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10 Steps to effective compliance risk management
As your business grows, you’re getting more customers and onboarding more employees. As your internal and external network grows, and more people and partners interact with your company’s data and information environment, it’s critical to ensure you’re in compliance with the various rules and regulations that govern the spaces in which you are doing business. You need an effective compliance risk management strategy. Where do you even begin? Follow these ten steps.
1. Add these key terms to your knowledge base
What is compliance risk management in the first place? Risk management describes the process of proactively identifying potential risks, analyzing those risks, and taking precautions to minimize risks; compliance risk management describes an organization’s process of managing the risk of non-compliance with pertinent regulations.
A compliance framework is a system by which your company can assess, or have assessed, its adherence to best practices in accordance with the regulations and other requirements that are meaningful to your company. The SOC 2 standard is one example of a compliance framework.
2. Know the compliance needs associated with your industry
Whether your organization operates in fintech or healthcare, in human resources or in team collaboration — it’s essential that your company works across departments to understand the various risks and compliance needs associated with SaaS in your particular industry.
It’s essential that your company understands the harms that can result if an identified risk comes to fruition. Once you have established possible risks, your compliance risk management team can prioritize risks and comprehensively manage potential harms in a holistic, strategic fashion.
Regulations apply to specific sectors and areas of work (e.g. HIPAA in the healthcare industry) and your company may need to be in compliance with a variety of regulations depending on your business model, your customers, the data your company handles, and other companies and partners with whom you do business. Consider the ecosystem in which you operate, and the rules and regulations that apply to the various parts of that ecosystem.
3. Replace yesterday’s risk management practices with a forward-looking approach
Companies used to manage security and compliance as separate, distinct stages in a process, led by different groups. Today, the speed and scale with which security and compliance lapses can be exploited has increased exponentially, and cybersecurity is more important than ever. A significant volume of data can be compromised in an instant — and your customers can lose trust in your business just as swiftly. The complex, interconnected data ecosystem in which today’s businesses are situated requires an equally interconnected and comprehensive approach to compliance risk management and data security. Where a reactive risk management strategy might once have kept your business above water, today a proactive strategy that puts your company out ahead of possible compliance risks will also help put you ahead of your competitors.
4. Understand the importance of an integrated compliance strategy
An integrated compliance strategy is one that applies across your company, and that involves all aspects of your company — bringing in key voices and insights company-wide to ensure that compliance has been considered from every angle. Gathering input and participation from a breadth of voices and workstreams across your company is essential in order to gain a clear and comprehensive understanding of the rules and regulations that impact your business. And it’s essential that all components of your company are operating in sync. If one part of the company is exercising good compliance management processes but another area is not, the company as a whole will suffer under a failure of compliance.
5. Consider who in your company should be involved
Engage senior managers, risk specialists, and key representatives from across your company’s departments to ensure that the full picture of your organization and the risks it faces are present and accounted for. In other words, build a risk management structure that matches your company’s structure. Together, your cross-departmental compliance risk management team can consider the rules and regulations that impact your industry, evaluate your company’s current compliance, and assess the need for, management of, and distribution of resources that will support a holistic compliance strategy.
6. Know the ins and outs of a few of the most common regulations
Your company will be subject to rules and regulations depending on your business model and your vendor and customer ecosystem. A few common regulations that you should consider include:
- GDPR: GDPR is the General Data Protection Regulation, applicable as of May 25 2018; its goal is to harmonize data privacy laws across Europe and to give individuals greater control over their personal data. The GDPR applies to any company that processes personal information of individuals inside the European Economic Area (EEA), comprised of the European Union, its member states, and the three states of the European Free Trade Association.
- CCPA: CCPA is the California Consumer Privacy Act, effective as of January 1 2020, which impacts companies that do business with California residents.
- HIPAA: HIPAA is the acronym for the Health Insurance Portability and Accountability Act, passed by Congress in 1996 with the goal of improving health care portability and the handling of confidential health information. HIPAA compliance is required of organizations and employees who work in or with the healthcare industry, or who have access to protected health information (PHI).
If, for example, your company handles protected health information and does business with EU countries as well as the state of California — all three of these regulations pertain to your company and how it manages its holistic security ecosystem. Your compliance risk management team will want to stay on top of various existing and emerging regulations that could impact your business.
7. And a few of the most common compliance frameworks
The process of getting and staying in compliance with required rules and regulations is different for every company, but commonly involves proving security and compliance against a standard assessment tool or set of guidelines. Adherence to a standard serves as a way to communicate to your customers and prospects that you are effectively protecting the data and information your company manages or works with. Two common standards and compliance frameworks include:
- A SOC 2 report lists a company’s verified security practices. “Verified security practices” are security measures that a company implements, which are then verified by a trusted auditor, a CPA. Only licensed CPA firms can perform a SOC 2 examination. SOC 2 is an evaluation structure comprised of five Trust Services Criteria utilized to evaluate and report on the suitability of the design and operating effectiveness of controls relevant to the Security, Availability, Processing Integrity, Confidentiality, or Privacy of an organization’s information and systems. Of the five criteria, the Security category is required to obtain a SOC 2 audit, and many early-stage startups may choose to start the SOC 2 process with an evaluation of the Security category only.
ISO 27001 is a set of requirements for an information security management system (ISMS) that helps keep consumer data safe by applying a risk management process to an organization’s people, processes, and IT systems. Adherence to the standard requires the creation of an information security management system, and the full standard provides a robust range of controls that an organization can utilize based on its particular needs. The ISO 27001 standard tends to be particularly compelling to businesses located outside of the United States.
8. Identify the right technology, tools, and partners to help your company manage risk
Compliance software describes the software tools your company can employ to monitor internal systems and controls, in order to ensure compliance with required standards and regulations. Compliance software can be an important component of your organization’s compliance risk management strategy — providing continuous tracking, monitoring, and tools for review of your compliance with identified relevant rules and regulations, as well as the standards and expectations of your customers. Vanta can help you develop a clear picture of what it means for your company to be secure and in compliance with the various rules and regulations that pertain to your industry — get started with the SOC 2 Compliance Checklist.
As your company builds partnerships with vendors and implements vendor management policies, vendor review processes, and a vendor assessment program as a part of its integrated compliance management strategy, you’ll be part of building and strengthening an ecosystem of trust and stringent security practices that will benefit your customers and prospects. An ecosystem of strong and secure partners — and an integrated approach to the regular review of partners’ security and compliance practices — ensures that your company can deliver on its business model.
9. Develop an integrated framework and a replicable risk-management process
Security and compliance concerns are top-of-mind for customers, companies, and regulators. Implementing a holistic, company-wide approach means taking a proactive stance, taking into account what varied customers, prospects, and regulators require of you now and in the future. This kind of proactive approach moves your company from a position of responding to increasingly frequent security concerns with one-off solutions — such as security questionnaires, time-consuming one-on-one calls with technical leaders, and numerous original documents to explain security practices — to being able to share the security standards by which your company abides, and to consistently prove and communicate your company’s security.
10. Develop training materials for employees and key partners
Once you’ve developed an integrated compliance risk strategy that involves broad company participation, you’ll want to ensure that every employee at your company is attuned to established compliance practices. This is where documentation and employee training comes into play. Training is an essential part of the compliance risk management process — just as you want all areas of your organization to be acting on the same page, you also want your employees to be operating from a shared knowledge base. Training materials should make clear for all employees what compliance looks like at your company, and what it looks like from one department to another. (See more about HIPAA employee training for an industry- and regulation-specific approach to training.) Developing effective training materials is an important step on the path of building a company culture that integrates compliance as a part of doing business, and that communicates to your whole team that the company has articulated a unified approach to compliance risk management.
In conclusion, compliance risk management is a process that involves and benefits your whole company. Developing a holistic approach to security and compliance, and a replicable risk-management process, requires investment and collaboration across your company — and this up-front work will in turn save your company time, energy, and money. Vanta can help your company get secure and compliant from top to bottom, and help you prove that security to your customers and prospects.
Determine whether the GDPR applies to you and if so, if you are a processor or controller (or both)
Do you sell goods or service in the EU or UK?
Do you sell goods or services to EU businesses, consumers, or both?
Do you have employees in the EU or UK?
Do persons from the EU or UK visit your website?
Do you monitor the behavior of persons within the EU?
If any of the above apply to your business, you’ll need to get GDPR compliant.
Create a Data Map by taking the following actions
Identify and document every system (i.e. database, application, or vendor) which stores or processes EU or UK based personally identifiable information (PII)
Document the retention periods for PII in each system
Determine whether you collect, store, or process “special categories” of data
racial or ethnic origins
genetic data
political opinions
biometric data that can uniquely identifying someone
religious or philosophical beliefs
health, sex life or sexual orientation data
trade union membership
Determine whether your Data Map meets the requirements for Records of Processing Activities (Art. 30)
the name and contact details of the controller
the purpose behind the processing of data
a description of the categories of data that will be processed
who will receive the data including data
documentation of suitable safeguards for data transfers to a third country or an international organization
the retention period of the different categories of data
a general description of the technical and organizational security measures
Determine whether your Data Map includes the following information about processing activities carried out by vendors on your behalf
the name and contact details of the processor or processors and of each controller on behalf of which the processor is acting, and, where applicable, of the controller’s or the processor’s representative, and the data protection officer
the categories of processing carried out on behalf of each controller
documentation of suitable safeguards for data transfers to a third country or an international organization
a general description of the technical and organizational security measures
Determine your grounds for processing data
For each category of data and system/application have you determined the lawful basis for processing based on one of the following conditions?
consent of the data subject
contract with the data subject
necessary for compliance with a legal obligation
necessary in order to protect the vital interests of the data subject or a third party
necessary for the performance of a task in the public interest or in the exercise of official authority vested in the controller
necessary for the purposes of the legitimate interests pursued by the controller or by a third party, except where such interests are overridden by the rights of data subject
Take inventory of current customer and vendor contracts to confirm new GDPR-required flow-down provisions are included
Review all customer contracts to determine that they have appropriate contract language (i.e. Data Protection Addendums with Standard Contractual Clauses)
Review all in-scope vendor contracts to determine that they have appropriate contract language (i.e. Data Protection Addendums with Standard Contractual Clauses)
Do your agreements cover the following items?
vendor shall process the personal data only on documented instructions (including when making an international transfer of personal data) unless it is required to do otherwise by EU or member state law
vendor ensures that persons authorized to process the personal data are subject to confidentiality undertakings or professional or statutory obligations of confidentiality.
vendor have adequate information security in place, technical and organizational measures to be met to support data subject requests or breaches
vendor shall not appoint or disclose any personal data to any sub-processor unless required or authorized
vendor shall delete or return all the personal data after the end of the provision of services relating to processing, and deletes existing copies unless Union or Member State law requires storage of the personal data;
vendor makes available all information necessary to demonstrate compliance and allow for and contribute to audits, including inspections
Have you performed a risk assessment on vendors who are processing your PII?
Determine if you need to do a Data Protection Impact Assessment
Is your data processing taking into account the nature, scope, context, and purposes of the processing, likely to result in a high risk to the rights and freedoms of natural persons?
Does your processing involve any of the following?
automated processing, including profiling, and on which decisions are based that produce legal effects
special categories of data or data related to criminal convictions and offenses
monitor publicly accessible area on a large scale.
If any of the above are true, you may need to conduct a Data Protection Impact Assessment for existing and new data projects.
Review product and service design (including your website or app) to ensure privacy notice links, marketing consents, and other requirements are integrated
Do you have a public-facing Privacy Policy which covers the use of all your products, services and websites?
Does the notice to the data subject include the following items?
the identity and the contact details of the organization and its representative
the contact details of the data protection officer, if applicable
the purposes to process personal data and its legal basis for the processing
the recipients or categories of recipients of the personal data, if any
the details regarding any transfer of personal data to a third country and the safeguards taken applicable
Does the notice also include the following items?
the retention period, or if that is not possible, the criteria used to determine that period
the existence of the data subject rights (i.e. requests for information, modification or deletion of PII)
the right to withdraw consent at any time
the right to lodge a complaint with a supervisory authority
whether the provision of personal data is a statutory or contractual requirement, or a requirement necessary to enter into a contract, as well as whether the data subject is obliged to provide the personal data and of the possible consequences of failure to provide such data
the existence of automated decision-making, including profiling, and meaningful information about the logic involved, as well as the significance and the consequences
Do you have a mechanism for persons to change or withdraw consent?
Update internal privacy policies to comply with notification obligations
Update internal privacy notices for EU employees
Do you have an Employee Privacy Policy governing the collection and use of EU and UK employee data?
Determine if you need to appoint a Data Protection Officer, and appoint one if needed
Have you determined whether or not you must designate a Data Protection Officer (DPO) based on one of the following conditions (Art. 37)?
the data processing is carried out by a public authority
the core activities of the controller or processor require regular and systematic monitoring of data subjects on a large scale
If you export data from the EU, consider if you need a compliance mechanism to cover the data transfer, such as model clauses
If you transfer, store, or process data outside the EU or UK, have you identified your legal basis for the data transfer (note: most likely covered by the Standard Contractual Clauses)
Have you performed and documented a Transfer Impact Assessment (TIA)?
Confirm you are complying with other data subject rights (i.e. aside from notification)
Do you have a defined process for timely response to Data Subject Access Requests (DSAR) (i.e. requests for information, modification or deletion of PII)?
Are you able to provide the subject information in a concise, transparent, intelligible and easily accessible form, using clear and plain language?
Do you have a process for correcting or deleting data when requested?
Do you have an internal policy regarding a Compelled Disclosure from Law Enforcement?
Determine if you need to appoint an EU-based representative, and appoint one if needed
Have you appointed an EU Representative or determined that an EU Representative is not needed based on one of the following conditions?
data processing is occasional
data processing is not on a large scale
data processing doesn’t include special categories or data related to criminal convictions and offenses
doesn’t risk to the rights and freedoms of data subjects
a public authority or body
If operating in more than one EU state, identify a lead Data Protection Authority (DPA)
Do you operate in more than one EU state?
If so, have you designated the Supervisory Authority of the main establishment to act as your Lead Supervisory Authority?
Implement Employee Trainings to Demonstrate Compliance with GDPR Principles and Data Subject Rights
Have you provided appropriate Security Awareness and Privacy training to your staff?
Update internal procedures and policies to ensure you can comply with data breach response requirements
Have you created and implemented an Incident Response Plan which included procedures for reporting a breach to EU and UK Data Subjects as well as appropriate Data Authorities?
Do breach reporting policies comply with all prescribed timelines and include all recipients i.e. authorities, controllers, and data subjects?
Implement appropriate technical and organizational measures to ensure a level of security appropriate to the risk
This includes pseudonymization/ encryption, maintaining confidentiality, restoration of access following physical/technical incidents and regular testing of measures
Have you implemented encryption of PII at rest and in transit?
Have you implemented pseudonymization?
Have you implemented appropriate physical security controls?
Have you implemented information security policies and procedures?
Can you access EU or UK PII data in the clear?
Do your technical and organizational measure ensure that, by default, only personal data which are necessary for each specific purpose of the processing are processed?
Consider streamlining GDPR compliance with automation
Transform manual data collection and observation processes into continuous monitoring
Download this checklist for easy reference
Develop a roadmap for successful implementation of an ISMS and ISO 27001 certification
Implement Plan, Do, Check, Act (PDCA) process to recognize challenges and identify gaps for remediation
Consider ISO 27001 certification costs relative to org size and number of employees
Clearly define scope of work to plan certification time to completion
Select an ISO 27001 auditor
Set the scope of your organization’s ISMS
Decide which business areas are covered by the ISMS and which are out of scope
Consider additional security controls for business processes that are required to pass ISMS-protected information across the trust boundary
Inform stakeholders regarding scope of the ISMS
Establish an ISMS governing body
Build a governance team with management oversight
Incorporate key members of top management, e.g. senior leadership and executive management with responsibility for strategy and resource allocation
Conduct an inventory of information assets
Consider all assets where information is stored, processed, and accessible
- Record information assets: data and people
- Record physical assets: laptops, servers, and physical building locations
- Record intangible assets: intellectual property, brand, and reputation
Assign to each asset a classification and owner responsible for ensuring the asset is appropriately inventoried, classified, protected, and handled
Execute a risk assessment
Establish and document a risk-management framework to ensure consistency
Identify scenarios in which information, systems, or services could be compromised
Determine likelihood or frequency with which these scenarios could occur
Evaluate potential impact of each scenario on confidentiality, integrity, or availability of information, systems, and services
Rank risk scenarios based on overall risk to the organization’s objectives
Develop a risk register
Record and manage your organization’s risks
Summarize each identified risk
Indicate the impact and likelihood of each risk
Document a risk treatment plan
Design a response for each risk (Risk Treatment)
Assign an accountable owner to each identified risk
Assign risk mitigation activity owners
Establish target dates for completion of risk treatment activities
Complete the Statement of Applicability worksheet
Review 114 controls of Annex A of ISO 27001 standard
Select controls to address identified risks
Complete the Statement of Applicability listing all Annex A controls, justifying inclusion or exclusion of each control in the ISMS implementation
Continuously assess and manage risk
Build a framework for establishing, implementing, maintaining, and continually improving the ISMS
Include information or references to supporting documentation regarding:
- Information Security Objectives
- Leadership and Commitment
- Roles, Responsibilities, and Authorities
- Approach to Assessing and Treating Risk
- Control of Documented Information
- Communication
- Internal Audit
- Management Review
- Corrective Action and Continual Improvement
- Policy Violations
Assemble required documents and records
Review ISO 27001 Required Documents and Records list
Customize policy templates with organization-specific policies, process, and language
Establish employee training and awareness programs
Conduct regular trainings to ensure awareness of new policies and procedures
Define expectations for personnel regarding their role in ISMS maintenance
Train personnel on common threats facing your organization and how to respond
Establish disciplinary or sanctions policies or processes for personnel found out of compliance with information security requirements
Perform an internal audit
Allocate internal resources with necessary competencies who are independent of ISMS development and maintenance, or engage an independent third party
Verify conformance with requirements from Annex A deemed applicable in your ISMS's Statement of Applicability
Share internal audit results, including nonconformities, with the ISMS governing body and senior management
Address identified issues before proceeding with the external audit
Undergo external audit of ISMS to obtain ISO 27001 certification
Engage an independent ISO 27001 auditor
Conduct Stage 1 Audit consisting of an extensive documentation review; obtain feedback regarding readiness to move to Stage 2 Audit
Conduct Stage 2 Audit consisting of tests performed on the ISMS to ensure proper design, implementation, and ongoing functionality; evaluate fairness, suitability, and effective implementation and operation of controls
Address any nonconformities
Ensure that all requirements of the ISO 27001 standard are being addressed
Ensure org is following processes that it has specified and documented
Ensure org is upholding contractual requirements with third parties
Address specific nonconformities identified by the ISO 27001 auditor
Receive auditor’s formal validation following resolution of nonconformities
Conduct regular management reviews
Plan reviews at least once per year; consider a quarterly review cycle
Ensure the ISMS and its objectives continue to remain appropriate and effective
Ensure that senior management remains informed
Ensure adjustments to address risks or deficiencies can be promptly implemented
Calendar ISO 27001 audit schedule and surveillance audit schedules
Perform a full ISO 27001 audit once every three years
Prepare to perform surveillance audits in the second and third years of the Certification Cycle
Consider streamlining ISO 27001 certification with automation
Transform manual data collection and observation processes into automated and continuous system monitoring
Identify and close any gaps in ISMS implementation in a timely manner
Learn more about achieving ISO 27001 certification with Vanta
Book an ISO 27001 demo with Vanta
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Download NowDetermine which annual audits and assessments are required for your company
Perform a readiness assessment and evaluate your security against HIPAA requirements
Review the U.S. Dept of Health and Human Services Office for Civil Rights Audit Protocol
Conduct required HIPAA compliance audits and assessments
Perform and document ongoing technical and non-technical evaluations, internally or in partnership with a third-party security and compliance team like Vanta
Document your plans and put them into action
Document every step of building, implementing, and assessing your compliance program
Vanta’s automated compliance reporting can streamline planning and documentation
Appoint a security and compliance point person in your company
Designate an employee as your HIPAA Compliance Officer
Schedule annual HIPAA training for all employees
Distribute HIPAA policies and procedures and ensure staff read and attest to their review
Document employee trainings and other compliance activities
Thoroughly document employee training processes, activities, and attestations
Establish and communicate clear breach report processes
to all employees
Ensure that staff understand what constitutes a HIPAA breach, and how to report a breach
Implement systems to track security incidents, and to document and report all breaches
Institute an annual review process
Annually assess compliance activities against theHIPAA Rules and updates to HIPAA
Continuously assess and manage risk
Build a year-round risk management program and integrate continuous monitoring
Understand the ins and outs of HIPAA compliance— and the costs of noncompliance
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