That title is intentionally misleading. Business owners the world round know that rest and relaxation rarely coincide with running a successful enterprise. Throw cybersecurity into the mix and rest and relaxation is definitely not top of mind for business owners. The R&R I am referring to are everyone’s favorite things to hate (except lawyers), rules and regulations. Regardless of the size of your business, you are beholden to some sort of rules and regulations. Furthermore, those rules and regulations are increasingly tied to the business’ cybersecurity posture.
Small bodegas that take credit and debit card payments are required to comply with the Payment Card Industry Data Security Standard (PCI-DSS) rules. Your local car dealership that promises to finance your next family hauler is subject to federal regulations in the form of the Gramm-Leach-Bliley Act (GLBA). If your run a small online retailer as your side gig and have customers residing as far as the European Union (General Data Protection Regulation – GDPR) or as near as California (California Consumer Privacy Act - CCPA) and New York (New York Privacy Act – NYPA) you will be responsible for safeguarding your customers’ data. Chances are that you may have to deal with multiple regulations and regulatory bodies. A small medical practice doesn’t only need to think of patient’s protected health information (PHI) and Health Insurance Portability and Accountability Act (HIPAA), but local and or state data privacy regulations as well as PCI-DSS if they accept credit cards for payment.
In our newest series of articles, we will focus on the rules and regulations that affect business across all sectors. We will inform business owners of what they can do to comply with those standards and exceed them where possible to secure their cyberspace.
Navigating Regulations and Compliance Issues in Cybersecurity for Small to Medium-Sized Businesses
Cybersecurity has become a pressing issue for businesses of all sizes and across all sectors. With the increasing number of cyberattacks, businesses have to be more vigilant than ever in protecting their sensitive data and ensuring compliance with relevant regulations. For small to medium-sized businesses (SMBs), the challenge of navigating the complex landscape of cybersecurity regulations and compliance issues can be daunting. This article aims to provide business owners and decision-makers with an overview of the current state of cybersecurity regulations, the potential penalties for non-compliance, and strategies for achieving compliance.
The Importance of Cybersecurity for SMBs
In recent years, there has been a significant increase in the number of cyberattacks targeting SMBs. According to a 2020 report by Verizon, 28% of data breaches involved small businesses, demonstrating that they are by no means immune to the threat of cybercrime. Furthermore, the Ponemon Institute's 2020 Cost of a Data Breach Report found that the average cost of a data breach for SMBs was $2.64 million, highlighting the potentially devastating financial consequences of a cyberattack.
One of the main reasons why SMBs are increasingly targeted by cybercriminals is their lack of resources and expertise in cybersecurity. Many small businesses lack the budget to hire dedicated IT security staff or invest in sophisticated cybersecurity solutions. As a result, they often rely on outdated systems and insufficient security measures, making them an attractive target for cybercriminals.
The Regulatory Landscape
To combat the growing threat of cybercrime, governments and regulatory bodies worldwide have introduced a range of regulations aimed at improving the cybersecurity posture of businesses. These regulations often require businesses to implement specific security measures, report data breaches, and adhere to certain standards in data protection. Some of the most significant cybersecurity regulations that SMBs need to be aware of include:
The Gramm-Leach-Bliley Act (GLBA) establishes stringent cybersecurity standards for businesses offering financial products or services to consumers. These standards comprise the Financial Privacy Rule, Safeguard Rule, and Pretexting Rule. The Privacy Rule necessitates transparent communication of data collection, usage, sharing, and protection practices, while the Safeguard Rule mandates the development, implementation, and maintenance of a comprehensive information security program. Small businesses affected by GLBA must adhere to these regulations to maintain consumer trust and avoid potential penalties. Noncompliance with GLBA may result in substantial fines, including up to $100,000 per violation for institutions and $10,000 per violation for individuals, as well as possible imprisonment.
The Sarbanes-Oxley Act (SOX)
The Sarbanes-Oxley Act (SOX) is a critical piece of legislation that aims to enhance the accuracy and reliability of corporate disclosures, with specific emphasis on cybersecurity. Established in 2002, SOX requires businesses to implement stringent internal controls, including robust security measures designed to safeguard sensitive financial data. Non-compliance with these rules and regulations can lead to severe consequences for businesses, including potential penalties and fines, which can range from $1 million to $5 million or imprisonment for responsible executives.
The Payment Card Industry Data Security Standard (PCI-DSS)
The Payment Card Industry Data Security Standard (PCI-DSS) is a set of security standards designed to protect payment card data. It applies to all businesses that store, process, or transmit payment card information. While these standards do not fall under a specific governmental regulatory body, they must be followed if a business intends to accept credit cards as payment for goods and services. Failure to comply with PCI DSS can result in fines of up to $100,000 per month and increased transaction fees.
The Health Insurance Portability and Accountability Act (HIPAA)
The Health Insurance Portability and Accountability Act (HIPAA) is a US federal law that applies to healthcare providers, health plans, and healthcare clearinghouses. It establishes standards for the protection of electronic protected health information (ePHI) and requires covered entities to implement specific administrative, physical, and technical safeguards to ensure the confidentiality, integrity, and availability of ePHI. Non-compliance with HIPAA can result in fines of up to $1.5 million per violation per year.
The General Data Protection Regulation (GDPR)
The General Data Protection Regulation (GDPR) is a comprehensive data protection regulation that applies to all businesses operating within the European Union (EU) or processing the personal data of EU citizens. It imposes strict requirements on businesses regarding the collection, storage, and processing of personal data, as well as the reporting of data breaches. Non-compliance with the GDPR can result in fines of up to €20 million or 4% of a company's global annual revenue, whichever is higher.
The California Consumer Privacy Act (CCPA)
The California Consumer Privacy Act (CCPA) is a data protection regulation that applies to businesses operating in California or processing the personal data of California residents. Similar to the GDPR, the CCPA grants consumers certain rights regarding their personal data and imposes obligations on businesses regarding data protection and breach reporting. Non-compliance with the CCPA can result in fines of up to $7,500 per intentional violation or $2,500 per unintentional violation.
The New York Privacy Act (NYPA)
The New York Privacy Act (NYPA) establishes rigorous cybersecurity standards for businesses handling the personal data of New York residents, requiring them to implement robust data protection processes, obtain consent, and maintain safeguards to protect sensitive information. Businesses affected by the NYPA must adhere to its provisions, including opt-in consent, right to notice, right to access, right to correct data, and right to delete, to ensure compliance and maintain consumer trust. Non-compliance with the NYPA can result in penalties up to $15,000 per violation.
Strategies for Achieving Compliance
Achieving compliance with cybersecurity regulations can be challenging for SMBs due to limited resources and expertise. However, achieving and maintaining a base level of cyber hygiene can help businesses improve their cybersecurity posture and reach compliance (See our previous posts on Essential Cyber Hygiene and Mastering Cyber Hygiene). A few of the following action items are recurrent themes across the R&R landscape and are covered in our Mastering Cyber Hygiene Series.
Conduct a Risk Assessment (see Mastering Cyber Hygiene: Building Processes to Improve Your Cybersecurity Posture)
A risk assessment is a critical first step in understanding the specific cybersecurity risks your business faces and identifying the necessary measures to mitigate these risks. By conducting a thorough risk assessment, you can prioritize your cybersecurity efforts and ensure that your resources are allocated effectively.
Develop and Implement a Cybersecurity Policy
A cybersecurity policy is a formal document that outlines the procedures and guidelines your business will follow to protect its information assets. This policy should be tailored to your specific business needs and should be regularly reviewed and updated to reflect changes in the threat landscape and regulatory requirements.
Train Your Employees (see Mastering Cyber Hygiene: Tips to Train Everyone in Your Organization)
Employee training is essential in fostering a culture of cybersecurity within your organization. Regularly train your employees on cybersecurity best practices, such as recognizing phishing emails, using strong passwords, and following your company's cybersecurity policy.
Implement a Multi-Layered Security Approach (see entire Mastering Cyber Hygiene Series)
A multi-layered security approach involves implementing multiple layers of defense to protect your business from cyber threats. This can include the use of firewalls, antivirus software, intrusion detection systems, and encryption. By implementing a multi-layered security approach, you can reduce the likelihood of a successful cyberattack and minimize the potential impact of a breach.
Regularly Monitor and Audit Your Security Controls (see Mastering Cyber Hygiene: Implementation Best Practices)
Regular monitoring and auditing of your security controls are essential for ensuring that they remain effective in protecting your business from cyber threats. This can include reviewing log files, conducting vulnerability scans, and performing penetration tests.
Develop an Incident Response Plan (see Mastering Cyber Hygiene: Building Processes to Improve Your Cybersecurity Posture)
An incident response plan is a documented set of procedures that your business will follow in the event of a cybersecurity incident. This plan should outline the roles and responsibilities of key personnel, as well as the steps to be taken to contain, mitigate, and recover from the incident.
Navigating the complex landscape of cybersecurity regulations and compliance issues can be challenging for SMBs. However, by understanding the key regulations that apply to your business, conducting a risk assessment, and implementing a comprehensive cybersecurity strategy, you can significantly reduce the likelihood of a cyberattack and minimize the potential penalties for non-compliance. Over the following weeks we will tackle the cybersecurity R&R landscape and dive deeper into how businesses can use cybersecurity frameworks to not only meet those standards but exceed them. Cybersecurity is an ever-changing game and the best way to secure your business is to take the lead and keep driving forward to ensure continued success.
If you want to get ahead of the game, contact the cybersecurity professionals at Quantum Vigilance. We can help your team develop a cybersecurity strategy that meets your needs. We will work with you to understand your cyber risk and deliver cybersecurity guidance that you and your team will understand. Contact us to get started on your winning cybersecurity strategy.