Data security is becoming more of a prominent issue as the world quickly becomes more digital. As regulatory standards are introduced, data compliance continues to evolve.
Understanding government and industry regulations is important for any business owner. That’s especially true if your organisation collects consumers’ information.
We know that it can be overwhelming to research the different data security compliance regulations. We’ve put together this guide to help you with what you need to know.
What is Data Security Management?
Most businesses in this day and age process personal data from customers in some form or the other. It may be when people purchase goods or services and enter their billing information. Or it may be as simple as clicking onto your website using their device.
To better understand your consumers, data is needed. But once their sensitive data is in your business’s hands, it becomes your responsibility to protect it.
That’s where data security management comes into the picture. A good data security management policy makes sure that all data, no matter what it is, is protected. That could be from cyber threats, corruption, or unauthorized access.
Simply, if data is in your possession, it’s your responsibility to protect it.
Why is Data Security Important to a Business?
Whether you’re a large corporation or a small business, protecting and managing data is incredibly important.
That’s because data is a valuable asset. It often involves personal information about your business or your consumers. First and foremost, protecting data assets is not only important – it’s the law. Government and industry regulations and legislation have been put into place to make sure people’s privacy is cared for.
But it’s also important for your business to succeed. When a breach of security happens, such as cyber attacks, and sensitive data is exposed, consumers lose trust in the brand. The same is true for your business.
Data security compliance protects your business from financial loss and a poor reputation among your consumers.
What Are Data Security Compliance Regulations and Standards?
There are many data security compliance regulations and standards that have been put in place over the years. However, not all of them may not apply to your business.
While Holmes Law doesn’t provided legal advisory services in the US, we are a part of the International Lawyers Network and can facilitate legal advice through this network (for example, for an Irish business looking to expand into the US, where we are the business’s legal advisers in Ireland).
That being said, there are 6 key data security compliance regulations that often involve many businesses. Here’s what you need to know:
GDPR is an acronym for General Data Protection Regulation. It’s a European Union law to protect data and privacy for people resident within the EU and the European Economic Area.
This data legislation gives internet users and e-Commerce consumers more privacy and protection of their personal data.
GDPR applies to any business operating in the EU that collects personal data. It also applies to businesses outside of the EU that provide goods or services to citizens within the EU.
To stay within GDPR compliance, businesses need to set up their business assets, such as websites, to gather sensitive data legally. Businesses also need to make sure that, once the data is gathered, it’s adequately protected from cyber attacks or other misuses.
HIPAA, or the Health Insurance Portability and Accountability Act, was passed by the United States in 1996. This data security regulation requires businesses to keep health information private and secure.
It’s particularly important for businesses that operate within the healthcare industry. Since it pertains to medical records, healthcare businesses are affected.
HIPAA applies to covered entities and any of their business associates. That includes healthcare providers, such as doctors, hospitals, and dentists. It also includes insurance companies that provide health plans and any healthcare entities associated with insurance companies are affected, too.
The GDPR is the EU equivalent of HIPAA. GDPR recognises data relating to health as a special category of data requiring specific and enhanced safeguards. Here is more information on how they compare.
Sarbanes-Oxley Act, or SOX, was established in the United States. It aims to protect the public, employees, and shareholders from corporate fraud.
SOX allows full transparency in the processes of companies for employees, the public, and shareholders. That includes transparency on joint ventures, mergers, and acquisitions, too. The main purpose is to improve accountability and accuracy of corporate governance. And the goal is to limit accounting fraudulent activity.
This data security legislation applies to publicly traded companies in the United States. It also includes any subsidiaries and foreign companies that do business and are publicly traded in the United States.
The EU equivalent to the act is Directive 2014/56/EU and Regulation (EU) no 537/2014 given effect in Ireland under statutory Instrument 312/2016. The EU has also established the Committee of European Auditing Oversight Bodies. The audit reform has an impact on who can act as a business’s audit firm and provide non-audit services, such as tax services and the operation of an audit committee.
4. PCI DSS
PCI DSS stands for Payment Card Industry Data Security Standard. This regulation was put into place in 2006 as eCommerce began to gain traction.
Its purpose is to manage security standards for eCommerce transactions to protect consumers. It’s required by credit card companies for any organisation that offers online transactions.
It is important to note that PCI DSS is a standard and not a regulation, and is not legally binding in Europe.
The California Consumer Privacy Act, or CCPA, was enacted in 2018 in California. Its goal is to allow consumers to have more control over their personal information and what they share with businesses.
Through this data security regulation, California consumers are allowed to know how businesses use their information. They’re also allowed to say they do not want their personal information to be sold by businesses.
Any business that offers goods or services to residents of California and is bringing in at least $25 million in annual revenue must be CCPA compliant. Businesses must also be compliant with CCPA if they have personal data of at least 50,000 people.
The equivalent to this in Ireland and the EU is GDPR.
The Gramm-Leach-Billey Act, or GLBA, is a data security regulation that requires financial institutions to explain any information-sharing policies to their customers.
This includes entities that handle secured lending, financial or investment advice, or insurance. These companies must tell consumers what information they collect. They must also tell who they might share it with, and how their information is protected.
The equivalent for Ireland and the EU is GDPR. While the US privacy laws tend to be sector specific, the GDPR in the EU is the overarching privacy law.
What Are the Consequences of Failing to Meet Data Security Compliance?
The severity of consequences for failing to meet data security compliance depends on the legislation.
Other than the repercussions it can have within your business-to-consumer relationship, you
may also find yourself in legal trouble if you do not protect sensitive information properly.
Take, for example, large corporations such as Google and Amazon. They are paying back millions in fines due to failing to comply with data security regulations.
How Can Businesses Ensure Data Security Compliance?
Now that you know the data security compliance regulations your business may need to meet, the next question is: how can businesses ensure data security compliance?
How do you know your business is in the green when it comes to protecting your consumers?
The best way to ensure data security management is by having a plan of action.
Data Security Compliance Plans Can Protect Your Business
A plan for data security is a necessity as the world continues to move toward a more digital future. As we rely heavily on collecting data to help our businesses grow, threats such as cyber attacks, data misuse, and data exploitation are becoming more prominent.
Make sure you have a plan of action so you can protect your business and your consumers’ sensitive data.
Within your data governance and security plan, it’s essential to:
1. Understand That Delaying Information Security is Not an Option
To operate a viable business that upholds both legislation and consumer trust, you should have data security at the forefront of your mind. There is no such thing as a “business that’s too small” for many of these data security regulations.
2. Determine What Data Assets You Collect from Customers
To be better data stewards, you first need to establish what kind of data you collect. That will help you determine which legislation and regulations your business needs to abide by.
For example, if you’re an eCommerce company that allows transactions on your website, then you may need to know more about PCI DSS and GDPR compliance. But you may not need to know as much about HIPAA compliance.
It’s best to sit down with your team, and even with a legal team, to determine what data your business collects and where you collect it from.
3. Educate Your Employees on Information Security
To prevent data breaches, such as cyber attacks, one of the main firewalls you have at your disposal is the education of your employees.
Unless they already know how serious information security is, they may not fully understand what they should and should not do with consumer information. The first step is to educate your employees about how crucial data security compliance is.
The first step can be to train your employees in data security compliance best practices. This might include things like not sharing sensitive information across emails or team messaging apps.
The next step can be training your employees on what the beginning stages of a cyberthreat look like and how they can report it.
How Holmes Can Help Your Business
Our team of legal experts at Holmes Law can help you make sure your business stays compliant with the relevant data security and privacy legislations.
We can assist you by advising you on how to mitigate risk and help you better understand how to use the legislation for competitive advantage. While we can’t provide legal advisory services in the US, we are a part of the International Lawyers Network and can facilitate legal advice through this network
Whether you need support with data collection and consent or you need in-house training on privacy issues, we can help you.
- Construction and Engineering
- Energy and Natural Resources
- Financial Services
- Food, Beverage and Agribusiness
- Healthcare, Pharma and Life Science
- Hospitality and Leisure
- Investing in Ireland
- Not-For-Profit and Charities
- Public Sector
- Real Estate
- Retail and Manufacturing
- Technology, Media and Telecom