Table of Contents

Cloud Security

What Is Data Compliance?

5 min. read

Table of Contents

Data Compliance Explained
Why Is Data Compliance Important?
Cloud Challenges Data Compliance
Data Compliance Varies Across Industries
Meeting Data Compliance Standards
Data Compliance FAQs

Data compliance refers to the practice of adhering to legal and regulatory requirements, industry standards, and internal policies related to the collection, storage, processing, and sharing of data. It involves implementing measures and following guidelines to ensure data is handled securely and responsibly. Key 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 the tenets of these can result in fines, legal penalties, and reputational damage.

Data Compliance Explained

A significant aspect of an organization's data governance and risk management strategy, data compliance involves managing personal and sensitive data in line with regulatory requirements, as well as industry standards and internal policies.

With data generated and collected at today’s rapid rate, data compliance is more than helping organizations establish controls for responsible data handling. It’s a key measure to improve operational efficiency and profitability while proactively addressing trust. Strong data compliance standards enable organizations to address vulnerabilities, maintain data accuracy, and efficiently mine datasets for insights.

While the specifics of data compliance vary across industries and regions, common goals include maintaining data accuracy, providing transparency about data rights, and safeguarding sensitive information from unauthorized access or breaches. Additionally, data compliance involves tracking how data is stored, managed, and used throughout its lifecycle.

Critical aspects of data compliance include data security, privacy, and governance.

Data security compliance focuses on safeguarding data from unauthorized access, loss, or theft, keeping it out of the hands of those not permitted access.
Data privacy compliance involves protecting individuals’ personal information (PII) and ensuring that it’s collected, processed, and used in accordance with applicable laws and regulations.

Rules in data privacy frameworks often delineate the processes of identifying and managing privacy risk.

Data governance refers to establishing policies, procedures, and controls to ensure data assets’ integrity, availability, and usability.

Data Compliance Vs. Data Security Compliance

As indicated above, data compliance and data security compliance, though closely related, encompass distinct aspects of managing and protecting sensitive information. Data compliance refers to the broader process of adhering to a range of data protection laws governing the collection, processing, storage, and disclosure of personal or sensitive data. Examples of data compliance regulations include the General Data Protection Regulation (GDPR), which addresses privacy rights and data handling practices in the European Union, and the Health Insurance Portability and Accountability Act (HIPAA), which sets standards for the protection of health information in the United States.

Data security compliance, on the other hand, focuses on the measures and controls implemented to safeguard sensitive data from unauthorized access, breaches, and other security threats. It involves complying with regulations and standards that target the security aspects of data protection.

The Payment Card Industry Data Security Standard (PCI DSS), for example, establishes security requirements for organizations handling credit card information, including encryption, access controls, and network security. Another example is the Federal Information Security Management Act (FISMA), which mandates information security management for federal agencies and affiliated organizations, encompassing risk assessments, security controls, and continuous monitoring.

While data compliance covers a broader spectrum of requirements, including data subject rights, data minimization, and transparency, data security compliance zeroes in on the technical and procedural safeguards designed to maintain the confidentiality, integrity, and availability of sensitive information. In essence, data security compliance can be considered a subset of data compliance. Both areas work in tandem to promote responsible and secure handling of sensitive data.

Why Is Data Compliance Important?

With surging cyberthreats, organizations must prioritize data compliance to avoid costly breaches, legal repercussions, and reputational damage. By adhering to data compliance standards, organizations can actively demonstrate their commitment to safeguarding valuable information. Customers and partners gain confidence in their ability to handle sensitive data responsibly, which cultivates trust and loyalty.

Effective data compliance strategies also promote best practices in data security, including staunch encryption, multi-factor authentication, and risk assessments. Through these practices, organizations can mitigate the risk of data breaches, unauthorized access, and data leakage.

Compliance | Security

Figure 1: Data compliance and data security work in tandem toward the same ends.

Failure to meet data compliance requirements and placing sensitive data at risk can result in severe consequences that can change the trajectory of an organization. Avoiding financial penalties and reputational damage requires an ongoing process of continuous monitoring, updates, and adaptation to changes in regulations and industry best practices to protect data throughout its lifecycle.

Cloud Challenges Data Compliance

Data compliance has become more challenging with the move to cloud technologies, which pose several challenges. Data sovereignty and jurisdiction become significant concerns as data stored in the cloud may be physically located in different countries or regions. This leads to complexities in determining applicable laws and regulations. Maintaining control over data is another challenge, as organizations rely on cloud service providers (CSPs) for data storage and management, necessitating appropriate contractual agreements and mechanisms for data retrieval or deletion.

Data visibility and auditing are also challenging because data distribution across multiple servers hinders comprehensive visibility and compliance demonstration. Organizations must implement robust data compliance strategies in cloud environments, considering shared responsibility models and carefully selecting compliant CSPs to fulfill their respective roles and obligations.

Data Compliance Varies Across Industries

While healthcare and financial industries are recognized for stringent data compliance requirements, other sectors are heavily regulated, with compliance derived from adhering to distinct framework requirements that provide for data security and privacy.

Data Compliance in Financial Services

Financial institutions are subject to strict data compliance regulations to ensure the security and privacy of customer financial information. Financial institutions must comply with regulations and standards such as the Payment Card Industry Data Security Standard (PCI DSS) and the Sarbanes-Oxley Act (SOX) to protect customer data and maintain trust. Compliance involves implementing well-defined security measures, such as encryption, access controls, and regular security audits, to safeguard data from unauthorized access, breaches, and theft.

E-commerce and Retail Data Compliance

Online businesses that handle customer payment information must comply with data protection regulations like the General Data Protection Regulation (GDPR) in the European Union designed to ensure that customer data is protected and used transparently. Compliance is necessary to protect customer data and maintain trust.

E-commerce and retail businesses must implement security measures, such as encrypting sensitive data, securing data storage, and monitoring access, to maintain compliance and protect customer information from unauthorized access or theft. Adhering to data compliance requirements helps businesses protect their reputation and avoid legal penalties or financial losses resulting from data breaches or non-compliance.

Data Compliance for Government Agencies

Government entities deal with a range of sensitive information and must protect it from unauthorized access, breaches, and misuse. Adhering to data protection laws and regulations, such as the Federal Information Security Management Act (FISMA) in the United States or the Data Protection Act in the United Kingdom, ensures the privacy and security of citizen data. Compliance involves implementing security measures, including encryption, access controls, and secure data storage. By maintaining data compliance, government agencies can uphold public trust, protect their reputation, and avoid legal penalties or financial losses resulting from non-compliance or data breaches.

Education and Data Compliance

Educational institutions collect and manage student data, including personal information. Compliance with relevant data protection laws, such as the Family Educational Rights and Privacy Act (FERPA) in the United States, ensures the privacy and security of student records.

Data compliance plays a significant role in the education sector, as educational institutions collect and manage student data, including personal information and academic records. Compliance with relevant data protection laws, such as the Family Educational Rights and Privacy Act (FERPA) in the United States, ensures the privacy and security of student records. To avoid legal consequences or reputational damage resulting from data breaches or non-compliance, educational institutions must implement appropriate security measures to protect student data from unauthorized access and breaches.

Marketing and Advertising

Data compliance in marketing and advertising protects individuals' personal information and maintains transparency regarding data usage. Compliance with regulations like the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA) ensures that marketing and advertising activities are conducted ethically and in accordance with privacy laws. Businesses must implement security measures to protect personal data, provide clear privacy policies, and obtain user consent where required.

Professional Services

Law firms, accounting firms, and other professional service providers often handle sensitive client data. Compliance helps maintain client confidentiality and meets professional and industry standards.

Data compliance is critical for professional services firms, such as law firms and accounting firms, as they often handle sensitive client data and are bound by professional and industry standards to maintain confidentiality. Compliance with data protection regulations ensures that client information is securely collected, processed, and stored, safeguarding it from unauthorized access and breaches. Implementing robust security measures, such as encryption, access controls, and secure data storage, is essential to protect sensitive information and maintain client trust. By adhering to data compliance requirements, professional service providers can uphold their reputation, avoid legal consequences, and ensure the ethical handling of client data.

Technology and Cloud Services

The significance of data compliance in technology and cloud services lies in the critical role this sector plays in handling, storing, and processing vast amounts of sensitive data for a multitude of clients across industries. With organizations relying on cloud service providers (CSPs) for data management, the onus of ensuring compliance with various data protection regulations and industry standards is a shared responsibility.

Data compliance in technology and cloud services aims to foster a secure environment for clients who entrust their valuable data assets to these providers. But compliance takes on greater significance when you consider the risks associated with supply chain attacks, which can have a far-reaching impact on numerous organizations that rely on the affected organization.

A supply chain attack occurs when a threat actor compromises a trusted third-party vendor or service provider, leveraging their access to infiltrate the systems of multiple organizations downstream in the supply chain. A successful supply chain attack could result in unauthorized access and massive data loss.

Data compliance plays a crucial role in reducing the likelihood and impact of supply chain attacks by ensuring that technology and cloud service providers maintain stringent security measures and adhere to industry best practices. By implementing maximum security controls, monitoring third-party access, and maintaining transparency in their data handling processes, technology and cloud service providers can significantly minimize risks associated with supply chain attacks and better protect their clients' sensitive data.

In addition to safeguarding client data, compliance in this sector plays a role in addressing the complexities of data sovereignty and jurisdiction, as cloud services often store data across multiple geographic locations. Understanding and adhering to the applicable laws and regulations in each jurisdiction is necessary to ensure legal compliance and avoid penalties.

Meeting Data Compliance Standards

To ensure proper data and regulatory compliance, organizations should take several steps. These include understanding relevant data compliance regulations, developing a data inventory, implementing restrictive access controls, ensuring secure data storage, and educating staff about data compliance. Additionally, establishing transparent data handling policies, conducting regular audits, and having a well-defined data breach response plan are essential for long-term data security and compliance.

Data Compliance FAQs

Data sovereignty refers to the concept that digital information is subject to the laws and regulations of the country or region where it is stored. In the context of cloud security, data sovereignty becomes a significant concern as cloud service providers may store data across multiple geographical locations. Ensuring data sovereignty requires organizations to understand the applicable laws and regulations in each jurisdiction where their data resides and implement appropriate security measures to maintain compliance. This includes selecting compliant cloud service providers, implementing data encryption, and adhering to data retention and deletion policies as required by local laws.

A data inventory is a comprehensive list of all the data assets that an organization has and where they're located. It helps organizations understand and track:

Types of data they collect, store, and process
Sources, purposes, and recipients of that data

Data inventories can be managed manually or automatically. The reasons for maintaining a data inventory vary — and could include data governance, data management, data protection, data security, and data compliance.

The Payment Card Industry Data Security Standard (PCI DSS) is a set of security requirements designed to ensure that all organizations handling credit card information maintain a secure environment for processing, storing, and transmitting cardholder data. Developed by major credit card companies, PCI DSS helps protect sensitive payment data from unauthorized access, breaches, and fraud. Compliance involves implementing robust security measures, including encryption, access controls, network security, and regular vulnerability assessments. Organizations must undergo periodic audits and assessments to maintain their PCI DSS compliance, ensuring the continued security of payment card data.

The Sarbanes-Oxley Act (SOX) is a United States federal law enacted in 2002 to protect investors by improving the accuracy and reliability of corporate financial disclosures. Established in response to high-profile financial scandals such as Enron and WorldCom, SOX aims to enhance corporate governance, hold executives accountable, and deter fraudulent activities. Key provisions include establishing internal control frameworks, requiring independent external audits, and mandating CEOs and CFOs to certify the accuracy of financial reports. Non-compliance with SOX regulations can result in significant penalties, including fines and imprisonment for responsible executives.

In the context of cloud security, organizations must ensure data protection, access control, and auditability to comply with SOX requirements.

The Health Insurance Portability and Accountability Act (HIPAA) is a United States federal law that establishes privacy and security standards for the protection of sensitive patient information, known as protected health information (PHI). HIPAA applies to healthcare providers, health plans, and healthcare clearinghouses, as well as their business associates that handle PHI on their behalf. Compliance with HIPAA involves implementing administrative, physical, and technical safeguards to ensure the confidentiality, integrity, and availability of PHI. This includes access controls, data encryption, secure storage, and regular security risk assessments to protect patient data from unauthorized access, breaches, and misuse.

The General Data Protection Regulation (GDPR) is a comprehensive data protection law that governs the collection, processing, and storage of personal data within the European Union (EU) and European Economic Area (EEA). GDPR aims to protect the privacy rights of individuals, giving them more control over their personal data and ensuring transparency in data processing activities. Organizations must adhere to GDPR principles, such as data minimization, purpose limitation, and accuracy, and implement appropriate security measures to protect personal data. Non-compliance with GDPR can result in significant fines and reputational damage, making it crucial for organizations to understand and meet their GDPR obligations.

ISO 27001 is an internationally recognized standard for information security management systems (ISMS) that provides a systematic approach to managing sensitive information and ensuring its confidentiality, integrity, and availability. Developed by the International Organization for Standardization (ISO) and the International Electrotechnical Commission (IEC), ISO 27001 outlines best practices for establishing, implementing, and maintaining an ISMS, including risk management, access controls, incident response, and continuous improvement. Achieving ISO 27001 certification demonstrates an organization's commitment to information security and provides assurance to customers, partners, and stakeholders that their data is being handled securely and responsibly.

SOC 2 (Service Organization Control 2) is a set of criteria and reporting framework for assessing and verifying the effectiveness of a service organization's controls related to security, availability, processing integrity, confidentiality, and privacy. Developed by the American Institute of Certified Public Accountants (AICPA), SOC 2 is designed to provide assurance to customers and stakeholders that the organization has implemented robust controls to safeguard their data and systems. A SOC 2 audit, conducted by an independent auditor, evaluates an organization's policies, procedures, and practices against the Trust Services Criteria, resulting in a SOC 2 report that demonstrates the organization's commitment to maintaining a secure and compliant environment.

The Federal Information Security Management Act (FISMA) is a United States federal law that sets requirements for information security management in federal agencies, their contractors, and affiliated organizations. FISMA aims to protect government information, systems, and assets from unauthorized access, breaches, and other security threats. Compliance with FISMA involves implementing a risk-based approach to information security, encompassing administrative, technical, and physical safeguards. This includes developing security policies, conducting risk assessments, implementing security controls, and regularly monitoring and reporting on the effectiveness of these controls. Non-compliance with FISMA can result in penalties, reduced funding, and reputational damage for affected organizations.

The Data Protection Act (DPA) is a United Kingdom law that governs the collection, processing, and storage of personal data, ensuring the privacy and protection of individuals' information. The DPA sets out principles for data handling, such as fairness, purpose limitation, accuracy, and data security. Organizations must adhere to these principles and implement appropriate security measures to protect personal data from unauthorized access, loss, or damage. Compliance with the DPA involves understanding and meeting legal obligations, maintaining transparency in data processing activities, and ensuring the responsible handling of personal information. Non-compliance can result in fines, legal action, and reputational harm.

The Family Educational Rights and Privacy Act (FERPA) is a United States federal law that protects the privacy of student education records held by institutions and agencies receiving federal funding. FERPA grants certain rights to parents and eligible students, such as the right to access, review, and request amendments to their education records, and the right to control the disclosure of personally identifiable information from these records. Educational institutions must implement policies and procedures to maintain compliance with FERPA, including access controls, secure data storage, and staff training. Non-compliance can result in penalties, loss of federal funding, and reputational damage.

The California Consumer Privacy Act (CCPA) is a state-level data protection law that grants California residents specific rights regarding their personal information, including the right to access, delete, and opt-out of the sale of their data. CCPA applies to businesses that collect, process, or sell personal information of California residents, regardless of the company's physical location. Compliance with CCPA involves implementing transparent privacy policies, providing notice of data collection practices, and responding to consumer requests within the mandated timeframes. Failure to comply with CCPA can result in fines, legal action, and reputational harm.