Compliance Framework

A compliance framework is a set of policies, procedures, and controls that 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 share common elements and regulatory requirements, and they involve comprehensive risk assessments to identify and manage an organization’s compliance risks.

Table of Contents

• What Are the Key Elements of a Compliance Framework?
• What Are Common Compliance Frameworks?
• How To Implement a Compliance Framework
• Why Are Compliance Frameworks Important For an Organization?
• What Are the Consequences of Non-Compliance?
• Key Takeaways

Compliance Framework: A Deep Dive

What Are the Key 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 and Procedures

This element forms the foundation of the entire framework. Compliance policies are the formal, high-level documents that outline the organization’s commitment to compliance and the guidelines it must follow to meet regulatory requirements.  Procedures are the detailed, step-by-step instructions that explain how employees and departments must meet those policy objectives.

Organizational leaders typically set these documents for all employees, with specific details tailored by roles and seniority, with the intent to:

• Clearly define applicable regulations or standards that the organization must comply with
• Guide 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 specific regulations or standards
• Define and update auditing methods and the frequency for monitoring the effectiveness of each policy

Compliance Plan and Control Implementation

A key element of regulatory frameworks is the compliance plan. It is a detailed roadmap outlining specific actions and activities that an organization and its employees should undertake to achieve and maintain compliance. A compliance plan translates 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 compliance 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 with 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.

Training and Awareness

Compliance replies on people, making this one of the most vital  of any framework. A robust one must ensure that all employees understand the importance of compliance for the organization, as well as their roles and responsibilities. This element involves:

• Regular training sessions on key policies, procedures, and regulatory changes.
• Targeted awareness campaigns to reinforce a strong culture of compliance.
• Mandatory policy acknowledgment tracking to ensure documentation that employees have read and understood the rules that apply to them.

Compliance Monitoring and Auditing

A regulatory framework must be continuously checked to ensure it remains effective and is being implemented correctly. Monitoring is the continuous process of tracking compliance controls and activities in real-time, allowing for immediate course correction. Auditing is the periodic, formal assessment of the framework.

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. 

Reporting and Documentation

This element is essential for proving compliance to management, stakeholders, and external regulators. It ensures that the organization maintains detailed records of all compliance activities, risk findings, control effectiveness, and incidents.

Documentation serves as evidence of compliance and is critical for management review and successfully passing external audits.

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.

Key regulatory requirements:

• Data collected must be accurate, limited to its purpose, and held only as long as necessary.
• Organizations must facilitate fundamental rights for data subjects, including the right of access, the right to be forgotten, and the right to be informed.
• Organizations must maintain documented proof of compliance.
• Privacy by Design and Privacy by Default, meaning privacy and data protection measures must be built into systems from the start.
• Data breaches must be reported to the Supervisory Authority within 72 hours of discovery, where there is a risk to individuals’ rights and freedoms.

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. Payment card brands can impose penalties on banks for noncompliance, including fines of up to US$500,000 per incident.

Key regulatory requirements:

• Build and maintain a secure network.
• Protect stored cardholder data (e.g., limit retention, use strong encryption/tokenization, never store sensitive authentication data).
• Maintain a vulnerability management program.
• Implement strong access control.
• Regularly monitor and test networks, systems, and processes.

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 that 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.

Key regulatory requirements:

• Privacy rule: Sets national standards for the protection of certain health information.
• Security rule: Requires technical, non-technical, and physical safeguards to protect PHI.
• Breach notification rule: Requires covered entities and business associates to provide notification following a breach of unsecured PHI.
• Transactions and code sets rule: Establishes standards for electronic health care transactions.

NIST Cybersecurity Framework (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. In February 2024, NIST CSF 2.0 was released, replacing the first version.

Key regulatory requirements:

• Govern: Define roles and responsibilities, communicate policies, make risk-based decisions, and manage supply chain risk.
• Identify: Understand the cybersecurity risk to the organization’s systems, assets, data, and capabilities.
• Protect: Ensure the delivery of critical infrastructure services.
• Detect: Identify cybersecurity incidents promptly.
• Respond: Create a detailed remediation plan.
• Recover: Develop and implement plans to build resilience and restore capabilities or services disrupted by a cybersecurity incident.

Service Organization Control 2 (SOC 2)

SOC 2 is a voluntary compliance standard for service organizations developed by the American Institute of Certified Public Accountants (AICPA). It dictates how companies manage customer data based on five Trust Services Criteria — Security, Availability, Processing Integrity, Confidentiality, and Privacy.

SOC 2 results in a third-party audit report that organizations can use to assure customers and regulators that they maintain a high level of information security.

Key regulatory requirements:

• Security: Implement a robust, multi-layered security posture across the organization to protect all resources. This includes restricting access to physical and digital assets, establishing controls to continuously monitor operations, preventing unauthorized changes to IT systems, and mitigating risks. 
• Availability: Maintain reliable network and system uptime that consistently meets the standards outlined in Service Level Agreements (SLAs).
• Processing Integrity: Secure all processes and transactions through their entire lifecycle, including strong protection during encryption, transmission, hosting, and storage.
• Confidentiality: Apply strict restrictions on data access and document and establish clear procedures for handling sensitive information like Personally Identifiable Information (PII) and Protected Health Information (PHI).
• Privacy: Make sure that transparent terms and procedures govern the entire lifecycle of customer data, from its collection and storage to its use and sharing.

ISO 27001

ISO 27001 is an international standard that specifies the requirements for establishing, implementing, maintaining, and continually improving an Information Security Management System (ISMS). It helps organizations manage their information security risks by adopting a systematic and risk-based approach to security.

Key regulatory requirements:

• Establish, implement, maintain, and continually improve an ISMS.
• Conduct an information security risk assessment and subsequent risk treatment.
• Define the scope of the ISMS and an Information Security Policy.
• Implement the security controls outlined in Annex A (e.g., access control, cryptography, incident management) in accordance with the risk treatment plan.

California Consumer Protection Act (CCPA)

The CCPA empowers California consumers to exercise rights over their personal information collected by businesses that meet certain revenue or data-processing thresholds. Noncompliance can result in significant statutory damages and fines of $2,663 for each unintentional violation or $7,988 for each intentional violation.

Key regulatory requirements:

• Provide consumers the right to know what personal information is collected and how it’s used.
• Provide the right to delete personal information (with exceptions).
• Provide the right to opt out of the sale or sharing of personal information.
• Implement a Notice at Collection and a comprehensive Privacy Policy disclosure.

Federal Information Security Management Act (FISMA)

FISMA is a U.S. federal law requiring federal agencies and their contractors to develop, document, and implement an agency-wide information security program. Using a risk-based approach, it mandates security controls for information systems supporting government operations and assets, primarily based on NIST standards.

Key regulatory requirements:

• Categorize information systems based on risk impact (low, moderate, high).
• Develop a System Security Plan (SSP).
• Implement an appropriate set of security controls from NIST SP 800-53.
• Conduct regular risk assessments and maintain a continuous monitoring program.

Basel III Operational Risk Framework

Basel III, developed by the Basel Committee on Banking Supervision, is an international regulatory framework for banks focused on strengthening bank capital requirements, liquidity, and risk management. The operational risk component standardizes how internationally active banks calculate and hold capital against potential losses from operational failures—including those arising from cybersecurity incidents and technology disruptions.

Key regulatory requirements:

• Calculate operational risk capital using the Standardized Measurement Approach (SMA).
• Banks must manage operational risk resulting from inadequate or failed internal processes, people, and systems, or from external events—explicitly including cyber and information security risks..
• Collect and use internal loss data for a minimum of ten years to help set the capital requirement (Internal Loss Multiplier).

FDA Cybersecurity in Medical Devices

The FDA recently issued a cybersecurity guideline requiring that medical devices be designed and maintained with a lifecycle approach to cybersecurity to protect patient safety and device functionality. This guidance requires manufacturers to integrate security risk management throughout the product’s development and postmarket maintenance.

Key regulatory requirements:

• Establish and maintain a Secure Product Development Framework (SPDF).
• Conduct cybersecurity risk assessments and threat modeling.
• Provide a Software Bill of Materials (SBOM) to users.
• Implement security controls to address risks, such as secure authentication and protection against unauthorized access.

Federal Risk and Authorization Management Program (FedRAMP)

FedRAMP is a U.S. government-wide program providing a standardized approach to security assessment, authorization, and continuous monitoring for cloud service offerings. It enables the “assess once, use many” model, ensuring that the cloud service providers of federal agencies meet stringent security requirements aligned with NIST guidelines.

Key regulatory requirements:

• Achieve an Authority to Operate (ATO) from a federal agency or a Provisional ATO (P-ATO) from the Joint Authorization Board (JAB).
• Complete a System Security Plan (SSP) demonstrating implementation of NIST SP 800-53 controls.
• Undergo a security assessment by a Third-Party Assessment Organization (3PAO).
• Implement a rigorous continuous monitoring strategy.

ISA/IEC 62443

ISA/IEC 62443 is a series of international standards for the security of Industrial Automation and Control Systems (IACS), also known as Operational Technology (OT). It provides a structured, risk-based framework for all stakeholders (asset owners, integrators, and product suppliers) to secure IACS against evolving cyber threats.

Key regulatory requirements:

• Use a risk-based approach to determine target security levels.
• Implement security zones and conduits for segmentation.
• Address foundational requirements for all components, including access control, data confidentiality, and system integrity.
• Establish processes for secure product development and patch management.

How To Implement a Compliance Framework

We outline below five key steps in implementing a compliance framework.

Choosing the Right Compliance Framework

The first and most critical step is to select the appropriate framework(s) for the organization, a decision that depends on the type of data, the industry, and strategic goals. The table below shows the factors that affect the choice of framework.

In many cases, more than one framework may apply. For example, if a company collects personal data of EU residents and processes payment card data, it must comply with both PCI-DSS and GDPR.

Planning and Control Mapping

Once the framework is chosen, this phase defines the scope (i.e., systems, applications, departments, and geographic locations to be included) and identifies the precise mandates the organization must meet. 

It also involves identifying the specific security and process controls mandated by the framework and cross-referencing them with existing controls. 

Risk Assessment and Gap Analysis

The goal of this phase is to determine the difference between the organization’s current operational state and a fully compliant state. The first step is to conduct a risk assessment, which involves creating an asset inventory, scanning it for threats and vulnerabilities, and assessing the risk levels posed by the detected issues. 

Organizations can then compare the risk assessment findings and their current security policies against the framework’s mandated controls. This reveals the specific, actionable areas (gaps) that require remediation to achieve compliance.

Remediation and Control Implementation

This is the execution phase, during which organizations actively close the compliance gaps identified in the previous step. This involves the following steps:

• Develop a remediation plan: Create a detailed plan that prioritizes fixing the highest-risk gaps first. The plan should include specific tasks, responsible owners, and deadlines.
• Implement controls: Deploy the necessary technical controls, such as installing new security tools, implementing encryption, strengthening network segmentation, or applying configuration changes. This also includes organizational changes, such as drafting and approving new security policies, updating employee training, or establishing formal vendor management procedures.
• Document everything: Maintain formal documentation for all new or updated policies, procedures, and evidence that the controls are operating effectively. This evidence is crucial for the final audit.
• Assign ownership: For every implemented control and system, assign a clear owner who is responsible for its ongoing operation and maintenance. 

It’s worth noting that compliance is a continuous commitment, not a one-time project. After implementation, organizations must ensure that they continuously comply with the framework requirements. 

Why Are Compliance Frameworks Important For an Organization?

Violating specific compliance requirements can be costly, as 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. Compliance frameworks are essential for organizations because they provide a structured, systematic approach to meeting legal, regulatory, and industry-specific requirements. Specifically, it helps organizations:

• Minimize 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.
• Improve risk management: Effective compliance programs help organizations identify, assess, and mitigate compliance risks. Continuously mapping controls to regulatory requirements gives companies a clear view of their vulnerabilities, enabling them to prioritize mitigation efforts based on actual exposure.
• Achieve strong governance and brand reputation: A good framework demonstrates an entity’s commitment to ethical business practices, which can help boost its reputation and attract investors and customers.
• Streamline operational efficiency: A regulatory framework can also contribute to operational efficiency by mandating clear and documented processes that streamline processes and reduce the risk of human error. Ultimately, its implementation can lead to cost savings and increased productivity.

What Are the Consequences of Non-Compliance?

The consequences of non-compliance with regulatory and industry frameworks can be severe, and they may have ripple effects. For example, a data breach resulting from non-adherence to the PCI-DSS standard immediately triggers an investigation by the card brands, potentially leading to the revocation of the company’s ability to process credit cards, which, in turn, causes a loss of customer trust and a significant drop in stock price. 

From that sample scenario alone, we can pinpoint several consequences — financial, operational, and reputational.

Key Takeaways

• A compliance or regulatory framework is a set of policies, procedures, and controls that 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 include policies and procedures, compliance plan, control implementation, risk management, training, monitoring, and auditing.
• Compliance helps organizations minimize legal and financial risks, improve risk management, achieve strong governance and brand reputation, and streamline operational efficiency.
• These frameworks can help protect an organization from fines, penalties, and other sanctions, as well as boost its reputation and attract customers and investors.
• Choosing the right compliance framework depends on factors such as data type, industry, customer requirements, and organizational goals.

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