Why Adhering to Compliance Standards IS Important

October 2, 2023 | By Chris Vernooy


In today’s dynamic and highly regulated business environment, compliance standards have become nothing short of indispensable. Whether you’re a small startup or a multinational corporation, adherence to compliance standards is not just good practice; it’s strategically imperative to the health and maintenance of your business. In this blog post, we’ll explore why compliance standards are so crucial in today’s business operations.

Legal Protection

One of the most obvious reasons for embracing compliance standards is legal protection. Laws and regulations vary widely depending on your industry, location, and the nature of your business. Compliance standards act as a roadmap, helping you navigate the complex legal landscape and avoid costly fines, penalties, and legal disputes. Essentially, they serve as a shield, protecting your business from potential legal pitfalls. Some examples of companies that have faced heavy consequences from not following application compliance standards:


      1. Yahoo’s Data Breaches: Yahoo experienced two massive data breaches in 2013 and 2014, affecting billions of user accounts. The company faced legal consequences, including class-action lawsuits and regulatory investigations. Yahoo eventually agreed to a $117.5 million settlement to resolve the data breach-related litigation.


        1. Target’s Data Breach: In 2013, Target suffered a data breach that compromised credit card and personal information for approximately 40 million customers. The breach resulted in numerous lawsuits from affected customers, financial losses, and reputational damage. Target settled a class-action lawsuit for $18.5 million and faced additional legal and regulatory scrutiny.


          1. Equifax Data Breach: Equifax, one of the major credit reporting agencies, suffered a massive data breach in 2017. The breach exposed sensitive personal information of nearly 147 million individuals. Equifax faced multiple class-action lawsuits, regulatory investigations, and a $700 million settlement with the U.S. Federal Trade Commission (FTC) as a result of failing to adequately protect customer data.


            1. Equifax Data Breach (Again): Equifax, already mentioned in a previous response, faced not only financial penalties but also legal consequences for its 2017 data breach. In addition to the settlement with the FTC, Equifax faced numerous class-action lawsuits from affected consumers and regulatory investigations.


              1. Aerojet Rocketdyne Agrees to Pay $9 Million to Resolve False Claims Act Allegations: In July of 2022, the Justice Department announced that “Aerojet Rocketdyne Inc. … has agreed to pay $9 million to resolve allegations that it violated the False Claims Act by misrepresenting its compliance with cybersecurity requirements in certain federal government contracts…” (source) . Apparently, an internal whistleblower brought the lawsuit and provided valuable information to the US Government regarding the matter. As part of a larger effort, in 2021 the Justice Department launched a new initiative to hold companies responsible for knowingly misrepresenting their cybersecurity posture and as a result putting guarded US information or systems at risk. Additionally, any company engaged in protecting said information or systems that knowingly don’t report a breach or knowingly don’t monitor for cyber breaches are included as well, all according to The Justice Department Brief


                1. T-mobile – 37 Million customer records stolen: In this breach, 37 Million customers were impacted and customer information was stolen by the threat actors. They accomplished this by attacking unprotected and exposed APIs. In this case PII of customers was stolen (emails, birth dates, names, addresses) but not critical information like SSNs, PIN codes, etc, according to CNN. According to the same article the breach was contained one day after discovery but it took approximately 2 months to discover the breach had occurred. 


                  1. Penn State University Sued for False Claims of Cyber Compliance: In the most recent example, the Federal Government has sued Penn State University for false claims of complying with cybersecurity standards while doing federal contracting. Fully implementing and following the application compliance standards would have helped prevent some of these incidents or made them far less severe impact to the systems and business operations. That is why they were hit so hard with fines, regulatory investigations, and lawsuits – the incidents could have been prevented with appropriate technical, operational, and process controls.

                There are an additional plethora of examples of data breaches and very public exploited companies. Many times we learn afterwards that there were standard information security practices that were not followed and often many of these items are detailed across multiple compliance standards. It’s not always cut and dry to say for certain that implementing a specific control or standard would 100% have prevented a specific breach, without much additional technical context, applying compliance standards and their technical controls significantly decreases the paths threat actors have to attack systems

                Reputation Management

                Reputation is everything in business. Compliance standards play a pivotal role in safeguarding your company’s reputation. Being known for adhering to ethical and legal guidelines enhances your brand’s image and credibility. Conversely, even a single compliance violation can tarnish your reputation irreparably. Customers and stakeholders prefer to do business with organizations they trust. The reputation of Target, Equifax, Yahoo! (the cringe and comments about Yahoo! are always funny) absolutely took a hit after their respective data breaches and even more after the investigations found additional compliance could have been implemented. 

                Competitive Advantage

                Surprisingly, compliance can also give you a competitive edge. In industries where trust and integrity are paramount, having robust compliance standards can set you apart from competitors who may be cutting corners. It can become a selling point, attracting customers who value ethical and responsible business practices. For example implementing SOC1 type 2 and SOC 2 compliance standards shows a fundamental level of Information Security which can help assure clients that you are looking out for their IP and private data. Similarly, all publicly traded companies in the United States must implement SOX (Sarbanes-Oxley) accounting standards. If a company wants to reap the benefits of being a publicly traded company, gain equity investors from the market, outside of private/angel/VC investors, will have to adopt these standards. SOX requires a SOC Type II report, which requires non-financial/accounting controls around information security. If entering the public market is the right choice for your business, this helps put you ahead of your competitors who can’t, or won’t, implement these standards. Other more cybersecurity and information security specific standards convey a similar advantage or are required for certain types of markets or take credit cards, such as PCI-DSS. Clearly, there is a benefit to implementing these standards from more than just a “check box” – they detail specific measures to ensure a greater level of information security and cybersecurity which helps protect your IP, employee data (PII), and client data. Additionally, many cyber insurance plans will not grant or pay out on coverage if certain compliance standards are not implemented or followed. 

                Risk Mitigation

                Compliance standards are your best ally in risk management. By proactively identifying and addressing potential risks and vulnerabilities, you can prevent crises before they occur. Compliance isn’t just about following rules; it’s about building a resilient business that can weather the storms of uncertainty. When you implement compliance measures, you’re minimizing the chances of unexpected and expected risks, threat vectors, and vulnerabilities. Compliance controls and standards are helpful even if you are not required to implement them. They exist specifically to reduce the risks to information, people, and systems and are varying degrees of success at doing so. It is financially positive to implement more controls than necessary because the loss associated with a breach or loss of data or information is massive. Add to that the reputational hit, as previously discussed, and potential legal ramifications and the adage “an ounce of prevention is worth a pound of remediation” rings even more true. It is imperative to start with a clear and well defined information and cybersecurity baseline for engineering and compliance staff to meet. Any compliance framework can work, but the NIST CSF may be a great place to start. The point of compliance isn’t complying but implementing the documentation, processes, and technical controls to enhance information security and cybersecurity standards.


                Sustainability is a growing concern in today’s world. Compliance standards increasingly include environmental and social responsibilities. By adhering to these standards, your business can contribute positively to society and the environment. Moreover, sustainable practices can lead to long-term cost savings and improved operational efficiency. Applying similar security standards across an environment or multiple environments decreases the potential for configuration drift and configuration management since there is a single accepted configuration standard to apply. The only things to manage are exceptions, which all environments will require as well as compensating controls. However this is still far easier if there is a single standard compared to multiple. This allows your organization to focus more on sustaining operations than constantly figuring out the configurations behind those operations. 

                Ethical Integrity

                Compliance standards go beyond legal obligations; they also uphold ethical integrity. They set a moral compass for your organization, guiding your actions and decisions in a principled manner. Ethical compliance ensures that your company operates with honesty, transparency, and fairness, which not only fosters a positive company culture but also builds trust among all stakeholders: customers, partner, employees and beyond. It also helps to eliminate the “Well no one said I couldn’t” conversations around data and information storage and processing. Employees shouldn’t have to do a lot of thinking about where data or information can be stored or processed – this should be well documented and that information disseminated to all employees. It’s not good to put employees, contractors, or partners in a position where they can access information but aren’t given clear standards on how to handle and process that information.

                Compliance standards are not merely bureaucratic red tape. They are the cornerstone of responsible, ethical, and legally sound business operations. They protect your business, preserve your reputation, and enhance your competitiveness. In an era where ethics, legality, and sustainability are paramount, embracing compliance standards isn’t just a choice; it’s a necessity for long-term success. So, if you haven’t already, it’s time to make compliance a top priority in your organization. Your future success may depend on it.


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