Common Compliance Vulnerabilities to Address

Toyota Bank Polska’s GDPR fine is a perfect example of how governance, risk, and compliance (GRC) failures can result in significant penaltie (https://lnkd.in/e2mWyfEb). This case shows the importance of aligning data processing activities with established frameworks like GDPR. The bank’s profiling of customer data for credit risk assessments lacked proper documentation and a mandatory Data Protection Impact Assessment (DPIA). This highlights weak governance and oversight in processing high-risk data activities. Without a DPIA, the organization couldn’t properly assess or mitigate risks to individuals’ rights. In GRC terms, this failure underscores the need for a robust risk management process tied to regulatory requirements. Another major issue was the independence of the Data Protection Officer (DPO). By reporting to the security director, the DPO’s role was compromised, creating a conflict of interest. This governance gap not only breaches GDPR but also undermines the internal controls needed to ensure impartial oversight. This case is a clear reminder of GRC fundamentals: • Risk assessments, such as DPIAs, are essential for identifying and mitigating data processing risks. • Governance structures must prioritize clear roles and responsibilities to avoid conflicts of interest. • Compliance frameworks require documentation and accountability to demonstrate adherence. When GRC processes fail, the consequences go beyond fines—they erode trust and expose organizations to legal and reputational risks. This is why GRC professionals must emphasize transparency, independence, and consistent alignment with regulatory standards.

After advising public company boards and leading cloud security at scale, I’ve seen the same governance gaps sink even well-funded programs. Here’s what to avoid: 1. Treating "Compliance" as Security 🚫 Mistake: Checking boxes for SOC 2/ISO 27001 but ignoring business-context risk (e.g., "Our AWS is compliant!" while shadow IT explodes). ✅ Fix: Map controls to real-world threats (e.g., "Encryption matters because a breach here = $XM in SEC fines + stock dip"). 2. Delegating Cloud Security to DevOps Alone 🚫 Mistake: Assuming engineers will "shift left" without guardrails (e.g., 100+ AWS accounts with no centralized IAM governance). ✅ Fix: Pair automation with human oversight 3. Ignoring the Board’s Language 🚫 Mistake: Drowning directors in CVSS scores instead of business impact (e.g., "Log4j = 9.8 severity" → "Log4j = 30% revenue risk if our e-commerce API goes down"). ✅ Fix: Use a 3-layer report: Technical finding (vulnerability) Business risk (reputation, revenue, regulatory) Strategic ask ("We need $Y to mitigate Z"). The Bottom Line: Cloud security isn’t about tools—it’s about aligning guardrails with business survival.

Reviewing security, compliance, and data privacy requirements in contracts is part of the role for many CISOs and DPOs. It’s painfully obvious (to me), that most of the requirements haven't been written by #security, #compliance, or #privacy professionals. Couple of things I frequently observe and push back on: 1.)   Vulnerability Management – STOP dictating a timeline to remediate vulnerabilities based on CVSS score. This is ridiculous! Generic CVSS score ≠ RISK in my environment. This works both ways - meaning a low CVSS score may present very high risk in my environment and vice versa. I’ll generally push back by stating – “vulnerabilities are addressed per our Vulnerability & Patch Management Policy and Procedures in conjunction with our Risk Management Program”. Analogy: Think of your home security. Just because a window is small (low CVSS score) doesn't mean it's less important to secure if it's easily accessible. Similarly, a high CVSS score doesn’t always mean high risk in your environment. 2.)   Compliance – #SOC2 Certification requirement. if I’m feeling snarky, then I push back and I don’t agree to SOC 2 “Certification”. Since there is NO SUCH THING. I will generally add a comment like “We don’t maintain SOC 2 Certification, but we can supply our SOC 2 Type II Attestation provided we have an active NDA in place…”. Also, there's no (real) HIPAA certification or certified to NIST badge or designation. If you’re going to hire an expensive attorney to draft data security, compliance, or data privacy requirements, then please get the language accurate.  3.)   Breach Notification – this is a tough one for me. Everybody always asks for 24 hours. In the real world, very few can notify clients within 24 hours of a breach. Push back with 72 hours – some will agree, and some won’t.   4.)    Right to #Audit – most agreements contain ambiguous language here – like “…we can audit whatever we want whenever we want to do it without notice…”. Push back, limit the audit scope, and require 30 days’ notice. Analogy: Allowing an audit anytime without notice is like letting someone search your entire house whenever they want. These are the tip of the iceberg and there are obviously many more… But…I got the party started. What are some unrealistic or crazy data security, compliance, or data privacy requirements that you see in #contracts & #agreements? #security #compliance #MSA #contract #ciso #dpo

Compliance may not be the same as security, but that doesn’t mean you can blow it off. Some common mistakes are: 1. Inadequate record-keeping This lack of organized documentation makes it difficult to demonstrate adherence to frameworks and regulations during audits. Moreover, poor record-keeping increases the likelihood of missing critical deadlines, leading to potential penalties, lost deals, or other consequences. 2. Ignoring industry-specific regulations Each industry has its own unique set of regulations. Failure to stay informed and adhere to these industry-specific rules can result in big problems. Ignoring industry-specific regulations not only exposes the company to legal risks but also damages its reputation and trustworthiness in the market. 3. Lack of compliance training Companies often underestimate the importance of educating their employees about compliance requirements. Without proper training, employees may unknowingly violate regulations. Regular and comprehensive compliance training is crucial to ensuring that employees understand the rules and regulations that apply to their roles. 4. Failure to monitor third parties Businesses often outsource certain functions to third-party vendors and partners. They can’t necessarily outsource accountability for abiding by relevant regulations, though. Neglecting to monitor third-party compliance can expose the company to significant risks and liability. 5. Taking a reactive approach Waiting for compliance requirements to mount before taking action can lead to more work in the end. Take a proactive stance by identifying potential risks, relevant frameworks, and appropriate controls to prevent non-compliance before it materializes. 6. Ineffective Communication Just having a policy in place doesn’t mean everyone knows about it (or is following it). Clearly communicating requirements to the right stakeholders is absolutely key. Moving past boilerplate slide decks into interactive exercises is a great way to make sure your compliance program “sticks.” What are some other common compliance mistakes? #compliance #mistakes #automation

For financial institutions, compliance risk is more than just a checklist of regulations. It's the risk of legal or regulatory sanctions, economic loss, or reputational damage that arises when an institution fails to comply with laws, rules, or internal policies. But here’s the part that’s often overlooked: Compliance risk doesn’t live in a silo. It intersects with almost every other major risk type, shaping the institution's overall risk profile in powerful (and often hidden) ways. Here are just a few examples: Operational Risk: Gaps in compliance controls can lead to breakdowns in day-to-day operations. Process, people, or systems fail, leading to operational risk. Included in operational risk are the risks that institutions must navigate when adhering to labor laws. One employee misclassified as salary exempt can create a whole host of labor law issues. Transaction Risk: Inadequate due diligence or poor record-keeping can lead to regulatory violations during transactions. Financial Risk: Non-compliance can result in substantial fines, loss of revenue, or increased capital costs. Regulatory fines directly impact the institution's financials, and not in a good way! Strategic Risk: A misalignment between business strategy and regulatory obligations can derail long-term goals. Rolling out a new business line without first consulting with the compliance team may result in the launch of a program that fails to meet regulatory expectations. Reputation Risk: One regulatory misstep can erode public trust—and fast. Lawsuits, fraud, and service interruptions are just a few of the examples that will quickly diminish any goodwill between your financial institution and your customers. Cyber & Third-Party Risk: Poor oversight of vendors or digital infrastructure can expose institutions to regulatory scrutiny. Failure to identify cyber risk within your team and failure to train your team significantly increase this risk. Compliance isn’t just a department—it’s a critical part of how risk is managed across the entire enterprise. Forward-thinking institutions view compliance as a strategic asset, not a cost center. How is your organization integrating compliance into its broader risk strategy?

NIST has just released their Core 2.0 Cybersecurity Framework for review. We expect the new requirements to be released for implementation in the first quarter of 2024. What is being updated the most? Governance and the Supply Chain controls. Why? Because if we get past the corporate jargon, the United States is doing poorly in these two areas. What we see in the government, healthcare, utilities, financial and other sectors of the critical infrastructure is some talk, but we definitely could see much more action to protect our country. Every time a C-Suite executive or manager makes an exception for a cybersecurity vulnerability, the defensive stance of the enterprise suffers. Governance is about accountability where you know you are risking our safety all the while your advertisements say otherwise.   The other area is simpler. Non-compliant third-party vendors are the number one weak spot in cybersecurity. Fortune companies in my industry continually hire non-compliant, non-certified and untrained vendors to handle their data. Don’t believe me. Any CISO can check their subcontractors in their datacenters and enterprise and find noncompliance. It is right there in front of you. When I asked a manager why they do this, they said they did not have the time to find a compliant vendor, so the organization continues to use high-risk third-party vendors. Whatever NIST CSF you are under, 800-171, 800-53 or Core, you should use the CSF to find your vulnerabilities. If you are having trouble, feel free to contact me and we can work together to build safer cybersecurity defensive posture.