How to Simplify Compliance Risk Management for Your Customers

Organizations that deal with sensitive customer data have a responsibility to protect it. And those that don't face compliance risks such as legal penalties and fines, financial losses, and reputational damage. 

Ultimately, it's the security provider's job to keep clients out of trouble by identifying and addressing any gaps in their compliance practices, avoiding costly fines, penalties, and sanctions.

Case in point: In 2019, Equifax Inc. agreed to a $575 million (potentially up to $700 million) global settlement with the FTC, Consumer Financial Protection Bureau, and 50 U.S. states and territories. The FTC complaint alleged that Equifax failed to take reasonable steps to secure the massive amount of personally identifiable information stored on its network, leading to a breach that affected around 147 million people. That’s almost half of the entire U.S. population that could be potentially exposed to identity theft and fraud. 

This is precisely why companies rely on MSPs and MSSPs for their security. When security providers integrate compliance risk management into their services, they can better protect their clients against legal penalties, preserve their sensitive data, and maintain trust. 

In this post, we’ll explore the different types of compliance risk, the frameworks that govern them, and how to successfully manage risk for your clients.

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What Is Compliance Risk?

Compliance risk is the potential risk associated with failing to act in accordance with industry laws, regulations, or internal policies. The risk of not complying with regulations can occur for several reasons:

• Changes in legislation
• Contractual obligations
• Issues with third-party vendors 
• Industry standards being updated
• Lapses in internal controls
• Inadequate compliance programs

MSSPs and security-focused MSPs looking to manage client risk must consider two different types: the inherent risk (or initial risk before any controls are applied) and residual risk (the remaining risk after security controls are applied), especially in highly regulated industries. As you can imagine, industries with more stringent regulations have higher risks. So, let’s see which ones you should keep an eye on. 

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The Different Types of Compliance Risk by Industry

Managing compliance risk involves identifying, assessing, and mitigating risks relevant to industry, company size, and other factors. Some examples of risks by industry include: 

1. Healthcare Compliance Risk: Patient Data Breach
   • Example: Imagine a hospital gets hacked and patient health records aren’t encrypted. This not only breaks HIPAA rules but could also mean massive fines and a huge loss of patient trust. 
2. Financial Compliance Risk: Unauthorized Financial Transactions
   • Example: Think of an e-commerce site handling millions of transactions daily. Now, picture it getting hacked and all that customer credit card info stolen. Suddenly, they’re facing legal action, huge fines for not following PCI DSS standards, and a spike in chargebacks and fraud. 
3. Consumer Compliance Risk: Retail Data Theft
   • Example: What if a retail company doing business in Europe doesn’t protect customer data and completely ignores GDPR rules, selling that info for a quick buck? 
4. Manufacturing Compliance Risk: Government Supply Chain Data Theft
   • Example: Imagine an aerospace manufacturer handling sensitive U.S. government geolocation data on their planes without following NIST SP 800–171 standards. If a malicious actor, like an unauthorized technician, were to steal this proprietary information, the company could face severe consequences. They might lose government contracts and business opportunities, as compliance with NIST standards is often a contractual requirement. 
5. Energy Compliance Risk: Critical Infrastructure Attacks
   • Example: Picture an energy provider skipping NERC CIP standards and then getting hit by a cyberattack on their critical infrastructure. Boom! Widespread outages and massive regulatory fines will follow. 
6. Government Compliance Risk: Sensitive Information Exposure
   • Example: Picture a government agency ignoring FISMA or CMMC standards. Sensitive information gets exposed like the blueprints to a nuclear weapon, leading to national security risks and political chaos. 

These are just some examples. Regardless of the industry, ensuring compliance and mitigating risks is about creating a culture that embraces and invests in employee training, enhancing communication, establishing clear policies, involving leadership, and encouraging positive behaviors.

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Which Security Compliance Frameworks Include Risk-Based Controls?

Some industries have specific standards for risk management, particularly those handling critical information, such as the financial and government sectors. Various cybersecurity frameworks govern these industries with risk-based controls to ensure compliance. 

Even if your clients aren’t in a highly regulated industry, aligning with framework best practices can help with cyber risk management. Doing so creates a baseline for security posture management, helping your clients improve by meeting controls over time. 

Let’s explore some of them. 

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The Top 3 Risk-Centered Controls Per Framework

Keep in mind that not measuring risk can lead to legal penalties, hefty fines, reputational damage, business operations disruption, legal action, and possible financial losses. That’s why most security frameworks have straightforward, risk-centered controls to help you avoid such problems:

NIST Cybersecurity Framework (NIST CSF)

1. Identify (ID)
   • Recognizes and understands assets and risks to manage effectively.
2. Protect (PR)
   • Implements safeguards to minimize impact and likelihood of risks.
3. Respond (RS)
   • Develops actions to mitigate damage and recover from incidents.

ISO 27001

1. Access Control
   • Restricts access to minimize unauthorized usage and data breaches.
2. Information Security Policies
   • Establishes guidelines to manage risks through consistent security practices.
3. Information Security Incident Management
   • Prepares for and responds to incidents to minimize impact.

HIPAA Security Rule

1. Administrative Safeguards
   • Policies to manage risks associated with electronic Protected Health Information access and use.
2. Technical Safeguards
   • Technology solutions to control electronic Protected Health Information access and protect integrity.
3. Physical Safeguards
   • Physical measures to protect electronic Protected Health Information from unauthorized access.

PCI DSS

1. Protect Cardholder Data
   • Safeguards payment information to prevent theft and fraud.
2. Implement Strong Access Control Measures
   • Restricts data access to minimize the risk of unauthorized use.
3. Regularly Monitor and Test Networks
   • Detects and addresses potential threats through continuous oversight.

Cybersecurity Maturity Model Certification (CMMC)

1. Access Control (AC)
   • Manages who can access information to reduce unauthorized risks.
2. Incident Response (IR)
   • Prepares for and addresses security incidents to minimize damage.
3. Risk Management (RM)
   • Identifies, assesses, and mitigates risks systematically.

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How To Address Compliance Risk Management Like a Pro

Okay, so we already know there are different types of risks. Now the question becomes, how can we manage risk effectively? 

The first step is to have a thorough compliance risk assessment plan — a systematic process used by organizations to identify, evaluate, and mitigate compliance risks. Here's what you should do in five simple steps:

• Step 1: Identify compliance risks. 
• Step 2: Assess the outcomes of non-compliance. 
• Step 3: Prioritize major risks and develop mitigation strategies. 
• Step 4: Implement strategies and validate results. 
• Step 5: Monitor and review your controls.

The good news is that these five steps can be automated by a compliance risk management tool that helps you streamline the process end to end. The benefits include the following: 

• ‍Super Fast and Accurate Assessments - Speed up and improve the risk management process for your clients so they can focus on the big stuff. A compliance tool automates risk identification and assessment, reducing mistakes and saving your clients a ton of time.‍
• All-in-One Risk Monitoring - Simplify risk monitoring, providing a comprehensive view of your client’s compliance status in one central location. This makes it much easier to track and manage risks.‍
• Easy Risk Identification and Remediation - Use resources wisely by ranking the most significant risks first (i.e., high risk, medium risk, low risk) and planning strategic fixes for your clients.‍
• Simplified Audits - Compliance risk monitoring tools also gather all the documents and evidence you need to help clients prepare for audits, cutting down on time and improving their chances of passing the audit with flying colors — while avoiding fines and penalties.

These benefits focus on managing internal risks — such as potential threats and vulnerabilities that arise from internal processes, employees, systems, and operations. But how about risks introduced by partners, vendors, and external organizations that interact with your business or your client’s customers? Let’s answer this question below. 

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The Role of Third-Party Vendor Risk Management

External vendors are a risky blind spot for businesses because it's tough to keep an eye on their operations, manage complex supply chains, and deal with different regulatory standards. 

The Maersk attack is a prime example of what can go wrong with third-party cybersecurity risks. In 2017, the shipping giant Maersk was hit hard by malware that penetrated its systems through third-party accounting software. The attack messed up Maersk's operations big time, forcing them to reinstall 4,000 servers, 45,000 PCs, and 2,500 applications — leaving them with a hefty tab of $300 million.

Moral of the story: Robust third-party risk management is a must-have. A third-party vendor risk management (TPVRM) process can help you identify, assess, and control the external risks of interacting with third-party vendors. And with the help of the right tool, you can quickly highlight vendor risk, run assessments, and manage audits. 

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How Apptega Helps Security Providers Manage Compliance Risks

Apptega is the end-to-end cybersecurity compliance platform that managed service and security providers use to streamline every step of the risk management process for their clients — from identification to remediation. Here’s how:

• ‍Risk Assessment Manager: Apptega helps you automate risk assessments for 30+ security frameworks, so you can identify risks and produce status reports in no time. ‍
• Revenue-Driven Risk Assessments: Apptega enables you to rank and classify internal risks and third-party risks based on their likelihood of occurrence and impact. Most importantly, the Apptega platform enables users to assign a risk rating, loss expectancy, and risk budget to factor in the cost of non-compliance. ‍
• Compliance Risk Crosswalking: When you map a new framework with an existing one, the shared sub-controls are combined, and any changes are automatically propagated to all paired sub-controls. You can apply multiple risks to one security framework sub-control, assign one risk to multiple sub-controls, or even create organizational risks that don’t apply to specific sub-controls. 

The Apptega platform is trusted by hundreds of MSSPs and security-focused MSPs who are growing lucrative compliance practices, creating stickier customer relationships, and winning more business from competitors.

‍Start your 14-day free trial now to discover how Apptega can help you score, rank, and report on compliance risks.