Despite what detractors say, regulations are in place for good reason. They typically protect individuals from organizational malfeasance. Many of these regulations are actual laws passed by a governing body and cover the entire spectrum of the issue, not just the data involved. The ones that have data protection regulations written into them mostly deal with the handling and protection of sensitive information. For organizations that work in industries covered by these regulations there are very visible costs that go into compliance. Today, we look at the costs incurred by these organizations as a result of these regulations, and how to ascertain how they affect your business.
Today’s world is driven by data. As a result, information systems have to be secured. That really is the bottom line. Business is all about relationships and without proper security protocols in place, there are some very serious situations that could completely decimate the relationships you’ve worked so hard to forge. While today’s hackers have a lot of different ways to breach an organization’s network, data breaches that occur as a result of lax security are unforgivable from a customer standpoint. Some organizations can spend more on security than others, but it with the landscape as it is today, it has to be a priority, no matter your IT budget.
Here are some of the regulations all business owners and IT administrators should know:
- GDPR: The European Union’s General Data Protection Regulation is as comprehensive a data protection law as there is. Its aim is to protect the citizens of EU-member countries from data breaches. The GDPR applies to every organization that processes personal information of people residing in the EU.
- GPG13: Known as the Good Practice Guide 13, it is the U.K.’s general data protection regulation for organizations that do business in the U.K.
- HIPAA: The Health Insurance Portability and Accountability Act puts several guidelines on how patients’ data is shared and disseminated by insurers and health maintenance organizations.
- SOx - The Sarbanes-Oxley Act requires corporate records to be kept for seven years to ensure that there is transparency in the accounting. For IT this means being able to have access to data to run reports when called upon.
- PCI-DSS - Payment Card Index Data Security Standard are regulations enacted to try and reduce fraud by protecting an individual’s credit card information.
That’s just a few of the regulations business owners and IT administrators have to be cognizant of. For business owners there are several more, like the federal and state tax codes, and the adherence to the Affordable Care Act. All these regulations seem pretty straightforward and necessary until you begin to roll them out for your business. Then they just get expensive. In the first-ever Small Business Regulations Survey conducted by the National Small Business Association, the numbers reported, although not comprehensive by any means, weren’t pretty. To put it frankly, the cost to the small businesses that reported, would sink as many or more new businesses.
“The average small-business owner is spending at least $12,000 every year dealing with regulations,” NSBA President Todd McCracken said, “This has real-world implications: more than half of small businesses have held off on hiring a new employee due to regulatory burdens.” The report goes on to state that the average regulatory costs to start a new business venture add up to a whopping $83,019. These figures don’t take in to account the dozens of man hours each year spent on these very complex problems. It should be stated that the NSBA has been a long-standing advocate of reducing regulations on small businesses.
Regulators are paid to be skeptical, but overall they are put in place for a purpose, as oversight to ensure sustained adherence to data protection laws. How much can they demand from a small business? The question begs for analysis, as to listen to entrepreneurs talk about them regulations are unnecessary, but as stated before, these regulations aren’t just implemented willy-nilly. They have empirical evidence of immoral or unethical wrongdoing attached to them. Moreover, it becomes clear that the financial pain these entrepreneurs are in is indefinite, which means that it is highly debatable. The truth is that each scenario needs to be seen in perspective in order to understand just how much certain regulations are costing a business.
One thing is certain: that the average small business pays more for their regulatory compliance programs than larger businesses in the same market do. That disparity is a main point of contention for many small business owners, as it directly affects a company's ability to compete. Some studies have seen organizations that have less than 20 employees charged nearly 60 percent more than slightly larger businesses. Getting into which regulations are onerous and which are necessary would take an examination of each one in detail, so it’s worth it to repeat that these regulations were bred out of situations where individuals were hurt, making them an important part of the oversight process.
To Comply or Not To Comply? That Is the Question
Small business owners who have been reprimanded or fined as a result of a lack of regulatory awareness have a tendency to get the message, but if an organization is notoriously noncompliant and has slipped past regulators, there is a tendency for them to stay the course; and, that course is filled with nothing good. Many european and multinational corporations are expecting to invest $1 million toward their GDPR compliance. Obviously this figure, despite being higher per user, will be substantially lower for small and mid-sized businesses. The cost, however, remains significant, and while an organization could probably get around it for a bit, when it hits, it could just sink the whole business.
According to Infosecurity Magazine, the average cost of compliance with GDPR is costing enterprises and average of $5.5 million, which comes in about a third of the estimate cost of noncompliance, $14.82 million. That’s a lot of cheddar. It stands to reason that if you are going to spend upwards of 10 percent of your yearly IT budget on ensuring your organization is compliant, that you meet the criteria under the regulation. The best way to do that is by finding affordable solutions that won’t take as big of a chunk out of your operational budget every year.
More than the capital, a business that doesn’t adhere to simple IT regulations probably isn’t adhering to other regulations. Would you want to do business with someone that you know won’t do what’s asked of them to protect YOUR data? Unreputable businesses that are looking to gain an edge by not meeting regulations will pay later for not spending now, end of story.
Compliance and Your Business
Finally, we get to your business. How are you going to plan for your compliance burden? The best way is to educate yourself on what exactly your business needs to plan for by looking at the regulatory mandates, sure, but more often seeking out organizations who have already insulated themself from the risks associated from noncompliance. This is where a managed IT service provider (MSP) can be a godsend. Since we take security compliance extremely seriously, and deal with multiple businesses that represent several vertical markets, we have the perspective that can provide a clear strategy on how to avoid problems staying compliant.
Moreover, MSPs like Hexafusion use extremely sophisticated monitoring, management, and reporting software to reduce risk and put our clients in the best position to prepare for any audits or assessments that need to be completed by regulators. Since the regulatory landscape is constantly changing, our IT professionals are in a unique position to serve as both IT administrator and regulatory consultant.
If you are searching for a way to control your compliance situation, look no further than the IT professionals at Hexafusion. We can deploy our strategies made up from tried and true industry best practices to virtually eliminate any risk your organization would have as a result of compliance concerns. Call us at 604-679-2223 today to get started.