Compliance Risk Examples & How to Mitigate Them

RSI Security

2 years ago

Compliance with regulatory standards is critical to keeping your organization’s security controls up-to-date and safeguarding any sensitive data you handle. However, many organizations face challenges meeting the expectations of regulatory frameworks, resulting in compliance risks. Read on to learn about common compliance risk examples and how to mitigate them.

Breakdown of Compliance Risk Examples and How to Mitigate Them

Safeguarding your digital assets from cyberattacks starts with understanding which regulatory frameworks you’re required to comply with and the risks you may face along the journey to compliance. An overview of compliance risk examples across various industries can highlight the impact of these risks on your data security. In this blog, we’ll cover:

Compliance risk examples in banking and financial services
Regulatory risk examples specific to the healthcare industry
Some best practices for mitigating all kinds of compliance risks

Identifying compliance risk examples early on in your regulatory journey will strengthen your security posture in the short and long term, especially with the guidance of a security advisor.

Compliance Risk Examples in Banking and Financial Services

Institutions in banking and financial services are frequently targeted by cybercriminals due to the vast amount of sensitive data they handle. When cybercriminals steal this data, they can either sell it to other criminals on the dark web or use it themselves to compromise victims’ accounts.

The compliance risk examples in banking and financial services can be classified according to the kinds of systems and vulnerabilities they may exploit. In particular, five categories include:

Data security control risks
Network security risks
Access control risks
Risks related to malware
Overall policy-related risks

Let’s dive deeper into these compliance risk examples and how they impact cybersecurity in the banking and financial services industry.

Risk #1: Poorly Implemented Data Security Controls

In many cases, cyberattacks occur because the data security controls designed to safeguard sensitive digital assets are either poorly implemented or not implemented at all. This makes it easier for cybercriminals to access environments containing highly sensitive data and steal it.

Two recent compliance risk examples in banking illustrate the value of complying with regulatory standards—and, more generally, safeguarding your systems—when handling sensitive data.

The 2017 Equifax data breach occurred because cybercriminals successfully infiltrated the Equifax systems and accessed sensitive data belonging to about 147 million consumers.

As a result of this breach, the following types of data were compromised:

Social Security numbers
Birthdates
Driver’s license numbers
Credit card information

Per the Federal Trade Commission (FTC), several vulnerabilities contributed to this breach:

Networks transmitting sensitive data were not patched with critical security updates.
Sensitive data environments were not segmented from those with malicious traffic.
Consumers’ sensitive information was stored in plaintext and not industry-standard encryption.

Similar to Equifax, Capital One experienced a breach in 2019, exposing the personal data of about 100 million individuals in the United States and close to 6 million in Canada.

Equifax and Capital One grappled with the reputational consequences of poor compliance with data security controls. And both faced significant legal and financial outcomes of the publicized data breaches. Equifax paid up to $700 million in settlements to impacted individuals and was forced to invest $1.6 billion in strengthening its cyberdefenses to mitigate future attacks. Capital One paid about $190 million in settlements to individuals affected by the 2019 data breach.

In both cases, a better and fuller security implementation could have prevented these outcomes.

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Risk #2: Unaddressed Network Vulnerabilities

For banking or financial services organizations, networks present critical security risks.

One gap in a network security control can compromise the integrity of the entire network, resulting in a potential data breach. And one common source of network security vulnerabilities is the rampant use of unsecured networks for remote work. Whereas remote work environments make it flexible for staff to work from cafes or airports, these networks are often not secure.

A 2022 Infosec survey indicated that sharing sensitive information over unsecured networks remains one of the most common compliance risk examples in the financial services industry. Staff who log onto low-security WiFi networks on their remote endpoints present significant risks to their organizations if these endpoints are not protected by secondary network encryption.

Risk #3: Poor Management of Access Controls

A leading cause of data breaches in financial services is the mismanagement of access control protocols. Over 90% of these institutions believe their access controls are effectively managed, yet there are still gaps in authentication procedures. To illustrate the gravity of compliance risk examples related to access controls, over 60% of financial services institutions that experienced data breaches still do not fully comply with the requirements of regulatory standards.

Plus, most of the employees at these institutions use legacy authentication methods such as one-time password (OTP) multifactor authentication (MFA), with which they feel comfortable.

Risk #4: Limited Malware Protection

Malware intrusion is a growing security risk that affects every industry using email or web applications for business. And, when targeting the financial services industry, cybercriminals have used malware to steal sensitive credentials, spy on organizations, or disrupt operations.

Most regulatory standards require organizations to implement antimalware solutions as safeguards against malware intrusion via trojan horses. For instance, the Payment Card Industry (PCI) Data Security Standards (DSS), which directly apply to organizations that process card payments, require them to protect cardholder data environments from malware.

Non-compliance with such standards can result in malware attacks, specifically on blockchain and cryptocurrency organizations like Axie Infinity, which resulted in losses of over $600 million.

Risk #5: Gaps in IT Security Policies

With the help of a security policy, you can methodically meet the requirements stipulated in regulatory compliance frameworks—and minimize the risks of data breaches impacting your organization. However, without an effective security policy to steer regulatory compliance, your organization will likely experience challenges protecting sensitive data from security threats.

Gaps in IT security policies often include:

Delays in updating policies to reflect current security needs
Poor delegation of roles and responsibilities to meet compliance requirements
Failure to implement the full scope of guidelines listed in security policies

Remaining compliant with regulatory standards is critical to safeguarding sensitive data in the banking and financial services industry. Achieving compliance year-round starts with learning from shortfalls like those that lead to the compliance risk examples illustrated above.

Regulatory Risk Examples in Healthcare

Besides the banking and financial services industry, healthcare is a frequent target for cyberattacks because of the value of protected health information (PHI). Considering the sensitivity of healthcare data, providers are often willing to pay hefty ransoms to prevent PHI and other data from being leaked on the dark web—or to recover it after it has been stolen.

The most effective way to minimize healthcare data security risks is to comply with HIPAA.

And, coincidentally, research shows the majority of healthcare data breaches involving PHI can be attributed to gaps in controls directly required for (or closely related to) HIPAA compliance.

Why Comply with HIPAA?

To standardize privacy safeguards for all healthcare transactions involving PHI, the Healthcare Insurance Portability and Accountability Act of 1996 (HIPAA) was established.

HIPAA comprises four primary Rules:

The Privacy Rule denotes which entities are required to comply with HIPAA, along with the particular situations in which use or disclosure to PHI may be allowed (or compelled).
The Security Rule breaks down the various safeguards covered entities need to implement to protect PHI and specifically electronic PHI (ePHI) from security risks.
The Breach Notification Rule provides guidelines for reporting breaches to the relevant parties (i.e., affected individuals and the Secretary of Health and Human Services).
The Enforcement Rule stipulates the processes by which the Office for Civil Rights (OCR) oversees HIPAA compliance and investigates potential violations thereof.

Below, we’ll highlight some of the common compliance risk examples in healthcare—and demonstrate just how critical it is for organizations to comply with HIPAA.

Gaps in Data-Sharing Security Controls

Data-sharing is fundamental to aiding healthcare providers to make accurate and robust clinical decisions. However, multiple players are involved in the healthcare system: healthcare providers that directly collect or analyze patient data, health plans that manage payments, and more.

As HIPAA-subject entities collaborate to share PHI, it is of utmost importance to comply with the HIPAA Rules. Failure to do so can result in data breaches that compromise sensitive PHI.

In a notable data breach incident, OneTouchPoint (OTP), a print and mailing services vendor for providers and plans, noticed that cybercriminals gained unauthorized access to its servers. As a result, PHI belonging to two million individuals, handled by 37 organizations, was compromised.

Similarly, Shields Health Care Group experienced a high-impact breach of systems affecting data concerning two million individuals handled by over 20 partners across Massachusetts.

In both instances, sensitive PHI was compromised, including:

Patient IDs
Treatment information
Medical record numbers
Social security numbers
Provider details

As a HIPAA-subject organization, you can mitigate security risks to the PHI you share with other entities by remaining up-to-date with HIPAA compliance. Beyond minimizing compliance risks, you will mitigate business disruptions and unnecessary non-compliance fines and penalties.

Top Considerations for Mitigating Compliance Risks

Considering the compliance risk examples in banking, financial services, healthcare, and other industries, what are some best practices to mitigate these risks? Remaining fully compliant with regulatory frameworks requires ongoing assessments of your compliance efforts and the security controls you implement along these guidelines. Whereas some compliance risks are universal, cutting across multiple industries, many of them are industry-specific.

Hence, you must identify which tools apply best to the unique needs of your industry and your specific organization. Two of the widely-applicable best practices for mitigating compliance risks are risk assessments and penetration testing.

Compliance Risk Assessments

The effectiveness of compliance risk assessments will depend on how best you tailor them to the specific framework with which you comply. To illustrate the value of tailored assessment, consider a compliance risk assessment example that applies to financial services institutions.

Using a step-by-step PCI compliance risk assessment, these organizations can review each of the regulatory requirements listed in the PCI DSS framework and evaluate their security controls along those standards. A methodical gap assessment of PCI compliance typically involves:

Identifying vulnerabilities to sensitive cardholder data environments (CDE)
Evaluating the effectiveness of CHD safeguards for CHD at rest and in transit
Reviewing the current vulnerability management infrastructure
Testing access controls for their robustness in preventing unauthorized access
Monitoring networks that handle CHD
Conducting a comprehensive review of your current PCI security policy

A similar strategy can apply to healthcare compliance risks. Ultimately, it is best to consult with a security advisor on which compliance risk assessments will help mitigate data breaches.

Compliance-focused Penetration Testing

Organizations that leverage penetration testing to evaluate the effectiveness of their security controls can do so swiftly over the entirety of their IT infrastructure. Penetration testing is a robust gap assessment tool that provides visibility into gaps in your security implementation.

When it comes to minimizing compliance risks, penetration testing applies to any organization, regardless of industry. But, for industries like healthcare that face rapidly evolving threats, penetration testing is an effective tool for monitoring compliance risks as they change daily.

In healthcare, penetration testing is critical to:

Assessing the encryption standards of networks that HIPAA-subject entities use to share PHI internally or externally
Verifying the security controls installed on applications that collect, store, transmit, or delete PHI from secure environments
Evaluating the security posture of the workstations and endpoints (remote or otherwise) that handle PHI

Conducting regular penetration testing as part of your HIPAA compliance efforts will help identify compromising security vulnerabilities early on and protect your organization from data breaches.

Comparing the similarities across some of the compliance risk examples we’ve explored reveals just how critical it is to work with a trusted security advisor to achieve regulatory compliance.

Mitigate Compliance Risks with a Security Advisor!

If you’re wondering how to mitigate the compliance risk examples discussed above, it all starts with conducting a comprehensive security assessment of your current IT infrastructure. Partnering with an experienced security advisor will help you conduct one effectively to identify compliance risks and mitigate them before they can impact your sensitive data.

To learn more, contact RSI Security today!