How to Avoid Costly Compliance Errors

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.

AI systems introduce uncertainty. When that uncertainty is not managed, it becomes liability. The costs don’t always show up as line items. They appear in regulatory exposure, lost contracts, litigation, and reputational harm. #ISO42001 helps organizations surface these risks before they become financial damage. It requires organizations to define what AI risk looks like in their context, assess that risk, and take action based on risk tolerance. Clause 6.1 makes this clear. AI-specific risk criteria are not optional. Governance decisions need to be documented and reviewed. #ISO23894 goes deeper. It guides the organization in identifying sources of AI risk, from model behavior to organizational gaps. It provides methods for evaluating how that risk impacts individuals, communities, and systems. Annex B in particular helps teams document risks they might otherwise overlook. #ISO42005 adds another layer. It focuses on AI system impact assessments. This includes assessing intended use, foreseeable misuse, potential harm, and who might be affected. Clause 6.1.4 of 42001 requires impact assessments. 42005 shows how to do them in a structured way. Together, these standards allow an organization to recognize where AI introduces exposure, who is accountable for that exposure, and how to manage it across time. If you’re using AI and haven’t implemented these structures, you may be holding liabilities that you don’t see until they cost you. Please remember, AI governance is not a paperwork exercise. It is a leadership responsibility. A-LIGN #TheBusinessofCompliance #ComplianceAlignedtoYou

What if I told you that your sanctions, PEP/RCA, and adverse media screening approach is broken—not because of outdated regulations, but because of flawed engineering? We’ve spent years debating false positives vs. false negatives, yet most organizations still struggle to get the balance right. Why? Because the current screening methodologies rely on rigid matching logic, failing to apply contextually intelligent, whole-entity matching and smart weighting of data attributes to reduce noise while capturing real risk. So what's the problem we're trying to solve? It's two fold. 1 - False positives overwhelm compliance teams, leading to manual overload and wasted resources. 2 - False negatives let bad actors slip through, exposing organizations to regulatory fines & reputational risk. How do I propose it gets fixed? 1 - Instead of simplistic name matching, consider contextual linkages across structured & unstructured data to form a 360° risk profile of an entity. Let's call this Whole-Entity Matching. 2 - Prioritize high-confidence risk indicators over weak matches, using AI-driven relationship mapping, behavioral patterns, and source credibility scoring. Introduce Smart Data Weighting. 3 - Move beyond static rules. Apply adaptive models that adjust in real time based on risk exposure & regional compliance mandates. Adopt Dynamic Risk Thresholds. Financial institutions face soaring compliance costs, with the total cost of financial crime compliance in the U.S. and Canada hitting $61B in 2024, driven by rising screening alerts (LexisNexis Risk Solutions - https://lnkd.in/eXjyXVpf) risk.lexisnexis.com). Regulatory scrutiny is increasing; Starling Bank was fined £29M by the FCA in 2024 for inadequate AML and sanctions controls (Reuters News Agency https://lnkd.in/efnz2xer). Advanced entity resolution technology is helping firms reduce false positives by improving data accuracy, such as metadata-enhanced screening techniques saving time and costs (Chartis Research https://lnkd.in/ez7bAZRd). What is the challenge then? Why are most financial institutions still clinging to outdated matching logic? Is it legacy tech debt, regulatory fear, or just inertia? What’s your take? Are we overcomplicating screening, or are we failing to evolve fast enough? Let’s discuss. 👇 #SanctionsScreening #FinancialCrime #AML #KYC #PEP #AdverseMedia #FraudPrevention #AI #RiskManagement #FinCrime

Thinking about SOC2 - Avoid these mistakes... 1. Treating SOC 2 as a one-time project Why it's risky: SOC 2 is about ongoing operational security and compliance, not just passing an audit. Avoid it by: Building long-term processes, automations, and controls into your day-to-day workflows. 2. Starting without a clear scope Why it's risky: You may waste time and money auditing systems or processes that aren’t in scope—or miss critical ones. Avoid it by: Defining the system boundary, key services, and relevant Trust Services Criteria (e.g., Security, Availability). 3. Neglecting vendor and third-party risk Why it's risky: Your SOC 2 controls extend to vendors who handle sensitive data or infrastructure. Avoid it by: Vetting vendors, maintaining a vendor inventory, and ensuring proper contracts and SLAs are in place. 4. Poor documentation Why it's risky: Even if you have good security practices, you won’t pass the audit without proper documentation. Avoid it by: Keeping up-to-date policies, procedures, risk assessments, and evidence of controls. 5. Lack of automation Why it's risky: Manual evidence collection and tracking makes audits painful and error-prone. Avoid it by: Using tools (like Trustme.ai 😉) to automate control monitoring, evidence collection, and reporting. 6. Waiting too long to get started Why it's risky: A SOC 2 audit requires 3-12 months of control history (for Type II), and rushing leads to poor outcomes. Avoid it by: Starting early, even if you’re just implementing controls and building habits. 7. Not preparing the team Why it's risky: Employees may unintentionally bypass controls or ignore audit-related responsibilities. Avoid it by: Running security training, assigning control owners, and involving key stakeholders early. 8. Not having any security controls in place Why it's risky: You could be at more risk; more visible yet less protected. SOC2 defines security and privacy - does not ensure you are doing it on-going basis Avoid it by: Have an integrated security and compliance platform in place versus solutions that check compliance checkboxes and not provide you any real security

A single IT contract could have cost my friend’s company millions in compliance fines. Let’s talk about someone today. Let’s call him David. David once shared how his company nearly signed a deal for new IT software. And at first, it seemed like the perfect solution! It promised: ✅ Increased efficiency with automated workflows ✅ Cost savings compared to competitors ✅ Seamless integration with existing systems ✅ An impressive demo that checked all the right boxes But before signing, they took one crucial step that exposed major risks hiding beneath the surface. They ran the software through their records management checklist—and what they found was alarming. 🚨 The system failed to meet their data retention standards. 🚨 The contract didn’t clearly define who owned the data created in the software. 🚨 There was no guarantee of secure data disposal after use. Long story short, they dodged a massive bullet. That one checklist helped them avoid a contract that could have exposed them to compliance risks and data governance nightmares. Flashy IT solutions mean nothing if they don’t align with governance and compliance standards. If you don’t have a checklist for incoming IT requests and contracts, start with the basics: ✔️ Data retention policies – Ensure compliance with legal and industry standards. ✔️ Privacy and security measures – Verify encryption, access controls, and secure storage. ✔️ Regulatory compliance – Confirm the software aligns with local and international regulations. A checklist isn’t a formality—it’s your best defense against IT disasters. What’s one red flag you’ve seen in an IT deal? Let’s discuss in the comments! #datagovernance #compliance #recordsmanagement -------------------------------------------------------------- Opinions are my own and not the views of my employer. -------------------------------------------------------------- 👋 Chris Hockey | Manager at Alvarez & Marsal 📌 Expert in Information and AI Governance, Risk, and Compliance 🔍 Reducing compliance and data breach risks by managing data volume and relevance 🔍 Aligning AI initiatives with the evolving AI regulatory landscape ✨ Insights on: • AI Governance • Information Governance • Data Risk • Information Management • Privacy Regulations & Compliance 🔔 Follow for strategic insights on advancing information and AI governance 🤝 Connect to explore tailored solutions that drive resilience and impact

Did you know even well-meaning companies often make costly compliance errors? In my consulting work, it never ceased to amaze me just how common wage and hour compliance mistakes were. Let me help you avoid a similar fate. Let’s explore 14 of the most common wage & hour compliance mistakes handled by HR: 1. Misclassifying Employees ↳ Incorrectly labeling employees as exempt vs. non-exempt or contractors vs. employees. 2. Failing to Pay Overtime Correctly ↳ Not paying 1.5x the regular rate or excluding bonuses/commissions in calculations. 3. Inaccurate Time Tracking ↳ Failing to properly track hours worked, leading to wage discrepancies. 4. Unpaid Work ↳ Including missed breaks, or unpaid mandatory training. 5. Meal and Rest Break Violations ↳ Not providing legally required breaks or deducting for breaks employees never took. 6. Improper Deductions ↳ Making illegal deductions for uniforms, damages, or other expenses. 7. Minimum Wage Violations ↳ Paying below federal, state, or local minimum wage rates. 8. Incomplete Payroll Records ↳ Failing to maintain or retain accurate payroll records as required by law. 9. Ignoring Local Laws ↳ Overlooking stricter state or local wage and hour requirements that differ from federal law. 10. Late Final Paychecks ↳ Delaying or underpaying final wages for departing employees. 11. Outdated Policies ↳ Failing to update wage and hour policies as laws and regulations change. 12. Off the clock work ↳ Allowing employees to work off the clock 13. Ignoring Complaints ↳ Failing to address employee wage and hour concerns, which could lead to costly disputes. 14. Paystub issues ↳ Incomplete or uncompliant pay stubs missing key details such as sick leave or PTO balances. 💸 What’s the cost of ignoring compliance? Compliance issues don’t just cost money—they damage trust and morale. Spot these mistakes before they hurt your business. 📩Want Help? Is your HR department compliant, scalable, mistake-free, and optimized? If not, book a call with me and let’s discuss how I can help you. ✅ Bonus: Want a free Federal employment law compliance checklist? Follow my link in the comments and get it delivered right to your inbox. ♻️ Repost to help your network. ➕ Follow Ricardo Cuellar for more content like this.