Organizations all over the world lose billions of dollars every year for non-compliance with regulatory standards. This will only continue to rise as data laws and regulations get tighter. However, the losses are not just limited to fines and penalties. Non-compliant businesses are also at serious risk of security breaches, loss of productivity, reputational damage and more.
The cost of non-compliance is estimated to be over three times higher than the cost of compliance. In fact, businesses lose about $4 million on average due to a single non-compliance event. Considering the impact of non-adherence, it would be wise to take it seriously and implement the required measures. Here is a summary of the consequences you are likely to face due to non-compliance.
Download our compliance checklist to guide you as you start your compliance program.
Businesses are required by law to adhere to privacy and data protection regulations to mitigate the risk of a security breach. Any failure will attract the following legal consequences.
- Fines and penalties: The regulatory bodies governing the privacy standards can impose fines and penalties on organizations for non-compliance. These fines may vary depending on the severity of non-compliance and the regulatory body governing the issue. For instance, GDPR fines can cost an organization up to 4% of its revenue.
- Lawsuits: When a data breach happens due to non-compliance, the repercussions aren’t limited to just fines and penalties. A data breach affects plenty of stakeholders including customers, employees, vendors, etc. There’s every chance these affected parties might decide to take legal action and file a lawsuit.
- Regulatory scrutiny: Recovering from a security breach that happened because of non-compliance is not an easy thing. Even after paying fines and penalties, businesses can be subjected to costly regulatory audits for years to come.
- Imprisonment: Regulatory standards dictate that organizations must take the necessary steps to protect the data of their customers. In the worst cases of non-compliance, business owners, directors and executives of an organization could also go to prison for criminal negligence.
The business consequences of non-compliance may not have actual monetary repercussions in many instances, but the damages can be quite far-reaching. Some of the common business consequences are as follows:
- Business disruption: As a part of its cascading effect, non-compliance can severely impact a business organization. Customers will not trust an organization that cannot maintain their data privacy and will more than likely defect to the competition. Moreover, the costs spent on fines, lawsuits, etc., will negatively affect an organization’s ability to make necessary business investments.
- Revenue loss: Non-compliance can force businesses to discontinue their operations temporarily. This can devastate a business as the overheads associated with maintaining a business while idle can be significantly high. This is why most organizations never recover after a major data breach incident.
- Security breaches: Any security breaches resulting from non-compliance might lead to loss of critical business data. Cybercriminals often make money by selling this data. This is not something that businesses can afford while dealing with other aspects of non-compliance.
- Damaged brand reputation: As the public gets wind of non-compliance issues or security breach incidents, the reputation of the organization in question could take a permanent hit. Customers will lose confidence in the company and it could take a long time before the business restores its reputation to its former glory.
Road to Compliance
Compliance typically starts with developing the right policies that govern data and other security measures. By incorporating these controls, you can mitigate various risks to your IT infrastructure. Also, compliance is not a one-and-done job. Organizations need to constantly review the regulatory standards governing their business and fill the gaps in compliance adherence.
With a strong commitment to compliance, you can not only prevent fines and penalties but also boost the overall security posture of your organization.
How IT Glue Can Help?
As a leading cloud-based software company, we understand the importance of information security. IT Glue helps secure your world with our SOC 2-compliant documentation platform that features an immutable audit trail, multi-factor authentication and next-generation password management engine — all of which are fully integrated and linked with all your documentation.
Check out our Quick Start Guide to Data Privacy and Compliance eBook for an overview of the steps you need to take to ensure your business adheres to data privacy compliance policies.
To see how IT Glue can protect you from the consequences of non-compliance request your free demo today!
Found this article helpful? Share it with your social network using the icons below.