A compliance framework is a set of policies, procedures, and controls organizations implement to ensure they meet mandated regulations and standards. Such a framework can help them better understand and, therefore, address compliance obligations and identify and mitigate cybersecurity risks.

A compliance framework, also known as a “regulatory framework,” can be tailored to fit an organization’s specific needs, sector, or geography.

In cybersecurity, various frameworks exist to protect personally identifiable information (PII) across different industries. For example, the National Institute of Standards and Technology (NIST) created the Cybersecurity Framework (CSF). Financial, healthcare, e-commerce, and federal organizations often consider adherence to CSF a best practice. These entities may also follow other frameworks for other aspects of their operations.

Most cybersecurity frameworks have common elements and regulatory requirements and involve comprehensive risk assessments to identify and manage an organization’s compliance risks.

What Are the Components of a Compliance Framework?
What Are Common Compliance Frameworks?
How Does a Compliance Framework Benefit Organizations?
What Are the Steps in Creating a Compliance Framework?

Compliance Framework: A Deep Dive

What Are the Elements of a Compliance Framework?

The components of a regulatory framework vary depending on an organization’s specific needs, but they typically include the following:

Compliance Policies

These policies cover formal documents outlining an organization’s commitment to compliance and the guidelines it must follow to meet regulatory requirements. Organizational leaders typically set the compliance policies for all employees, with certain specifications often based on roles and seniority, with the intent to:

Clearly define applicable regulations or standards the organization must comply with
Provide guidance for processes and technologies to use in implementing a given policy
Outline an organization’s expectations and requirements for employees regarding compliance
List prohibited activities because they may violate certain regulations or standards
Define and update auditing methods and the frequency for monitoring the effectiveness of each policy

Compliance Plan

A key element of regulatory frameworks is the compliance plan. It is a detailed road map outlining specific actions and activities an organization and its employees should undertake to achieve and maintain compliance. A compliance plan aims to translate the high-level principles outlined in the compliance policy into actionable steps.

For instance, a compliance policy may dictate the need for a comprehensive asset inventory but the details on how to create it should be outlined in the compliance plan, which may look like this:

The IT department should document all connected devices, applications, infrastructure components, and cloud resources within the organization’s environment.
The security team should conduct weekly vulnerability scans to identify potential weaknesses and security vulnerabilities in the identified assets.
Based on the severity and potential impact of the vulnerabilities identified, the security team should prioritize and address the severest ones urgently.

In short, the plan details the internal controls that need to be implemented, including the processes, tools, and responsible employees or departments that will allow organizations to monitor and mitigate compliance risks.

Compliance Risk Management Program

Aside from creating a compliance policy and detailing its implementation through a plan, organizations should also develop a risk management and monitoring program.

This process involves identifying the dangers of noncompliance to applicable laws and standards. More than that, risk management also includes analyzing and addressing the potential risks to an organization’s systems, network, and data.

Compliance risk management begins with identifying all assets and their vulnerabilities. Organizations may employ attack surface management (ASM) platforms or vulnerability management tools to identify the potential attack entry points present in connected assets and systems to manage risks better and avoid noncompliance with applicable regulations.

Compliance Audit

A regulatory framework should be audited regularly to ensure it remains effective and is being implemented correctly. This process assesses if an organization is adhering to its compliance policies, procedures, and internal controls.

Independent entities typically conduct audits to avoid bias. Since the auditors have an outsider view, audits can help expose security weaknesses and gaps that may lead to noncompliance, allowing organizations to address risks immediately.

What Are Common Compliance Frameworks?

Bear in mind that the specific compliance frameworks applicable to an organization depend on its industry, location, and nature of operations. However, some common regulatory frameworks are widely adopted across various sectors.

General Data Protection Regulation (GDPR): This European Union (EU) regulation aims to give individuals in the EU and the European Economic Area (EEA) control over their personal data. Noncompliance may result in a penalty of up to €20 million or 4% of an organization’s global annual turnover, whichever is higher, along with public reprimands and potential civil lawsuits.

Payment Card Industry Data Security Standard (PCI-DSS): As an information security standard for organizations handling cardholder information, PCI-DSS aims to protect sensitive cardholder data from breaches through regulatory requirements that include access controls, data encryption, and vulnerability management. Penalties for noncompliance include fines of up to US$500,000 per incident.

Health Insurance Portability and Accountability Act of 1996 (HIPAA): HIPAA aims to secure the privacy and security of protected health information (PHI) in the U.S. Health professionals and organizations who violate this regulation may be levied with civil penalties of up to US$68,928 per violation, potential lawsuits, and criminal penalties that may include imprisonment.

NIST CSF: CSF is a voluntary framework developed by NIST to help organizations improve their cybersecurity posture. It provides a set of recommendations for identifying, protecting, detecting, responding to, and recovering from cyber attacks.

How Does a Compliance Framework Benefit Organizations?

Violating specific compliance requirements can be costly. It can lead to monetary penalties and reputational damage, to name a few consequences. However, organizations can minimize the risk of noncompliance by having a well-defined framework in place. Specifically, these are some of the benefits of a regulatory framework.

Reduced legal and financial risks: Adhering to regulatory requirements through a compliance framework allows organizations to significantly reduce the risk of legal actions, fines, and other financial penalties associated with noncompliance.

Improved risk management: Effective compliance programs help organizations identify, assess, and mitigate compliance risks.

Strong governance and brand reputation: A good framework demonstrates an entity’s commitment to ethical business practices, which can play a role in boosting its reputation and attracting investors and customers.

Improved efficiency: A regulatory framework can also contribute to operational efficiency, streamlining processes and reducing the risk of human error. Ultimately, its implementation can lead to cost savings and increased productivity.

What Are the Steps in Creating a Compliance Framework?

Here are the basic steps in creating a compliance framework.

Pinpoint all applicable laws, regulations, and industry standards to determine the scope of your framework.
Assess your current compliance posture. Identify gaps between your current practices and compliance requirements by assessing risks and finding vulnerabilities that can lead to noncompliance.
Develop and implement policies to address gaps. At this point, you must mitigate the vulnerabilities you discover that can put your systems at risk.
Monitor compliance by conducting regular audits to ensure your policies and procedures are adequately followed.
Review and update your compliance framework regularly. Laws and regulations change frequently, so it is vital to revisit your framework to ensure it remains up-to-date.

Keeping the steps above in mind when writing a regulatory framework will help your organization meet its legal and regulatory obligations.

Key Takeaways

A compliance or regulatory framework is a set of policies, procedures, and controls organizations put in place to ensure they meet all required regulations, laws, and standards.
It guides organizations in meeting their compliance obligations and helps them identify and mitigate risks.
Its components typically include risk assessment, policies and procedures, controls, training, auditing, communication, and management oversight.
Organizations can lessen the risk of noncompliance by having a well-defined framework in place.
These frameworks can help protect an organization from fines, penalties, and other sanctions, as well as boost its reputation and attract customers and investors.

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Compliance Framework

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