Concerns about risk and compliance used to be a serious obstacle to cloud adoption, with decision-makers worried about trusting someone else with their sensitive data. This seems like good governance, especially if you believe that on-premise systems are more secure than the cloud.

However, in recent years, opinion has shifted, and businesses now understand that the cloud can be just as secure as the server in your basement. In fact, when used correctly, cloud services can actually help to reduce risk and lower the regulatory burden.

Table of Contents

  1. The Difference Between Risk and Compliance

  2. 5 Questions About Your Current Approach to Risk and Compliance

  3. How Cloud Services Help Combat Risk and Compliance

  4. What Are the Drawbacks of Cloud Services?

  5. Risk, Compliance, and Xplenty

The Difference Between Risk and Compliance

Though both ultimately relate to data security, risk and compliance are not quite the same:

  • Compliance is mandated by state, federal, or even supranational authorities, in the form of laws like GDPR or HIPAA, or with oversight from bodies like the FTC. You can be audited to see if you meet compliance requirements, and non-compliance could result in severe penalties.
  • Risk management is what you do to protect your business data. You decide how you want to analyze and mitigate risk, and you decide how to deal with breaches. There are no official penalties for failure, but poor risk management could lead to loss of trust and business-killing damage to your reputation.

In summary: Compliance is an obligation; risk management is an aspiration. But they’re both ultimately about the same thing – keeping data safe.

5 Questions About Your Current Approach to Risk and Compliance

Risk and compliance is a high stakes game with heavy penalties for organizations that get it wrong. If you're responsible for data security, or if you're leading projects that may have risk and compliance implications, you need to ask these five questions.

1) What Kind of Data Are You Storing?

Your data warehouse likely contains a bewildering array of data, from website analytics to personnel records. For a successful risk and compliance strategy, you need to categorize that data and understand the related risk and compliance issues.

For example, customer data is bound by data protection laws, plus a contractual commitment to protect the client’s privacy, while medical information processing is subject to HIPAA rules.

2) How are You Accessing Data?

Data rarely sits still. Instead, it constantly flows from one database to another, either via an automated process or a user request.

To manage risk and compliance, you need to know everything about those data access processes. How many are happening on-premise? How many queries are run by remote workers, or systems based off-site? Is data being transferred over the cloud? Are systems sharing data via API calls or file exports? How is data secured in transit and at rest? These are fundamental questions in your risk and compliance strategy.

3) Where Does Your Data Travel?

Imagine one of your employees opens their laptop at home, logs into the Customer Relationship Management system, and checks a customer file. How did that data get from your CRM to their screen?

That journey is almost as important as its endpoints. The EU’s General Data Protection Regulation (GDPR) is a tough law that makes a distinction between data processor and a data controller. You, the business owner, are the data controller, with full responsibility for data safety. Everyone else, from the CRM provider to the employee’s broadband company, is a data processor with no compliance obligations. As the data controller, you are responsible for ensuring that you only use trustworthy processors.

This is also a vital element of risk management. You have to identify any potential weak spots in your security, especially when data is being handled by a third party.

4) What are the Local Compliance Requirements?

If you’re based in the US, you’ll have to comply with all relevant federal laws. This includes specific regulations such as HIPAA, as well as the FTC’s more general authority to punish mismanagement of personal data.

You may also need to comply with state regulations. New York has SHIELD, California has the CCPA, and other states are bringing their own legislation online. Some of these rules may apply if you’re dealing with customers in those states or using data processing services in other parts of the country.

5) What are the International Compliance Requirements?

Laws like GDPR apply to all data controllers, regardless of where you’re based in the world. That means that if you’re based in the US but you have customers in France or Germany, you need to ensure you’re GDPR compliant. International authorities have pursued foreign businesses in the past, such as Google, who were hit with a €50 million fine

How Cloud Services Can Help With Risk and Compliance

If you've identified risk and compliance issues with the questions above, you might need to look at a new approach to data. This is where secure cloud services can help, offering scalable solutions with the following features:

1) Software Updates

Cloud services don’t have to be updated regularly in the same way as on-premise systems. This means that you don’t have to worry about security-critical updates – all vulnerabilities are patched at the back end.

The best cloud services will also stay on top of compliance requirements. For example, if the government issues new regulations on financial reporting standards, most cloud-based financial tools will add the functionality required to meet the new rules. And if they don’t upgrade, then you can always move to a better cloud service.

2) Secure Remote Access

Almost two-thirds of employees work remotely some of the time, which introduces an additional element of risk for their employers. There are many other reasons why you might need to allow off-premise systems access, such as working with a consultant or integrating with a third-party service.

Cloud access helps to mitigate this risk by hiding sensitive data behind a secure API. Using an API means that your database is never exposed directly, and all API transactions are encrypted. Each API call is also logged in detail, providing an audit trail that helps you stay compliant.

3) Process Automation

Automated processes eliminate the risk associated with manual processes, such as human error or failure to adhere to data security protocols. Cloud services offer the ideal platform for secure process automation.

Automation can also help to eliminate a lot of the tedious, unproductive work associated with risk and compliance. For example, financial departments have a system of internal controls designed to reduce fraud, identify errors, and meet financial compliance requirements. These controls are expensive when done manually, but most of them can be automated to some extent. One report suggests that control automation can bring internal rates of return on investment of up to 250%.

4) Analytics

Cloud services allow you to perform complex analyses on massive sets of data. Analytics can help you identify things that may pose a risk, such as suspicious activity on your website. Potential risks can be flagged up and brought to the attention of a human operator, who can then investigate further.

Most major organizations now rely on analytics to detect all kinds of risk, from financial fraud to DDoS attacks. It’s almost impossible to do this kind of analysis with on-premise systems, especially when your business is scaling up.

5) Always-on Support

Some on-premise systems come with a limited support contract. Other systems might have been sold by vendors who are now out of business. Either way, it means that you can’t pick up the phone and ask for help if something goes wrong.

That’s rarely a concern with cloud services. You should always have a consistent level of support available, although the actual level of support on offer can vary according to your membership tier. If you’re using an enterprise-level solution, you should expect to have access to enterprise-level support whenever you need it.

What Are the Drawbacks of Using Cloud Services?

Switching to the cloud is not always guaranteed to be risk-free. There are some common problems, such as:

  • You won’t have the same level of access and transparency as with an on-premise system
  • The provider may not have adequate security protocols
  • The  provider may not understand your regulatory compliance obligations
  • The provider may outsource part of their service to a non-compliant third party
  • Your cloud service may not have adequate back-up plans, risking data loss

When you use an enterprise cloud service, you’re entering into a partnership with another company. As with any partnership, you need to make sure that you know them and trust them before you sign any deals. Have an in-depth conversation, ask the tough questions, and make sure you’re picking the right partner.

How Xplenty Helps with Risk and Compliance

Xplenty is one of the most well-known and trusted data integration platforms in the world. Businesses can rest easy, knowing that Xplenty offers:

  • Compliance with all major regulations, including GDPR, HIPAA, and CCPA
  • Regular upgrades by an elite team of engineers
  • SSL/TLS encryption with best-in-class network and physical security
  • ETL to eliminate unnecessary risk exposure
  • Integration with a wide range of analytics tools
  • Multichannel support from knowledgeable experts

These are just some of the reasons Xplenty is a trusted partner of so many businesses. Contact our team to schedule a demo and experience the Xplenty platform for yourself.