IT compliance is critical for any business running on any technology, no matter how simple or complex the system. All IT elements and infrastructure must follow legal requirements and industry standards set by regulatory bodies to ensure secure processes and data, maintain compliance, and avoid penalties for violations.
We will discuss everything you need to know about IT compliance, explain why it’s important, and outline an actionable checklist to help you avoid potential compliance issues.
Table of Contents
What Is IT Compliance?
IT compliance refers to businesses meeting all legal requirements when it comes to data and computer systems. It's the process of ensuring that the technology you use is in line with the laws and regulations that apply to your business.
For example, if you run a financial services company, you are subject to various regulations governing how you handle information about your customers and your operations. You may also be required by law to report lost or stolen devices containing customer data.
Did you know that organizations lose roughly $4 million in revenue because of non-compliance incidents? If your technology doesn't meet various standards, there are serious consequences for your business’s reputation.
IT Security vs Compliance
Compliance and security are commonly used in tandem with one another, but there are important differences between the two concepts you should know. Compliance does not ensure security, nor does robust security automatically mean compliance.
IT security and IT compliance are two sides of the same coin. The main difference is that security centers on data and business protection, while compliance is all about corporate governance.
| Aspect | IT Security | IT Compliance |
| Definition | Primarily involves technical processes and internal controls | Primarily involves documentation and standards |
| Guidelines | Follows internal systems designed specifically for the company’s operations | Follows defined guidelines set by third-party regulators |
| Purpose | Protects business data and assets against emerging threats | Protects a company’s ability to operate within its locality and industry |
| Scope | Covers all elements of IT infrastructure, including hardware, software, data, networks, etc. | Focuses on specific requirements relevant to location or industry |
| Assessment | Must be continuously updated and improved | Remains largely static once compliance audit is completed |
| Personnel | Security teams, including engineers and analysts | Legal and compliance teams |
| Audits | Audits are primarily concerned with internal operations | Audits compare the company’s IT infrastructure against established industry standards |
| Penalties | Data breaches, revenue loss, negative reputation | Legal fines and loss of certifications and licenses |
| Examples | NIST, ISO/IEC 27001, and internal best practices | GDPR, FISMA, PCI DSS, HIPAA, etc. |
Why Is IT Compliance Important?
IT compliance is important because it ensures organizations adhere to legal and regulatory requirements, safeguard data security, and effectively manage risks.
According to Hyperproof’s 2024 IT Risk and Compliance Benchmark Report, 59% of businesses experienced data breaches that resulted in the disclosure of sensitive information in the past 24 months. IT issues like failed password change procedures can be prevented with a robust IT compliance strategy.
Maintaining data security protects sensitive business information, reduces the risk of breaches, and ensures the confidentiality, integrity, and availability of internal and client data. It also leads to efficiency, competitive advantages, and global consistency.
IT compliance also plays a significant role in risk management, with frameworks including risk assessments and effective mitigation strategies. Organizations can then identify and minimize potential threats, thus ensuring overall security and long-term business continuity.
Non-compliance can result in reputational damage, legal penalties, financial repercussions, and contract violations.
You can work with IT compliance solution companies to ensure that your business is abiding by various industry standards and regulations.
When Is IT Compliance Necessary?
IT compliance is always necessary for every organization as it protects them from legal and financial risks. It ensures that their tech infrastructure is secure and reliable, reducing the risk of disruptions caused by compromised systems or outdated equipment.
For business owners, it's important to know what the laws require. If you don't follow the regulations that apply to your business, you could be fined or even serve jail time.
Many organizations work with specialized IT service providers to navigate complex compliance landscapes and minimize risks.
6 Common Types of IT Compliance Standards
Various authoritative bodies have regulations to protect sensitive data and ensure businesses are complying with industry standards. Here are the six common types of IT compliance standards your business should follow:
- General Data Protection Regulation (GDPR)
- Federal Information Security Management Act (FISMA)
- Payment Card Industry Data Security Standard (PCI DSS)
- Sarbanes-Oxley Act (SOX)
- Health Insurance Portability and Accountability Act (HIPAA)
- Gramm-Leah-Bliley Act (GLBA)
General Data Protection Regulation (GDPR)
General Data Protection Regulation or GDPR was approved in 2016 and legally put into effect in 2018 in the European Union. It is designed to protect every EU citizen’s right to protect their personal data. These comprehensive regulations apply to all organizations that process the personal data of individuals residing in the EU, regardless of their actual location.
GDPR’s key provisions include:
- Explicit consent must be obtained before collecting and processing customer data. Consent must also be easy to withdraw.
- Individuals can request data corrections and deletion from records, i.e., the “right to be forgotten.”
- Organizations must document all data processing activities.
- Organizations must have robust security measures in place to protect data.
- Organizations must notify authorities and those affected by data breaches within 72 hours of discovery.
Non-compliance with GDPR can result in fines up to 4% of the company’s global annual turnover or €20 million, depending on which is higher.
Federal Information Security Management Act (FISMA)
This federal law was enacted in the United States in 2002. It outlines regulations to ensure the security and integrity of government data.
FISMA’s key provisions include:
- Federal agencies must develop and deploy a robust information security program designed to protect federal information systems.
- Agencies must follow guidelines outlined by the National Institute of Standards and Technology (NIST).
- Agencies must send annual security reports to the Office of Management and Budget (OMB). All reports are submitted to Congress.
Payment Card Industry Data Security Standard (PCI DSS)
These security requirements were designed by the Payment Card Industry Security Standards Council (PCI SSC) to protect card information, reduce the risk of fraud, and maintain consumer trust. Compliance is a basic requirement for all entities that process cardholder data for transactions.
Key provisions of this standard include:
- All data must be protected by encryption when transmitted over public networks. System security must be tested and updated regularly.
- Entities must use firewalls to protect cardholder information and regularly update security software.
- Entities must limit internal access to cardholder data on a need-to-know basis. Unique IDs should be assigned to personnel with physical and computer access.
Sarbanes-Oxley Act (SOX)
This compliance standard was enacted in 2002 and requires businesses to disclose complete and accurate financial data.
Key SOX provisions include:
- Companies must provide accurate and complete financial reports. CEOs and CFOs are personally responsible for certifying these reports.
- Companies must establish internal audit committees to ensure the integrity of their financial reporting. External auditors must also evaluate their internal financial systems.
- Whistleblowers who report financial fraud will be protected.
Health Insurance Portability and Accountability Act (HIPAA)
Enacted in 1996, HIPAA mandates that healthcare providers keep patient information confidential. All businesses that handle personal information need to have a compliant HIPAA process in place.
Key HIPAA provisions include:
- Covered entities must not disclose protected health information (PHI) without patient authorization.
- Safeguards such as encryption and access control must be in place to ensure the integrity and security of electronic PHI.
Gramm-Leah-Bliley Act (GLBA)
Also known as the Financial Services Modernization Act of 1999, this act centers on financial privacy for consumers. Banks, credit unions, and insurance companies must meet requirements for data security.
Key GLBA provisions include:
- Financial institutions must outline and deploy detailed privacy policies to ensure the security of their clients’ private information.
- Opt-out privacy notices that allow consumers to decline information sharing to unaffiliated third parties.
IT Compliance Checklist
This comprehensive IT compliance checklist will help ensure that your business meets all requirements outlined by third parties.
Phase 1: Identification
- Regulatory Frameworks: Identify the specific laws and regulations applicable to your industry and organization, such as GDPR, HIPAA, SOX, or PCI DSS.
- Data Classification: Define and classify business data based on its sensitivity and regulatory requirements.
- Risk Assessment: Identify potential security vulnerabilities and develop strategies to mitigate them.
- Vendor Management: Assess and ensure the compliance of third-party vendors that can access your business data.
Phase 2: Procedures
- Data Security: Implement measures to protect data, including encryption, access controls, and data loss prevention.
- Physical Security: Secure physical access to data centers and IT equipment.
- Security Policies and Procedures: Develop and document IT security policies and procedures, covering areas like data handling, incident response, and disaster recovery.
- Data Retention and Disposal: Establish policies for data retention and secure disposal.
- Access Control: Ensure proper user access controls, including role-based access, strong authentication, and password policies.
- Security Monitoring and Auditing: Implement logging, monitoring, and auditing of IT systems for compliance monitoring and incident detection.
- Security Documentation and Records: Maintain detailed records of compliance efforts and documentation for audits.
- Training and Awareness: Provide training and awareness programs for staff on security and compliance practices.
Phase 3: Audits
- Regular Audits: Conduct regular internal and external audits to verify compliance.
- Reporting: Generate reports for compliance documentation and reporting to regulatory authorities.
Phase 4: Responses
- Incident Response Plan: Develop and maintain a plan to respond to security incidents and breaches.
- Business Continuity and Disaster Recovery: Implement plans to ensure continuity of IT operations in case of disasters.
- Change Management: Implement a change control process to manage system changes.
- Legal and Regulatory Changes: Stay informed about changes in relevant laws and regulations and adapt your compliance practices accordingly.
- Updates and Patch Management: Install security patches and regular updates for all security systems.
IT Compliance Takeaways
No matter the size of your company or the nature of your business, ensuring compliance and security in your network is important. This maintains peace of mind that data breaches or other security issues will not disrupt your day-to-day operations.
To make sure your organization is compliant with all rules, regulations, and policies that apply to it, outsource the services of some of the best IT services agencies.
IT Compliance FAQs
1. How do I make sure my company remains compliant with changing IT regulations?
Join events and professional organizations to monitor updates to IT regulations in your industry. Official websites of relevant regulatory bodies also post updates to regulations.
You can also install compliance software or designate a member of your compliance team to track regulatory changes.
2. How do I communicate concerns about specific issues in my industry?
Every industry has its own compliance regulations. To communicate concerns about certain issues in your industry, look for more information. For example, if you're concerned about approving large transactions on a single credit card, learn more about credit card regulations and talk to your bank about how they handle such payments.
You can also consult an attorney specializing in data security and compliance to help you navigate the laws and policies surrounding compliance issues. They can help you determine if your concern is worth bringing up to the authorities.
3. Are there different levels of certifications for meeting IT requirements?
IT standards and requirements are often set at a national level, but smaller regions or individual companies can create their own.
Different levels of certification demonstrate that an organization has completed various assessments and meets requirements. These certifications are generally voluntary and an excellent way for businesses to stay on top of IT developments.
