05 May 2020
Why data compliance is so expensive
Our world is becoming more digitised every year. The amount of data is growing, and it is regarded not only as information, but also as a precious commodity. The battle for acquiring correct data, numbers and statistics is ongoing, as it provides organisations with invaluable insights into their own operations, along with information to outrace the competition. However, such success comes with a price tag. There are a variety of factors that determine the final expenses when it comes to gathering data, but where the market stands now creates a situation of a potentially high threshold for new participants. What can we do about it?
Enterprises aren't ready for rising costs
Compliance maintenance is a subject of severe issues and expenditures, which often go over the top.
One Paonemon Institute study – which was based on more than 50 multinational organisations and stakeholder insights – found out that the average cost of compliance for companies is estimated at $7.93 million AUD – a 43 percent increase from a previous version of the study conducted back in 2011
"The average cost of compliance for those companies is estimated at $7.93 million AUD."
On average, non-compliance costs have reached $21.5 million AUD, which is 2.71 times more than the cost of compliance: a 45 percent increase since 2011. With such numbers in mind, one logical question should be asked every time: Can your business afford such spending?
With the growing and continuing demand for various data use, the frequency rate of data movement also increases. When the river is becoming wider, the lost ships are harder to find – this means data is becoming more vulnerable to lose and steal.
New and enhanced data protection regulations are developed to prevent data leaks, but the more regulations step in, the more complex it all becomes. Businesses worldwide are challenged not only to launch their operation, but to evaluate if they have the proper budget to implement decent compliance measures. However, an increasing number of threats, the permanent need to protect valuable data and the need to reduce long-term perils caused by non-compliance are driving implementation.
So why are KYC solutions so expensive in the first place? Data protection regulations often include a number of requirements that can be costly and complicated to follow. And there are more than a few steps to take to ensure that you're in the clear:
- Your company requires licensing
- A need to comply with the General Data Protection Regulation (GDPR)
- Requirements which require implement AI-technology for facial recognition
- Complying with the Payment Card Industry Data Security Standard (PCI DSS)
The challenges of compliance and the numerous risks of non-compliance are the main issues for global customers.
Complying with data protection regulations is expensive, but it's the only option for businesses: Sooner or later, non-compliance will cost organisations much more than it does now. In this age of cyber breaches, protecting data is a critical necessity and not a "nice-to-have" option.
"Only 36 percent of global security decision-makers say they are fully compliant with GDPR."
The increasing rate of cybercrime and data breaches undoubtedly indicates that most businesses either do not take the problem seriously or just don't invest enough to win this battle. As this war becomes more and more expensive for companies, a logical consequence would be rising interest from companies to implement cybersecurity solutions expenditure and implementation into their business strategy rather than leaving it for the last thing.
Regulations like GDPR and CCPA were set in place to improve the security level of organisations and protect user privacy and security. However, according to the latest Forrester report, only 36 percent of global security decision-makers say they are fully compliant with GDPR.
Non-compliance dangers and consequences
The rising cost of fines and penalties increase pressure on businesses to comply with data privacy rules. And in case of non-compliance, the aftermaths can be severe : Businesses are witnessing a major hit on their bottom line as fines rise and reduced consumer trust affects the overall business.
Recent news includes some of the biggest numbers in fines and restitution:
- FTC hit Facebook with a record-breaking $7.25 billion AUD fine (9 percent of company revenue!) and ordered a privacy oversight.
- British Airways faces a record $334 million AUD fine after a website failure compromised the personal details of roughly 500,000 users.
- Marriott International faces a potential $179.3 million AUD fine due to failing attempts to protect passenger data after a serious hack.
These headlines show how important compliance implementation is nowadays, and user privacy regulations and laws are not things even major corporations can neglect. With these growing standards, the market survival rate of companies who lack millions saved for a rainy day to pay possible fines is nothing but a rhetorical question.
Another 2019 study by the National Cyber Security Alliance (NCSA) states that data breaches can be devastating for businesses. Moreover, 10 percent of small businesses breached shut down in 2019 and 69 percent of small organisations were forced offline for a limited time, with 37 percent experiencing financial losses.
How to survive and protect your business in the world of security issues
Since massive online security breaches are becoming more commonplace, specific services must be used to prevent cyber fraud. According to the State of Application Security report, the spend on application security solutions will more than double over 5 years, from $4 billion AUD in 2017 to $10.3 billion by 2023! For now, every dollar spent on compliance services and cybersecurity implementation is a long-term investment aimed to build customer trust.
"Every dollar spent on compliance services and cybersecurity implementation is a long-term investment aimed to build customer trust."
Existing companies heavily depend on software applications not only to grow their business, but also to detect threats before they become a real menace. A well-thought, risk-based strategy approach to evaluating cybersecurity vulnerabilities can immensely improve one's company security stand.
The data compliance field is changing
Digital security requirements are rewriting business strategies in today's world. Despite the ever-changing nature of the industry, one cardinal rule must always be taken seriously: Nobody but you is accountable for your business security. Take a wise approach when choosing the strategy and tools to protect your venture.