What Is Data Compliance? Top Regulations You Need to Know

With the growing commoditization of data and with it, its value, many governmental agencies have taken steps to protect users’ data and privacy. Violating these regulations can garner steep fines and penalties and the risk of reputation damage.

With that in mind, companies must take data compliance seriously and understand the top regulations that impact their industries.

What Is Data Compliance?

Data compliance refers to the process by which companies adhere to the rules and regulations required by governing bodies concerning data collection, storage, processing, and management. These rules can pertain to security measures, personal privacy, data loss prevention, and more, with legal regulations differing by country and industry. 
 

Failure to comply with data regulations can lead to severe penalties, both financially and reputationally. Some necessary data compliance regulations include the General Data Protection Regulation (GDPR) in the European Union and the California Consumer Privacy Act (CCPA) in the United States.

Why Does Data Compliance Matter to Businesses?

Data compliance is important to businesses for the following reasons:

• Legal Obligation: Businesses must comply with various data protection and privacy regulations. Failing to do so can result in fines, penalties, audits, and potential lawsuits.
• Trust and Reputation: When businesses demonstrate that they handle data responsibly, it builds trust with customers, partners, and stakeholders. Violating data compliance can damage this trust and harm a company's reputation, potentially leading to loss of customers.
• Protection Against Data Breaches: Compliance with data regulations often involves implementing strong data security measures. This helps protect businesses from data breaches, which can lead to financial losses, harm to reputation, and potential legal action.
• Manage Risk: Compliance helps a business identify and manage risks associated with data handling. This can guide strategic decision-making and resource allocation, enhancing operational efficiency.
• Competitive Advantage: Businesses that exhibit strong data compliance and protection practices can gain a competitive edge, especially if customers prioritize data privacy.
• Investor Relations: For public companies or startups looking for funding, showing strong data compliance can be critical in gaining investor confidence.
• Increased Awareness: Compliance fosters a data awareness culture and promotes responsible employee behavior when handling sensitive information. This can prevent internal mishaps and potential unauthorized data exposure.

Ensuring Data Compliance with Best Practices

• Understanding the Applicable Laws and Regulations: Understand which data protection laws apply to your business. This could be the General Data Protection Regulation (GDPR) if you operate in the European Union or the California Consumer Privacy Act (CCPA) if you have customers in California, as well as others.
• Create a Data Inventory: Know your data, where it's stored, who has access to it, and how it's protected. This is crucial to assess your potential risks and vulnerabilities.
• Establish Internal Policies and Procedures: Develop internal data handling and privacy policies that align with the pertinent laws. This should also encompass data collection, storage, processing, sharing, and destruction.
• Implement Security Measures: Use encryption for data at rest and in transit, conduct vulnerability assessments and penetration tests, ensure the secure disposal of unnecessary data, and use reliable antivirus software and firewalls.
• Access Control: Restrict user access to sensitive data. Use strong passwords and two-factor authentication. Regularly review and update access privileges.
• Employee Training: Regularly train all employees about your data protection policies and procedures, including updates or changes. Make sure they understand their responsibilities in ensuring data compliance.
• Regular Audits and Updates: Conduct regular audits of your data management practices and security measures and update them as needed. Ensure your policies remain compliant with changing regulations.
• Incident Response Plan: Develop a robust incident response plan. In the event of a data breach, you should be able to respond quickly to minimize the damage, and you will likely be required to notify certain parties, like affected customers or regulatory bodies.
• Vendor Management: Make sure any third-party vendors that handle your data also comply with applicable laws and regulations.
• Engage Legal Counsel: Engage legal experts who understand data compliance and can provide advice personalized to your business' needs.

What Are the Benefits of Data Compliance?

Businesses reap many benefits when they embrace a culture of data compliance. 

• Protection from Penalties and Legal Consequences: Compliance with data regulations helps organizations avoid hefty fines, penalties, and legal consequences associated with non-compliance.
• Enhanced Reputation: When companies show that they treat data privacy seriously and comply with all regulations, it enhances their reputation among customers, partners, and stakeholders.
• Competitive Advantage: Compliance with data regulations can serve as a selling point and give a competitive edge over businesses that do not prioritize compliance.
• Improved Data Management: Compliance rules require businesses to manage their data effectively, which can lead to improved data practices.
• Increased Trust: By adhering to data regulations, organizations can foster trust with clients and customers, as they are assured their data is being handled responsibly.
• Data Security: Compliance requirements often involve implementing robust data security measures, which can assist with protecting an organization from data breaches and cyber threats.
• Reducing Risk: Adhering to data compliance standards reduces the risk of data breaches, hacks, and other digital threats to sensitive data.
• Facilitating Data-Driven Decision-Making: Ensuring data compliance maintains data integrity, facilitating data-driven decision-making, leading to consistent and reliable analyses and forecasts.
• Streamline Business Operations: Compliance requirements can help businesses streamline operations by identifying data procedure gaps and creating clear data management protocols.
• Ensure International Business: Regulations like GDPR have international implications. Thus, compliance ensures businesses can operate and handle data across different regions.

What Are the Challenges of Data Compliance?

Data compliance has many advantages, but implementing it successfully poses several challenges, such as these:

• Rapidly Changing Regulations: One of the significant challenges is keeping up with the ever-evolving laws and regulations across different jurisdictions. As lawmakers strive to protect consumers, they continue to enforce new and updated directives that companies must adhere to.
• Vast Amounts of Data: With the surge of Big Data, companies are collecting, processing, and storing more information than ever. Managing massive amounts of data and ensuring compliance can be overwhelmingly complex.
• Technological Changes: The rapid pace of technological advancements, including cloud computing, AI, and IoT, creates new data privacy and security concerns, making compliance even harder.
• Lack of Skilled Personnel: There is a growing need for specialists who understand the technology and the legal aspects of data compliance. However, due to high demand, there’s an urgent need to produce more such skilled professionals.
• Cost: Compliance can be expensive. It often requires significant resources for technology upgrades, personnel training, and the potential hiring of consultants or internal compliance staff. Furthermore, continuous audits and assessments are needed to ensure ongoing compliance.
• Understanding Cross-Border Data Transfers: Companies operating in multiple countries must understand and navigate diverse and often conflicting data protection laws, which can present an arduous challenge.
• Difficulty in Data Mapping: To comply with regulations, companies must know their data, especially where it is stored and how it is used. As businesses often use multiple systems and databases, locating and classifying all data can be difficult.
• Ensuring Third-Party Compliance: Companies are responsible for the data processed by their third-party vendors. Ensuring these partners also comply with relevant regulations can be daunting.
• Increased Risk of Data Breaches: With cyber threats on the rise, ensuring data security and, thus, compliance is a considerable challenge.
• Legacy Systems: Often, older systems are not designed with modern compliance in mind. As a result, it can be hard to make them meet today's myriad regulations.

Here Are the Top Data Compliance Regulations and Standards You Need to Know

For a business to stay compliant, it must maintain a catalog of all the data compliance regulations it must adhere to. Listed below are some of the major regulations that impact most online activity:

• General Data Protection Regulation (GDPR): This is a significant piece of legislation in the EU that protects citizens' data privacy rights. It also sets out stringent rules for exporting personal data outside the EU.
• California Consumer Privacy Act (CCPA): This law grants California residents the right to know what personal data is being collected and shared by businesses and provides them rights over their personal information.
• Health Insurance Portability and Accountability Act (HIPAA): It is a US federal law that requires the protection and confidential handling of sensitive health data.
• Payment Card Industry Data Security Standard (PCI DSS): This PCI compliance standard applies to any business that handles credit card transactions and requires strict security measures to protect against data theft.
• Sarbanes-Oxley Act (SOX): A US law that mandates strict auditing and financial regulations for public companies to protect shareholders.
• The Federal Information Security Management Act (FISMA): This US legislation requires federal agencies to implement security programs to protect data and information systems.
• Children’s Online Privacy Protection Act (COPPA): This U.S. law restricts the collection of personal data from children under 13.
• The Personal Information Protection and Electronic Documents Act (PIPEDA): A Canadian federal law that sets privacy standards for how private businesses handle personal data.
• Asia-Pacific Economic Cooperation (APEC) Privacy Framework: This is a set of principles and commentaries on privacy protection standards for APEC member economies.
• Australian Privacy Act 1988: This Australian regulation governs how personal data is handled.

Learn How Fortra Data Loss Prevention Can Bolster Your Data Compliance

Data Loss Prevention (DLP) can help with data compliance as it's essentially a solution that ensures sensitive or critical information is not lost, misused, or accessed by unauthorized users. Moreover, data compliance regulations often mandate the use of such strategies to protect data.

Fortra has a suite of solutions designed to help with securing an organization’s corporate networks and endpoints. Organizations can also leverage our robust Managed Security Program (MSP) that allows you to expand your team’s capabilities by tapping into our expertise.