Most businesses, healthcare companies, and educational institutions are governed by a handful of data privacy regulations, like the GDPR, HIPAA, and FERPA. However, these are frameworks that determine what must be protected, often leaving it up to individual organizations to figure out implementation. At first glance, it seems easy to meet the requirements, but in practice, it’s not so simple.
For example, it’s not enough to restrict access and monitor for potential threats – data isn’t truly secure unless it’s encrypted end-to-end. However, end-to-end encryption isn’t a requirement, and that’s the dilemma many companies face. They have to decide whether or not to go the extra mile or stick with the bare minimum. The problem is that the minimum is never enough in light of an incident.
Minimum protection is insufficient
Minimum efforts – like access control – only offer surface-level protection. Hackers frequently bypass basic security protocols by exploiting vulnerabilities in the database or applications that connect to the database. Multi-factor authentication and restricted credentials won’t prevent this from happening.
With minimal security measures, you’re risking a lot. The more information you store, the bigger the penalty will be after an incident. That’s why some companies end up with million-dollar regulatory fines for a single incident. Each compromised record racks up a separate fine.
When you look at the requirements under HIPAA, for example, you’ll find that protected information includes medical conditions and treatments along with basic information like payment information, names, dates of birth, phone numbers, and even handwriting and photos. That’s a lot of information to protect. Still, many healthcare companies choose not to encrypt patient data on their servers. Encryption isn’t a legal requirement, but it’s the only way to avoid penalties after a breach, and companies that skip encryption pay the price.
You’re responsible for the software you use
If you use third-party applications to store and manage data, you’re responsible for the security of those applications, so you’ll probably need to spend a little more money on the right services. If someone exploits a vulnerability in the software, the legal responsibility for the aftermath will fall on you even if the software developer promised you iron-clad cybersecurity.
This is why many companies seek out industry software that complies with strict voluntary security frameworks. For example, fleet managers use SOC-2 compliant software because these applications have been certified by expert auditors. Many software vendors make claims about security, but few actually live up to those claims. Independent verification is the only way to separate hype from effective security.
Since you can’t control your third-party applications, using software that adheres to high standards and has been vetted by security experts is the only way to avoid using vulnerable applications made by careless vendors who just want your money.
Regulatory fines can put you out of business
The law doesn’t distinguish between a company that accidentally leaks customer data and one that was forcibly hacked. When data is compromised, you’re subject to regulatory penalties that can include hefty fines and jail time in extreme cases. Many companies struggle to stay in business because they incur substantial costs beyond immediate fines. For example, there are legal fees, forensic investigations, and sometimes mandatory credit monitoring services for affected customers. These expenses can reach millions of dollars and hinder the ability to recover fully.
You’ll adapt to new regulations faster
When you take the time to exceed current regulatory requirements, you’ll be in a better position to adapt to new laws as regulations evolve and new regulations are put into place. For example, businesses who were already on board with tight data protection protocols didn’t struggle to comply with GDPR in 2018, and were in an even better position to comply with CCPA.
Going the extra mile can make you a leader
While the main point is to safeguard customer data, regulatory compliance is ultimately a trust issue. Customers expect businesses to keep their information safe and when that trust is violated through a data breach, they’ll go somewhere else even if no harm is done.
Businesses that go the extra mile to secure customer data are seen as more reliable, trustworthy, and get the lion’s share of business in their market. If you have a choice between meeting basic requirements to get by, or over-delivering to secure your customers’ data, choosing the latter will help you build a brand that customers know they can trust.
Founder Dinis Guarda
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