What is data compliance?
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What is data compliance?

Data compliance is the act of handling and managing personal and sensitive data in a way that adheres to regulatory requirements, industry standards and internal policies involving data security and privacy.

Data compliance standards can vary by industry, region and country but frequently involve similar goals. These goals can include:

  • Ensuring data accuracy
  • Providing individuals with transparency and knowledge of their data rights
  • Protecting sensitive information, such as personal data and credit card information, from unauthorized access or data breaches
  • Tracking data storage, including the type of data an organization stores, how much it stores and how it's being managed throughout its lifecycle

Some of the most common data compliance regulations include the General Data Protection Regulation (GDPR), the Health Insurance Portability and Accountability Act (HIPAA) and the California Consumer Privacy Act (CCPA)

Non-compliance with these regulations can increase cybersecurity risks and cost organizations significant fines, legal penalties and reputational damage. For this reason, data compliance is often considered a critical component of an organization's overall data governance and risk management strategy.

Data compliance versus data security compliance


Data compliance is sometimes mistakenly called data security compliance, a closely related but technically smaller subset of data compliance.

Whereas data compliance covers the broader set of rules and regulations organizations must adhere to when handling data, data security compliance focuses specifically on the security aspects of managing data, including protecting data from unauthorized access, breaches and other security threats by implementing data security solutions, such as encryption, access controls, firewalls, security audits and more.

Put another way, data compliance includes all aspects of data security compliance while data security compliance does not include all aspects of data compliance.

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Why data compliance is important

To understand the importance of data compliance, consider our era of big data. Every time someone taps a screen, browses a website or strolls down the street, smartphone in hand, they leave a growing trail of personal data. At the same time, organizations are shifting toward cloud services and digital apps as part of their digital transformation and accumulating ever-increasing data sets. Unsurprisingly, all this data can be incredibly valuable to organizations, helping them turn data into insights to make better business decisions.

However, more data also means more vulnerabilities and a greater surface area for cyberattacks. According to IBM’s Cost of a Data Breach report, the global average cost of a data breach in 2023 was USD 4.45 million—a 15% increase over three years.

Data compliance helps mitigate these threats and keep customer data safe. It establishes a set of controls—or data compliance standards—that organizations and individuals must follow when handling data. The purpose of these compliance requirements is to create safeguards that protect data privacy and prevent data misuse. Data compliance can also help organizations and individuals develop policies and procedures to more responsibly handle data.

Because of these many benefits, organizations will often invest in data compliance willingly and proactively, not just out of necessity. Organizations recognize that data compliance can help them foster customer trust and build their reputation as a transparent, responsible steward of personal data.

Even more—data compliance often helps businesses increase their security and enhance their efficiency and profitability. Companies can more effectively shore up vulnerabilities that put them more at risk of data breaches by having strong data compliance standards in place. Additionally, having a robust data compliance program doesn’t just keep data secure; it also maintains its accuracy and reduces costly errors. With effective data management, organizations not only reduce the time and resources spent on data discovery and correction but also become more efficient and agile at mining their own datasets for insights. 

Many organizations also find that having a robust data compliance program in place makes it easier to keep up with data protection compliance standards, which have been getting updated more frequently than in the past. These standards include SOC 2, CSA STAR, ISO 27001, National Institute of Standards and Technology (NIST) 800-53, and more.

Types of data compliance regulations and standards 

As governments and other entities continue to focus on data security, there’s been a growing number of privacy regulations and data compliance standards that companies must meet to do business with their target customers.

Some of the most common data compliance regulations and standards include:

Health Insurance Portability and Accountability Act (HIPAA) 

The Health Insurance Portability and Accountability Act, or HIPAA, is a critical piece of legislation that was passed in the United States in 1996. It establishes the guidelines for how healthcare entities and businesses handle patients' personal health information (PHI) to guarantee its confidentiality and security.

Every entity that falls under the "covered entities" category, as defined by HIPAA, must uphold HIPAA data security and compliance standards. These entities encompass not only healthcare providers and insurance plans but also business associates with access to PHI, including providers of data transmission services, medical transcription service providers, software companies, insurance firms, and more.

General Data Protection Regulation (GDPR)

The General Data Protection Regulation (GDPR) is a comprehensive data privacy framework enacted by the European Union to safeguard the personal information of its citizens. 

GDPR focuses primarily on personally identifiable information (PII) and places stringent compliance requirements on data providers. It mandates organizations within and outside Europe to be transparent about their data collection practices, granting individuals greater control over their PII.

One of the GDPR's most striking aspects is its uncompromising stance on non-compliance. It imposes substantial fines for those who fail to adhere to its privacy regulations and data compliance standards. These fines can reach up to 4% of an organization's annual global turnover or EUR 20 million, whichever is greater.

For this reason, GDPR has caused businesses worldwide to reevaluate their data collection and handling practices, emphasizing the importance of robust data security and compliance.

The California Consumer Privacy Act (CCPA)

The California Consumer Privacy Act (CCPA) is a landmark data privacy law in the United States, similar to the GDPR.

Like the GDPR, it also places the onus on businesses to be transparent about their data practices and empowers individuals to have more control over their personal information. Under the CCPA, California residents can request details about the data collected on them by businesses, opt out of data sales, and request data deletion.

However, unlike the GDPR, CCPA—and many other US data protection laws—are opt-out rather than opt-in, meaning that businesses can use consumer information in California until specifically told otherwise. The CCPA also only applies to companies that exceed a specific annual revenue threshold or handle large volumes of personal data, making it relevant for many, though not all, California businesses.

Since the CCPA came into effect, organizations have actively reassessed their data handling processes and adopted comprehensive data protection strategies to meet compliance requirements.

The Sarbanes-Oxley Act (SOX)

The Sarbanes-Oxley Act (SOX) is a piece of legislation enacted in response to corporate scandals such as Enron and WorldCom. Its primary aim is to enhance corporate transparency and accountability. Under SOX, every publicly traded company in the United States must meet strict financial reporting and governance standards.

Some of the most significant provisions of SOX include requirements for CEOs and CFOs to personally certify the accuracy of financial statements and the establishment of independent audit committees. SOX also introduces rigorous internal control measures to ensure the reliability of financial data while significantly increasing corporate misconduct and fraud penalties.

Though SOX primarily deals with financial reporting, it's still a vital compliance consideration, and IT organizations must be aware of it to ensure accurate and timely financial reporting.

Payment Card Industry Data Security Standards (PCI-DSS)

The Payment Card Industry Data Security Standard (PCI-DSS) is a set of regulatory guidelines to safeguard credit card data. Unlike government-imposed regulations, PCI-DSS consists of contractual commitments enforced by an independent regulatory body known as the Payment Card Industry Security Standards Council.

PCI-DSS applies to any business that handles cardholder data, whether it be through acceptance, storage or transmission. Even if a third-party service is involved in credit card transactions, the company remains responsible for PCI-DSS compliance and must take the necessary measures to manage and store cardholder data securely.

How to ensure proper data and regulatory compliance

The following steps can help organizations establish a robust data compliance program that meets compliance requirements and protects sensitive information. 

Many of these are actions that organizations can take immediately, while others require longer-term planning. The hope is that, with the proper amount of planning and focus, organizations can not only meet data compliance standards and ensure data privacy but also strengthen their overall information security and more effectively protect themselves and their customers from data breaches, data misuse and other forms of unauthorized access.

Taking inventory of compliance standards and data
  • Data compliance: Start by understanding the data compliance regulations relevant to your organization, which generally depend on your industry and geographical location.
  • Data inventory: Develop an inventory outlining the types of data you collect, including where it is stored and who has access to it.
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Implementing immediate next steps
  • Access controls: Implement robust access controls to restrict data access to authorized personnel, which can involve user authentication, role-based access and the encryption of sensitive data. A modern identity and access management program can help with this.

  • Data storage: Take steps to ensure that your data is stored securely, both physically and digitally, which may entail deploying encrypted storage solutions, firewalls and access logs.

  • Compliance training: Educate staff about data compliance to make sure they understand the regulations and the significance of data privacy. Regular training sessions can also help everyone stay informed about best practices.

Establishing a longer-term data security plan
  • Data handling policies: Establish transparent security policies and procedures throughout your organization around how to responsibly handle data and ensure everyone knows the correct data management practices.

  • Regular audits: Conduct periodic audits to verify the effectiveness and currency of your data compliance measures and identify potential vulnerabilities and areas in need of improvement.

  • Data breach response plan: Develop a well-defined data breach response plan to prepare for a breach. Knowing how to respond effectively and promptly is crucial for minimizing damage and meeting the requirements of compliance frameworks.

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