Organizations have collected increasing amounts of data in recent years. Often, data includes sensitive information such as customer or client details, increasing the need for businesses to streamline data security efforts. These trends have led to new data security regulations that companies must follow. 

In this article, we’ll discuss what data security compliance is, current regulations to be aware of, and tips for protecting sensitive data to build trust with your customers. Before we dive into ways to bolster your organization’s data security practices, let’s take a look at what data security compliance is and why it matters.    

What is data security compliance?

Data security compliance — also known as data protection compliance — is the practice of adhering to laws and regulations that protect sensitive data. Many of these standards are national requirements that organizations are legally obligated to follow. Not only could overlooking data security put sensitive customer or client information in jeopardy, it could also lead to fines, penalties, and reputational damage. With so much at stake, companies must make complying with data security regulations a top priority.  

Data security compliance vs. data compliance

While data security compliance and data compliance are related, these terms are not one and the same. Data security compliance is about following laws that regulate how data is protected. On the other hand, data compliance encompasses laws related to how data is stored, collected, processed, and managed. Data compliance has a broader scope and addresses all the legal, ethical, and regulatory aspects of how companies manage their data. 

Examples of security data compliance

To help you understand the difference between these terms, here are some examples of data compliance efforts:

• Issuing consent forms to customers that let them know how their data will be collected and confirming their agreement.
   
• Updating privacy policies to reflect how data will be collected and used, and informing customers how to exercise their rights related to data under current regulations. 
   
• Providing clear opt-out mechanisms for customers who don’t want their data to be collected or sold.
   
• Conducting regular security audits to detect any vulnerabilities in payment systems or other solutions that collect sensitive information.
   
• Ensuring that only the necessary staff members have access to sensitive data.
   
• Conducting regular training sessions so staff can learn about the latest data protection policies.      

What are the 4 key areas of data protection?

The four key areas of data protection are governance, assessment, training, and response. Here’s a brief introduction to each. 

• Governance: The policies established by higher management and organizational systems used to manage data security. They set the organization’s goals for cybersecurity and provide clear procedures for staff to follow.
  
   
• Assessment: Provides the context for security controls. This area of data protection defines where data should be stored, who should access it, and what level of protection should be applied. 
  
   
• Training: Data protection measures that strengthen employees’ ability to follow correct security procedures and protect against threats to sensitive information.   
  
   
• Response: In situations where data is compromised, this area of data protection outlines business continuity and disaster recovery plans.

The impact of data security compliance on business

Data protection compliance should always be a top priority. It impacts relationships with customers as well as where your business stands within the industry. Some key benefits of complying with data security regulations include:

• Avoiding fines: Many data security regulations are mandatory. By complying, you can avoid government fines.
  
   
• Building trust with customers: 34% of Americans have experienced fraudulent card charges, email or social media account takeovers, or someone trying to open a line of credit in their name. People are very aware of the risks associated with their data, and when customers or clients know you’re meeting data protection regulations, they’ll feel more confident doing business with you. 

• Preventing cybercrime: Did you know that $4 billion was lost to cyber crime in 2020? Complying with data security standards is the best way to stop cyber criminals from stealing sensitive information. 

• Improving your reputation: When you make strong data security compliance part of your branding, it helps establish your reputation as a trustworthy, responsible industry leader.  
  
   

Complying with data security regulations can help your business save time and money by protecting against the financial and reputational consequences of a data breach. For businesses that don’t meet regulations, the consequences can be steep, and the risk very real. 

Hacking attempts generally occur every 39 seconds, and in 2023 the average cost of a data breach was $4.45 million. Once customers’ data has been compromised, it can take years to recover. It’s essential that companies recognize the importance of complying with data security practices in order to remain competitive.

Common data protection compliance challenges

While meeting data security regulations should be a top priority, businesses typically face a few challenges on their way to full compliance. Before we cover specific compliance regulations, let’s take a look at these challenges and how to address them.

Challenge 1: A lack of data inventory 

Companies are constantly collecting data from across different departments, which can be difficult to track. Without visibility into the location and use of company data, businesses risk non-compliance and security breaches. Fortunately, modern technology can help create a robust data inventory so a business always has full visibility into what data it has and how it’s being protected.  

Challenge 2: Dormant identities

When a user or service account is no longer active, it becomes a dormant identity. If these accounts aren’t monitored and still have access to sensitive information, it can create weak points for hackers to steal data. It’s important for companies to establish procedures that promptly remove users and accounts after they become dormant. By following these procedures, you can make sure you’re not creating security risks every time an employee, vendor, or client leaves.       

Challenge 3: Over-privileged identities 

Sometimes, user identities have more access to sensitive data than necessary. If these accounts get compromised, cyber criminals are able to do more damage than they would otherwise. It’s important to limit permissions so that employees, clients, and vendors have the right level of access for their respective roles.

Challenge 4: Company culture

While never recommended, some businesses don’t prioritize data security compliance. A culture of non-compliance can persist when company leaders don’t believe that complying with regulations is necessary. Rather than learning to comply with data security regulations after a fine is issued or a breach occurs, it's crucial to be proactive. Leaders should familiarize themselves with the risks of non-compliance and the benefits of data protection, then take appropriate action to minimize those risks. 

Meeting data protection compliance regulations

There are several data security compliance regulations that companies need to be aware of. Some of the most important regulations include:

The General Data Protection Regulation (GDPR)

The GDPR outlines standards for all organizations to protect the data of European Union (EU) residents, and applies to any US-based company working with individuals or entities in the EU. It was signed into effect by the EU in 2018. According to the GDPR, companies must follow certain data protection procedures to prevent unauthorized data collection, processing, damage, loss, or destruction. Failing to do so can result in fines up to €20 million (about $21.5 million) or higher.   

The Federal Information Security Management Act (FISMA)

FISMA applies to all government agencies, subcontractors, and service providers. This regulation dictates that organizations must store data according to how impactful it would be if it were compromised. It also mandates that agencies conduct regular risk assessments. Failing to comply with FISMA may result in budget reductions and greater bureaucratic oversight. 

 

The Sarbanes-Oxley Act (SOX)

SOX was enacted by the U.S. Securities and Exchange Commission in the wake of financial scandals such as Enron in the early 2000s. It increases the requirements for public companies to be accurate in their corporate disclosures, including how and for how long businesses store data. 

The Payment Card Industry Data Security Standard (PCI DSS)

PCI DSS applies to any organization that deals with the processing, storage, and transmission of credit card information. It protects this sensitive information by requiring companies to build a secure network, regularly test data security, and establish specific access controls.

The California Consumer Privacy Act (CCPA)

Under the CCPA, companies with a revenue of above $25 million, or with at least 50,000 users, must give California residents access to any saved data that’s related to them. If residents believe that a company is withholding access to data that’s rightfully theirs, they’re entitled to file a lawsuit. This law applies to any company that collects data from California residents.

Most states in the U.S. have individual data security policies, and companies should always be aware of local regulations that impact business. While state regulations may vary, most policies will require the following: 

• Strong encryption: Encryption is one of the most important elements of data security. It prevents unauthorized access from cyber criminals by scrambling sensitive information into code. To ensure that your company’s data is as secure as possible, use 256-bit encryption for protected data when at rest and in transit.  

• Email security: From phishing attacks to extracting sensitive information from the body of a message, emails are a common way for hackers to gain access to data. Make sure your company’s emails are encrypted and that your staff is trained to respond to phishing threats.    

• Data access control: Controlling who can access sensitive information limits the reach of cyber criminals in the event of a breach. Set up data access controls so that information can only be accessed by the people who need it to do their jobs. 

Related Read: File encryption 101 

5 steps to prepare for a data security compliance audit

To prepare for data protection audit, follow these steps:

Take inventory of hardware and software: Take inventory of your technology-related assets to make sure you’re aware of everything your company owns. This will help you understand what will get audited and ensures nothing will be overlooked.

Get a copy of the audit checklist: With a checklist of required documents and files from auditors, you can stay organized and understand what’s expected of you during the audit.

Review data security policies: Make sure all of your data security policies are documented. Review regularly to ensure policies are up-to-date and accessible for staff.

Perform a self-assessment: Conduct an internal audit to assess what issues should be addressed before the external audit. Be as rigorous and objective as possible.

Schedule tests and deliverables: Schedule necessary tests (i.e., risk assessments, penetration testing) before the audit and have deliverables ready to demonstrate your company’s commitment to the process.

Technology’s role in data security compliance

Even for companies that prioritize data security and take steps to protect data, audits can be stressful. As your company expands, you may find yourself collecting overwhelming quantities of data through different channels. The need to constantly update and adjust your internal processes to comply with regulations can be a burden.

With technology that’s built for compliance and easy to use, you can streamline processes for collecting, storing, and managing data — empowering your company to meet regulations as it scales. Modern tools can automate file encryption, email security measures, and data access controls, giving your teams the ability to focus on work without worrying about federal or state requirements. 

Technology solutions can keep sensitive information secure at all times. To feel more confident about your company’s data protection compliance approach, consider software solutions that meet your company’s needs and offer the highest level of encryption.

Meet your data compliance goals 

According to international, federal, and state laws, organizations across all industries must meet certain standards for data protection compliance. Not only does complying with these regulations protect your company from fines and costly data breaches, it builds trust with customers and helps establish your reputation as a responsible, reliable organization. Implementing compliant technology solutions is one of the best ways to feel confident that you can consistently meet regulations.   

Visit our website to learn how ShareFile is empowering businesses like yours to meet their data compliance goals.