage Limitation

Data should be stored only for as long as necessary to fulfill its intended purpose. Once the data is no longer needed, it should be anonymized or deleted to minimize the risk of it being misused or accessed by unauthorized parties.

Accountability

Companies should ensure compliance with data protection laws and must demonstrate adherence to these principles. This includes maintaining documentation of how the data is processed, conducting regular audits, and having the right policies in place to uphold data protection standards.

Steps to Achieve Data Compliance

The key steps that companies should follow to ensure that they comply with data compliance regulations are to

1. conduct data audits,
2. implement data protection policies,
3. train employees,
4. create a data breach response plan, and
5. conduct compliance reviews.

Conduct Data Audits

Conduct audits to verify how effective your data compliance measures are. Audits can also help you identity potential vulnerabilities and understand possible areas of improvement.

Implement Data Protection Policies

Develop and implement strong data protection policies throughout your company. The policies should outline how to handle and protect data, including measures to prevent breaches and the steps to take in case there's a data breach.

Train Employees to Increase Awareness

Regularly train your employees about data compliance to keep them up to date on the best practices. Educating them also ensures they understand the data they have access to and the risks involved with handling it.

Have a Data Breach Response Plan

Create a detailed and well-defined plan so that you're always ready to respond to a data breach. Knowing how to quickly and effectively respond to breaches is crucial for reducing damage and making sure you comply with legal requirements.

Conduct Compliance Reviews

Frequent compliance reviews are crucial for making sure that the company stays up to date with data protection regulations. Regularly evaluating policies and procedures helps identify areas for improvement and ensures you continue to adhere to legal standards. So, as your company grows and new protection laws are passed, make sure you review your data compliance policies and update them as needed.

Tools and Technologies for Data Compliance

When it comes to data compliance, companies use various tools and technologies to make sure their data adheres to regulations. These include

• data discovery tools to identify sensitive and personal data in the database;
• data classification tools to categorize data based on sensitivity, so that the correct privacy and security policies can be applied to them;
• audit and monitoring tools to track and log data usage and access, which helps ensure compliance by identifying potential data breaches before they escalate;
• data observability tools like Acceldata to monitor the health of the data pipeline and improve data reliability; and
• compliance management platforms to keep track of compliance efforts and stay updated with regulatory change.

Challenges in Data Compliance

Data compliance can be tough for companies of all sizes. And in particular, hybrid and multi-cloud environments add further complexity to maintaining compliance. Some major challenges in data compliance include the following.

Continuously Evolving Regulations

Data protection laws like CCPA and GDPR constantly evolve to stay in line with the latest developments. Companies must stay up to date with the new changes to stay in compliance.

Plus, some companies operate in many countries, and they need to abide by the local regulations as well, which further complicates compliance.

Data Discovery

Companies must identify personal data stored in their system, which can be time consuming and difficult, especially for companies with lots of data. They might have to audit multiple storage systems and locate where the data is stored across cloud services, file systems, and databases. Some data might even require manual inspection.

Vulnerabilities in IoT Devices

IoT devices have now become very popular and are used in various industries. However, the greater the number of internet-connected devices, the greater the chances of a breach. According to reports, IoT devices are attacked more than 5,000 times a month. And once someone gets access to your network, they can also access confidential information such as customer card details.

Expensive

Compliance itself is quite expensive since it requires a significant amount of resources for employee training and technology updates.

Damage costs due to noncompliance can also be quite high. In addition to paying fees and penalties, your reputation is also affected—even the smallest slip-up can make your customers lose trust in the company.

Huge Amounts of Data

As mentioned earlier, companies today collect and process vast amounts of data. Managing it and ensuring compliance can be pretty complex. With data coming from a variety of sources like IoT, social media, and transactions, companies find it hard to organize and store information in a structured way. Plus, since large datasets and constantly updated or modified, making sure that the new data complies with regulations can also be quite complex.

Best Practices

Some best practices to keep in mind to stay compliant with regulations include the following:

• Perform data discovery to identify all the data present in your environment that's subject to compliance regulations.
• Make sure your data compliance policy addresses the different areas of compliance such as data retention, sharing, and storage. Also, make sure you review and update these policies as the regulations change.
• Perform risk assessments to find vulnerabilities and take immediate action to address those.
• Understand the data protection laws that apply to your business.
• Create a data inventory so that you know your data and where it's stored. It can also help you keep track of who has access to the data and the steps taken to protect it.
• Have security measures in place to protect regulated data, including making backups and having disaster recovery plans to promptly restore access.
• Make sure data is encrypted when it's at rest and when it's in transit. Other security measures you should implement include conducting penetration tests and vulnerability assessments, and ensuring unnecessary data is securely disposed of.
• Ensure that third-party vendors handling your data also comply with regulations.

This post was written by Nimra Ahmed. Nimra is a software engineering graduate with a strong interest in Node.js & machine learning. When she's not working, you'll find her playing around with no-code tools, swimming, or exploring something new.