As a small business owner, you juggle many responsibilities: managing daily operations, serving customers, and overseeing your cash flow. With so many competing priorities, it’s easy for other important tasks, including IT compliance to fall through the cracks. But overlooking IT compliance can expose your business to serious risks.
In this blog post, we’ll explore what IT compliance is, highlight common mistakes that lead to noncompliance, discuss the potential repercussions, and share actionable steps to safeguard your business from compliance risks.
What is IT compliance?
IT compliance means following key standards and procedures designed to protect sensitive data, such as customer, employee, or patient information. It ensures your business meets data privacy and security regulations, such as the:
- Health Insurance Portability and Accountability Act (HIPAA): If your business handles patient health information — whether you’re a clinic, therapy practice, or an IT provider servicing healthcare professionals — you must comply with HIPAA.
- Payment Card Industry Data Security Standard (PCI DSS): Do you accept credit or debit card payments? If so, you’re required to comply with PCI DSS, which ensures customer card details are processed securely to prevent fraud and data breaches.
- General Data Protection Regulation (GDPR): If you have customers or website visitors from the EU, you must comply with the GDPR. It enforces strict guidelines on collecting, storing, and using personal data of EU citizens.
Read also: A guide to GDPR compliance
How does IT noncompliance happen?
Noncompliance usually stems from small oversights, not intentional negligence. Common causes include:
- Inadequate data protection: Failing to secure, encrypt, and routinely test backups for critical data
- Poor patch management: Neglecting to update software, servers, and systems, leaving vulnerabilities for cybercriminals to exploit
- Untrained employees: Having employees who are unaware of common cyberattacks and proper data-handling procedures
- Weak access controls: Using default or weak passwords, not enabling multifactor authentication, or failing to remove former employees’ access to company accounts
- Insecure networks: Operating without a properly configured firewall or lacking secure methods for remote access to company data
The high stakes of noncompliance
Falling short of compliance standards can set off a domino effect of issues that can impact every facet of your business.
The immediate financial impact
Regulators impose steep penalties for noncompliance, and the financial consequences can be severe. For instance, HIPAA fines range from $100 to $50,000 per violation, with annual maximums reaching $1.5 million. Similarly, PCI DSS violations can result in monthly fines between $5,000 and $100,000 until the issue is addressed.
In addition to fines, noncompliance often opens the door to lawsuits from affected customers or further investigations by regulatory bodies. Even if your business is cleared of wrongdoing, legal defense costs can easily escalate into the tens of thousands of dollars.
The hidden long-term costs
The repercussions of noncompliance extend into areas that can destabilize your business and hinder future growth:
- Operational downtime: Regulatory investigations can disrupt your operations, forcing you to pause business activities while you address compliance issues. During this downtime, you lose revenue but still have to cover fixed costs such as rent and salaries.
- Reputational damage and customer churn: Word of compliance violations spreads fast, eroding customer trust. A damaged reputation often results in long-term revenue loss as customers seek out more reliable alternatives.
- Increased scrutiny and insurance premiums: A compliance violation puts your business under closer regulatory watch. Future audits become more demanding, and cyber liability insurance premiums are likely to rise.
Protecting your business from compliance risks
Achieving IT compliance demands a robust, multilayered approach that addresses every aspect of data security:
- Technical safeguards: Use advanced tools such as firewalls, data encryption, and secure access controls to protect sensitive information from cyberthreats.
- Administrative safeguards: Establish clear, well-defined policies, procedures, and training to guide your team’s actions. This includes creating a formal data security plan, conducting regular risk assessments, and teaching employees how to spot phishing scams and handle data responsibly.
- Physical safeguards: Secure the physical locations where your data is stored. Lock devices when not in use, restrict access to storage areas, and implement proper disposal protocols for old devices.
Managing multiple layers of defense requires specialized expertise that many small businesses may lack. That’s where Fidelis comes in. As a trusted managed IT services provider, we design and maintain the critical security infrastructure your business needs to stay compliant and secure. Schedule a consultation with us to get started.
