Why is information governance important for your business? Find out what information governance is and the reasons you need to implement a strategy.
Why Information Governance Is Crucial for Regulatory Compliance
Businesses must operate in an increasingly litigious environment. Some industries are more highly regulated than ...
Businesses must operate in an increasingly litigious environment. Some industries are more highly regulated than others, but all companies must do business under some form of rules. These rules often have information governance provisions, including data privacy and protection. Data is a prized asset among corporations and hackers, so organizations must do everything possible to ensure compliance. The priceless value of data is why information governance is crucial for regulatory compliance.
Table of Contents
- Why Information Governance Is Crucial for Regulatory Compliance
- Understanding Information Governance
- The Risks of Non-Compliance
- Best Practices for Ensuring Information Governance
- The Role of Employee Training and Awareness
- The Benefits of Effective Information Governance
- Why Cloud Migration and Information Governance Is Crucial for Regulatory Compliance
Why Information Governance Is Crucial for Regulatory Compliance
Commerce generates a large volume of data that increases exponentially. This adds urgency to the importance of effectively managing this data. Information governance provides a strategic framework for doing just that. It dictates how organizations control, collect, use, store, and manipulate data.
Certain jurisdictions even regulate how organizations use that data to make decisions. For example, some states, such as California and Michigan, ban insurance companies from using credit scores as a determining factor for providing insurance or estimating premiums.
Implementing an effective information governance strategy is necessary to avoid non-compliance penalties and potential damage to a company's reputation. It also protects consumer data and reduces the success rate and boldness of cyber criminals.
Understanding Information Governance
Once you understand why information governance is crucial for regulatory compliance, IT systems become a top priority. Start with the basics and then seek additional knowledge relevant to your industry.
What Is Information Governance?
Information governance is a discipline that focuses on managing an organization's data assets consistently, competently, and securely. It involves processes and best practices for maintaining data integrity, confidentiality, and availability.
Key concepts include data quality, security, privacy, and lifecycle management. Effective information governance also ensures that data is reliable and available when needed, such as for eDiscovery requests.
Finally, it protects data from unauthorized manipulation, such as the deletion of accounting records, to hide fraud. Manipulating data leaves auditing breadcrumbs that IT can find.
What Is the Relationship Between Information Governance and Regulatory Compliance?
Regulatory compliance refers to an organization's adherence to applicable laws, regulations, guidelines, and specifications. Information governance is a critical component because it handles the IT security aspect of compliance and risk management.
Together, these procedures ensure that organizations understand their data assets, manage them effectively, and demonstrate compliance with relevant regulations. That understanding should be evident from top to bottom in the organization because everyone with access is a potential risk factor.
The Risks of Non-Compliance
Failing to implement an effective information governance strategy exposes organizations to significant risks and consequences:
- High fines from regulatory bodies
- Lawsuits from affected persons
- Bad press from media agencies
- Customer attrition
- Damaged public trust
- Increased attractiveness to cyber criminals
- Increased financial and market fear
Non-compliance with data regulations can result in severe financial penalties, with organizations facing millions or billions for violations. For example, the U.S. Securities and Exchange Commission levied multi-million-dollar fines against Scotia Capital USA and HSBC Securities for recordkeeping violations. Meanwhile, Amazon faces $746 million in fines for GDPR violations.
A data breach or failure to comply with regulations can publicly expose an organization's poor information governance practices. This can lead to losing the trust and confidence of stakeholders and partners, which is one of the top reasons why information governance is crucial for regulatory compliance.
Capital One faced significant embarrassment in 2019 when a researcher found the bank’s files for sale on the dark web. It exposed a breach that had gone undetected for some time. This resulted in a $190 million settlement to affected persons.
Best Practices for Ensuring Information Governance
To effectively implement information governance and achieve regulatory compliance, organizations should adopt these best practices.
Define Policies and Procedures
Establishing clear policies and procedures for information governance is the foundation of an effective strategy. Organizations must document their approach to data management, including data classification, retention, security, and disposal. Communicate these policies and procedures to all employees to ensure compliance and ongoing adherence to regulatory standards.
Leverage Technology and Automation
Organizations can optimize their data management practices by incorporating technology and automation into information governance processes. This can also reduce instances of human error. Leveraging technology enables organizations to adapt more quickly to the evolving regulatory landscape and protect their valuable data assets.
Solutions like data classification tools, encryption software, and automated retention policies help streamline information governance. Such tools make it much easier to monitor and manage data assets.
The Role of Employee Training and Awareness
Educating employees on the significance of information governance and regulatory compliance is essential for organizations looking to safeguard their data and uphold legal requirements. A well-informed workforce can contribute significantly to implementing an effective information governance strategy.
Developing and Implementing Training Programs
Creating effective training programs for employees begins with a needs analysis. Then, develop a curriculum that covers essential aspects of information governance:
- Data classification
- Data purging
- Consumer privacy
Incorporating practical examples and case studies can help employees understand why information governance is crucial for regulatory compliance. These cases also show the real-world implications of non-compliance. Regularly updating and revisiting training materials will ensure employees stay informed on the latest regulations and best practices.
Raising Awareness and Encouraging a Culture of Compliance
Promoting a culture of compliance within an organization involves more than just providing training. Encourage open communication about the importance of information governance and foster a sense of shared responsibility. This can help employees fully embrace the concept.
Management should lead by example, demonstrating their commitment to upholding compliance standards. Regularly recognizing and rewarding those exhibiting exemplary compliance behavior can reinforce the importance of information governance and regulatory adherence.
The Benefits of Effective Information Governance
Implementing a robust information governance strategy has numerous benefits for the data itself. When considering the cost of non-compliance, you see that it ultimately leads to cost savings as well.
Improved Data Quality and Accuracy
Organizations can reduce errors, inconsistencies, and redundancies by enforcing strict data entry, storage, and retrieval standards. This results in higher-quality data. Accurate, reliable data is the foundation for informed decision-making and facilitates compliance with regulatory requirements.
Increased Efficiency and Cost Savings
A well-structured information governance strategy can increase efficiency and cost savings. Streamlined processes, such as automated data classification and retention, save time and resources by reducing manual tasks. Proper data management helps organizations avoid costly fines resulting from non-compliance and minimizes the risk of expensive data breaches.
The enhanced data quality of effective information governance also enables organizations to make better, data-driven decisions. This approach to decision-making contributes to additional cost savings and business success.
Why Cloud Migration and Information Governance Is Crucial for Regulatory Compliance
Cloud migration is essential for modern organizations wanting to upgrade their information governance systems. However, this process also presents new challenges in maintaining information governance and adhering to regulatory compliance. As data moves to the cloud, organizations must have robust information governance strategies to ensure cyber criminals do not intercept that transfer and steal records.
Our experienced cloud migration specialists understand why information governance is crucial for regulatory compliance. We design our migration strategies with this in mind and take all necessary steps to protect your data. Experience a seamless cloud migration journey while maintaining strict information governance and regulatory compliance with Cloudficient's expert solutions. Contact us today to get a quote.