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Data Compliance: What It Is and Why You Should Care


February, 2020

by Arnab Roy Chowdhury

Do you remember what Uncle Ben said to young Peter Parker? “With great power comes great responsibility.” The same applies to companies. At present, businesses hold a huge amount of data—not only the data of a company but also of employees and customers.

Many recent incidents show how a company’s reputation gets damaged if they misuse data. You all remember the Facebook incident, right? That incident and many others made companies aware that they need to follow data compliance rules, not only to prevent fines but to prevent data breaches and misuse as well.

In this post, we’ll explore what data compliance is and who should care about it. Finally, we’ll look at why companies should care about data compliance. So, buckle up your seat belt, and let’s start the journey.


What Is Data Compliance?

If you work in a company, you may have often heard the buzzword “compliance.” In layman’s terms, compliance is a rule or a set of rules that you have to follow. Failing to follow these rules may lead to penalties or even get you fired.

Now let’s talk about data compliance. We all know that data is of huge importance. Companies have to take a lot of security measures to keep their employees’ and customers’ data safe. Data compliance is a set of rules and regulations every company must follow. Usually, data compliance rules cover five areas: audit, controls, accreditation confirmation, regulatory, and legal compliance. These rules ensure that a company keeps data safe and secure.

By following the compliance rules, a company is bound to have security measures. These security measures will prevent any kind of data loss or breaches. If your business is local, you must follow the data compliance rules of your country. But if your company operates worldwide, you must also follow the compliance rules of other countries. For instance, if your company works in Europe, you must follow GDPR.

Now that we know what data compliance is, let’s talk about who should care about it.

To Whom Does Data Compliance Really Matter?

Usually, any company that collects and uses a customer’s data for their business must care about data compliance rules. A company should be more concerned if they’re vulnerable to data privacy risks. According to a document compiled by Pillsbury, the following types of companies have a greater risk of data breaches:

  • Companies belonging to the financial domain, like banks, insurance, and credit card companies.
  • Marketing and retail companies.
  • E-commerce and social networking sites.
  • Universities and colleges.
  • Government agencies, like census and voter registries.

The categories mentioned above store a customer’s personal as well as financial details. The information they store is of high value. No matter how strong their firewall is, hackers are always lurking around. Data compliance rules ensure that companies take all the steps needed to keep data safe.

But do these rules only keep your data safe, or is there a bigger picture? Let’s discuss why you should care about data compliance in the next section.

Why Should You Care About Data Compliance?

We all know that failing to comply with data compliance laws will lead to your company facing fines and lawsuits. You may be surprised to know that there’s a bigger picture. Caring about data compliance is of huge benefit to your company. It’s not about just avoiding fines. Let’s find out why you must care about data compliance.

To Protect Your Reputation

At the present, companies collect a great deal of information from customers. For example, an e-commerce company like Amazon stores the customer’s address, contact information, credit card details, etc. The thing that affects a company’s reputation is how they handle the customer’s private data. With data privacy laws like GDPR, a company’s reputation is on the line.

Suppose your company fails to comply with data privacy laws. As a result, you may lose potential scopes of partnership. In the worst case, you may suffer a huge loss in business. Moreover, your customers will stop trusting you. They won’t think before shifting their accounts to your competitor. Think about this from the perspective of a customer. Suppose you get a slight hint that your address and credit card details aren’t safe with a shopping portal. At this point in time, would you purchase anything from their site?

To Respect the Law

Why should you care about data compliance? Well, the most important reason is you don’t have any choice. You have to care about data compliance. Data privacy laws now exist in many countries. These laws state that some information isn’t meant for others to access. If your company stores such information, you’re solely responsible for protecting that information.

Data compliance laws also state how you should store, transfer, and handle a user’s personal information. If you don’t comply with those laws, as mentioned in the last section, it will result in loss of business and a bad reputation. What’s more, you may face a federal lawsuit.

To Protect Your Company from Breaches

Have you ever thought about why data compliance laws came into existence? Data breaches are a major reason. Not to mention, there are multiple data breach incidents and cyberthreats on the rise. So, people had to come up with something to keep their data safe. Data compliance laws ensure that the chance of breaches is lessened if a company follows these laws.

Let’s look at an example. Data compliance laws state that the data your company stores should have strong encryption and security solutions. What if you don’t have that? Any midlevel hacker can break into the virtual data vault and access your valuable data. Consequently, you’ll face civil lawsuits and penalties. You don’t want that for your business, do you?

To Grow Your Business

Since the Edward Snowden incident, people have started to think about how companies collect and use their data. A report published by Pew states that 90% of customers prefer to control the information that companies collect from them. If your company takes data compliance laws seriously, people will trust you and your business will grow.

For example, suppose you want to install an image editing app for Android. You found two apps. The first app asks for permission to access your phone’s camera and gallery. The terms and conditions of that app explain why the app needs access. On the other hand, another app asks for permission to access your contacts as well—without any clear details about what they need the contacts for. Which app will you trust? Obviously, the one that provides clarity about the data they need and the reason behind it. The business of the first app will grow much more than that of the second one.

To Support Innovation in Your Company

You might think that following new security and privacy rules in your new software conflicts with innovation. But this is a myth. Data compliance actually promotes innovation. Think of it in this way. Your developers will now have to think of a way to make your app work while complying with data privacy rules.

For instance, we all know that data privacy rules like GDPR don’t allow testers to use a real user’s data. This led to the invention of API mocking tools and random data generators. These tools create mock data that resembles the data of a real user—thus leading to a smooth test case execution. So, supporting data compliance laws will lead your employees to think outside of the box. As a result, they’ll discover new solutions for getting the job done.

To Save Your Company from Penalties

You don’t want your company to suffer a huge monetary loss, do you? As per data compliance and privacy loss, if your company doesn’t implement the required guidelines, you may face huge fines. The amount of the fine may lead to the loss of millions of dollars or even more. The amount may be greater if GDPR is in play.

You may have heard about Rite Aid Corporation. They agreed to pay a million dollars to settle a privacy case since they violated HIPAA rules. Additional penalties are in place for 20 years. If you’re a growing company, this kind of incident may lead to bankruptcy. Care about data compliance laws to ensure that these kinds of unforeseen events never happen.

Stay Ahead of Competition by Following Data Compliance Regulations

A survey carried out in 2017 found that people had a lot of worry about online privacy and security risks. A major percentage of them chose not to do any online shopping or other activities. This is because they worried that their data may get misused.

Show your customers that your company follows data compliance rules and guidelines. You can either conduct webinars or publish a blog or video on your site. Demonstrate how your company handles the customer’s data. Once people see that you care about their data’s privacy, they’ll trust you more. Let’s think back to our earlier example. As a customer, who would you trust more? A company that provides clarity regarding how they use your data or a company that doesn’t?

So, start caring about data compliance. Follow all the rules, use a data compliance suite, and take appropriate measures to stay ahead of your competitors. Take a look at this case study if you want to know how Enov8’s Data Compliance Suite helped a large financial institution.

Arnab Roy Chowdhury

This post was written by Arnab Roy Chowdhury. Arnab is a UI developer by profession and a blogging enthusiast. He has strong expertise in the latest UI/UX trends, project methodologies, testing, and scripting.

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