What Is Compliance Monitoring? Techniques & Importance

Compliance monitoring is crucial for cybersecurity. This guide covers its importance, key components, and how to implement an effective program.

TikTok’s massive €345 million GDPR fine in 2023 is a classic example of what can go wrong when compliance is neglected.

Compliance is more than just a box you must check. When done right, it can enrich customer trust, strengthen internal security postures, and save you from legal troubles and fines.

Among the broader gamut of compliance management—which involves risk assessment, policy development, and compliance training—compliance monitoring ensures your business remains continuously vigilant to regulatory demands and changes, ultimately protecting you from financial and legal risks.

This is precisely what went wrong with three different banks in the U.S. Before 2023, the United States had experienced only one bank failure involving an institution with at least $100 billion in assets: Washington Mutual in 2008.

However, this number increased to three within a span of just three days in March 2023. Silicon Valley Bank, with $209 billion in assets, and Signature Bank, with $110 billion in assets, both failed during this period. In May, First Republic Bank, holding $229 billion in assets, became the fourth bank to collapse.

Federal and state regulators closed each of these banks after financial instability caused customers to panic and rush to withdraw their deposits. The failures were attributed to inadequate management of risks related to rising interest rates and customer concentration, despite numerous warnings from regulatory agencies.

Additionally, in March, Swiss regulators forced Credit Suisse to merge with its larger competitor, UBS, due to a ‘crisis of confidence’.

In response to these failures, U.S. banking regulators imposed new requirements on banks with over $100 billion in assets, mandating higher reserves and revised risk management strategies.

Do you see the pattern here? These substantial fines highlight a critical lesson: Neglecting data protection and compliance not only breaks trust but also leads to huge financial losses.

Let’s learn how to build a robust compliance monitoring plan to stay ahead of regulatory changes and minimize legal, financial, and reputational troubles.

What is Compliance Monitoring?

Compliance is a suite of QA-related tests an organization implements in its operations as part of regulatory compliance and internal policies. When done right, compliance can enrich customer trust, strengthen internal security postures, and consequently, prevent legal troubles and fines.

Compliance monitoring is the act of continuously monitoring whether the organization is adhering to the regulations and policies. For example, the International Organization for Standardization (ISO) and other accreditation bodies mention this in their application process—they require organizations to provide a plan during approval. This ensures that companies are not only meeting current standards but are also prepared for future regulatory changes.

Any enterprise’s reputation heavily relies on its capability to follow industry regulations and changes over time. Failure to do so can result in severe consequences, as we’ve seen in recent examples.

Importance of Compliance Monitoring

Globally, governments, industry bodies, and even individual companies have set up several compliance rules that businesses must adhere to, regardless of their location.

Non-compliance can lead to severe repercussions for the companies, from hefty fines to legal issues. A recent example is Amazon, which was hit with an $886 million fine for breaching European Union (EU) data protection laws.

Beyond fines, non-compliance can result in costly legal battles. Companies may face lawsuits from affected individuals or groups, leading to additional legal fees and potential damages. For example, data breaches can prompt class-action lawsuits from customers whose personal information was compromised.

Additionally, regulatory bodies might impose restrictions or sanctions, such as operational shutdowns or mandatory changes to business practices. These sanctions can disrupt business operations and affect revenue streams.

The long-term impacts of non-compliance include damage to the company’s brand and trust with customers. Rebuilding trust can be a lengthy and costly process, further affecting the company’s market share and growth potential. In some cases, severe compliance breaches can lead to increased scrutiny from regulators, resulting in more frequent audits and oversight.

But it is not just cyber security teams that are responsible for maintaining compliance.

Senior executives and other key personnel must follow practices consistently to stay in line with compliance. For example, the California Consumer Privacy Act imposes fines of up to $7500 per violation on individuals if they sell personal information of minors (under 16) without the latter’s consent.

Compliance, in general, is complicated. One may break the rule unintentionally. Take, for instance, the breach involving Pegasus Airlines in March 2022. The cybersecurity team SafetyDetectives uncovered that a vast amount of sensitive data was exposed online due to an unprotected AWS S3 bucket. This bucket held around 23 million files, including critical flight data, crew PII, and software code, totaling approximately 6.5 terabytes.

Such exposure could have compromised thousands of passengers and crew, potentially breaching Turkish data protection laws, which could result in a fine of up to $183,000. The issue stemmed from employee negligence: a system administrator failed to properly configure the cloud environment, leaving data unsecured. Fortunately, this incident did not result in any known lasting harm. The oversight highlights the importance of monitoring user interactions and securing privileged accounts to prevent such vulnerabilities.

Moreover, companies operating in niche industries may not have complete knowledge of the regulations or be updated on data protection laws that include explicit customer privacy policies. This is where a compliance monitoring system becomes essential.

It helps the organization manage risk by identifying issues early, saving them time and money, and making reporting to regulatory agencies much easier.

Here’s how compliance monitoring plays an important role:

• Mitigating Legal Risks

Compliance monitoring helps identify issues early, reducing the risk of severe legal consequences and costly fines by ensuring that regulatory requirements are met continuously.

• Ensuring Customer Data Privacy

By actively monitoring compliance, organizations can better protect customer data, ensuring that privacy standards are maintained and breaches are prevented.

• Building Trust

Consistent adherence to compliance requirements fosters customer trust, demonstrating that the company values and safeguards their personal information.

• Business Growth

Effective compliance monitoring can streamline operations and reduce the likelihood of legal issues, enabling businesses to focus on growth and expansion without regulatory setbacks.

Essential Components of a Compliance Monitoring Plan

A robust compliance monitoring system is essential for organizations to ensure adherence to regulations and maintain operational integrity. This system involves several key components, each playing a vital role in successful compliance management.

1. Risk Assessment and Evaluation

An effective compliance monitoring plan begins with a combination of risk assessment and evaluation. This includes:

• Regularly reviewing and updating compliance policies to reflect current regulations and best practices
• Hiring third-party auditors to conduct regular assessments and identify gaps
• Implementing ongoing internal audits to ensure adherence to compliance policies and identify areas for improvement.
• Using technology to automate compliance processes, monitor regulatory changes, and maintain accurate records.

2. Employee Training

Good training can pay dividends in many ways:

• It reduces the possibility of violation.
• The organization remains safe from legal liability.
• It increases productivity.
• It ensures people are aware of their responsibilities in compliance.

3. Clear Compliance Policies and Defined Roles

Well-documented policies and clearly defined roles form integral parts of a compliance plan:

• Having clear policies helps ensure that everyone is on the same page and provides protocols for handling situations.
• Appointing compliance officers or managers prevents compliance oversight. These personnel also conduct audits and stay updated on regulatory changes.

Benefits of Compliance Monitoring

Compliance monitoring has several benefits that significantly impact an organization.

• Enhanced risk management: If a business is consistent in its compliance monitoring strategy, it can identify early opportunities for risks, which can be addressed to avoid legal issues.
• Improved organizational reputation: Consistent adherence to regulatory requirements showcases integrity and ethical practices that reflect the trust customers, partners, and stakeholders would wish to have in a compliant organization.
• Streamlined regulatory reporting: Preparing audit reports becomes easier and takes less time and fewer resources while the organization meets deadlines and sets expectations from the regulatory entity.
• Enhanced data security: Continuous monitoring helps protect sensitive information by ensuring that security protocols are consistently followed. This reduces the risk of data breaches and helps maintain compliance with data protection laws, thereby safeguarding customer information.
• Increased business agility: With a robust compliance monitoring system in place, organizations can quickly adapt to new regulations and industry standards. This agility allows businesses to stay ahead of regulatory changes and maintain compliance without significant disruptions to operations.
• Reduced legal and financial liabilities: By staying compliant, businesses can minimize the risk of legal actions and financial penalties. Compliance monitoring helps ensure that all regulatory requirements are met, thereby reducing exposure to lawsuits and fines.
• Enhanced employee morale: A well-structured compliance program fosters a positive workplace environment by ensuring that policies and procedures are clear and consistently applied. Employees will feel secure and valued in an organization that prioritizes ethical standards and regulatory adherence.

Developing an Effective Compliance Monitoring Program

Having comprehended the fundamental concepts of compliance monitoring, let’s put them into action by constructing a working plan to suit your needs:

1. Conduct Compliance Risk Assessment

Any good plan should start by knowing what gaps the organization may have. This entails performing a thorough compliance risk assessment in order to identify areas of risk, apprise the risk elements, and preferably determine as well, the risk probability factor.

For example: A healthcare organization might perceive risks to the privacy of the patient’s data under the guidelines set by the HIPAA rules and regulations. This may help assess the risk posed by ill-fitted personnel with respect to the handling of data.

An assessment review of this nature may be done every three months in order to incorporate new changes in the regulatory landscape or the business environment.

2. Strategies for Setting Compliance Policies

Compliance policies should be an easy-to-understand handbook for employees concerned about how they are expected to behave and perform activities within the enterprise.

Such policies should be focused on ensuring that compliance with legal and other requirements to which your organization now subscribes, will not be breached. Regular review of such policies is advisable so as to keep up with the trends in regulatory requirements.

For example, a financial institution creates a policy setting out the framework for reporting suspicious transactions in accordance with the Bank Secrecy Act. The policy states the characteristics of suspicious activities and requires employees to report any suspicions within 24 hours to the relevant compliance officer. It also elaborates on the extent of protections afforded to whistleblowers.

3. Train Employees About the Policies and Procedures

When you conduct training sessions regarding prosecution guidelines, you should take your employees through a thorough, fun, and entertaining compliance training program. Their participation will determine the success of compliance programs.

Keeping abreast with the new regulations may be assisted further by providing refreshing training on the new policies.

For example, an interactive training workshop in a manufacturing organization could incorporate activities such as the use of hazardous materials, which have to be handled correctly. This makes it easier for employees to understand the requirements of compliance and the consequences of failing to comply with them.

4. Undertake Corrective and Preventive Actions

You can have the best laid out plans but somehow issues may always come up and when those issues do come up, timely corrective actions have to be taken. In addition, trying to take preventive actions will help ensure that those incidents do not happen again.

For example: If a data breach occurs because of poor password strength policies, then the company must take corrective action like introducing strict password policies and conducting internal security audits. Thereafter, they can also proceed to hold regular cybersecurity awareness training sessions to stress the value of data security.

Challenges in Compliance Monitoring

Getting compliance monitoring right is a delicate balancing act. Still, facing these challenges head-on will go a long way in ensuring businesses reap the advantages of a robust compliance program.

Here is a breakdown of common issues and how to handle them:

#1. Navigating Regulatory Changes

One of the biggest hurdles in compliance is dealing with complex and ever-changing regulations. There’s a lot of flux in the regulatory landscape, driven by legislative updates, industry-specific changes, international standards, and technological advancements.

For instance, the SEC’s new disclosure rules, which went effective January 2024, will require public companies to provide detailed annual reports on cybersecurity risks and disclose material incidents within four days. This includes outlining risk management processes and the roles of the board and CISO. CISOs will need to work closely with departments like legal, audit, and finance to develop a rigorous cyber materiality assessment process. The challenge lies in ensuring that all relevant details are disclosed accurately and promptly, requiring enhanced cross-departmental collaboration.

Additionally, integrating new requirements into existing systems and dealing with regulatory overlap across regions adds to the difficulty.

To simplify this, businesses should stay informed about the latest regulatory updates and seek advice from experts who can offer guidance.

Using compliance monitoring software such as SentinelOne is also crucial. These tools automate the process of tracking various regulations, ensuring that businesses are always up to date, monitoring their compliance status, and spotting any gaps or violations.

By investing in such platforms, companies can enhance the efficiency of their compliance processes, boost accuracy, and reduce the risk of human errors. This makes navigating the maze of regulations much more manageable.

#2. Resource constraints

Resource constraints can pose a significant challenge when it comes to compliance monitoring.

For example, small to mid-sized organizations often struggle with limited personnel who are responsible for managing not only compliance but also other critical operational tasks. This limitation can result in inadequate attention to compliance activities, potentially leading to missed regulatory updates or insufficient monitoring.

Another challenge is the complexity of regulations. For instance, it can be overwhelming to navigate GDPR, HIPAA, or PCI-DSS. Each of these regulations has specific mandates and frequent updates, making it difficult for organizations to stay current and ensure full compliance without dedicated resources.

Data overload also adds to the difficulty. Companies must process and analyze large volumes of data to identify compliance issues, which can be especially challenging without advanced tools.

#3. Managing integrations

API compatibility is a significant hitch many enterprises face when integrating compliance tools into their existing systems.

This is because most companies rely on different software systems—such as CRM, ERP, and legacy databases—which may use other data formats, communications protocols, or API standards. A typical case would be that your legacy CRM is in XML, and the new compliance tool works in JSON, so the translation and update of the data don’t match.

Also, if the compliance tool requires certain APIs and your existing systems just happen to have outdated or non-standard APIs, integration becomes complex and expensive. Real-time data synchronization further complicates things, especially when the frequency of updates for existing systems is less than what is required by the new tool.

To overcome this, careful planning needs to be done well in advance.

Compliance Monitoring Technologies & Software Tools

Having the right tools is crucial when it comes to managing compliance.

These compliance monitoring tools can help businesses find the best solutions for their specific needs:

1. SentinelOne: Advanced AI-driven security

SentinelOne is an advanced, AI-driven cloud security platform suitable for every business size. It monitors your compliance score over time and identifies trends that will help improve your general security strategy.

The SentinelOne compliance dashboard empowers complete visibility into your cloud infrastructure through support for security standards, including Payment Card Industry Data Security Standard (PCI-DSS), the National Institute of Standards and Technology (NIST), and the International Organization for Standardization 27001 (ISO 27001).

Its patented 1-click automated remediation of threats and offensive security engine set a new bar for simplicity in threat analysis and compliance tracking.

The SentinelOne CSPM tools are crucial to realizing a high level of security and becoming an extraordinary example of compliance monitoring.

Key features:

• Automated handling of cloud configuration issues
• Advanced threat remediation and analysis
• Extensive compliance support, including CI/CD integration
• Binary Vault to ensure software components meet security and compliance standards
• Storyline Technology to create detailed attack timelines
• Offensive Security Engine to simulate attacks uncover vulnerabilities, and test defenses
• Cloud Detection and Response (CDR) to safeguard against threats
• Cloud Workload Protection Platform (CWPP) for visibility and compliance
• PurpleAI provides AI-driven insights for accuracy and efficiency
• Leverage SentinelOne’s integration with Synk to manage vulnerabilities in code, containers, and dependencies for strong security
• Secret Scanning to protect API keys, passwords, and critical information
• Singularity Data Lake for thorough threat intelligence and compliance monitoring

Pros:

• Free Demo
• Streamlines audits with detailed reports
• Enhances cloud forensics with innovative technology

2. Sprinto: Streamlined compliance automation

Sprinto is also pretty good at compliance monitoring automation. It integrates well with cloud configurations and is a go-to solution for any SaaS company willing to obtain SOC 2, ISO 27001, GDPR, HIPAA, etc. certifications.

This data compliance monitoring tool makes sure that your compliance efforts are relevant and timely.

Key features:

• Robust automation for monitoring and control
• Integrates effortlessly with various cloud configurations

Pros:

• User-friendly interface with expert assistance
• Rapid certification process

Cons:

• Some client meetings may face time zone challenges

3. Connecteam: Comprehensive employee management

Connecteam is an all-in-one employee management and compliance monitoring software ideal for remote and mobile teams.

It simplifies everyday operations by allowing real-time notifications, data collection, and reporting, making it a robust compliance monitoring example for different business needs.

Key features:

• Seamless communication through a mobile app
• Efficient task management and time tracking

Pros:

• Affordable and user-friendly
• Offers excellent customer support

Cons:

• Integrations are still under development

These tools provide effective compliance monitoring examples across different business environments, ensuring your organization stays compliant and secure.

Best Practices for Effective Compliance Monitoring

When it comes to the sophistication of your compliance monitoring plan, you may incorporate the following effective strategies:

#1. Regular Audits and Reviews

Regular audits and reviews are an essential part of compliance monitoring. Periodical audits allow the organization to measure the level of compliance with various statutes and internal policies.

Such audits should be strategic, all-encompassing and performed by competent personnel with a view to discovering problems, determining their level of risk, and addressing them in good time.

#2. Clear Communication Channels

Clear communication channels ensure that the organization’s concerned stakeholders are well-addressed regarding compliance expectations, regulation updates, and even policy changes.

These include training sessions, newsletters, and easily accessible documentation that the employees can refer to in times of need.

#3. Continuous Improvement Strategies

Organizations should embrace practices that ensure constant evaluation and enhancement of compliance practices. This includes gathering input from audits, monitoring the trends within regulatory bodies, and benchmarking regarding the best industry practices to execute preventive measures against compliance violations.

These techniques strengthen, efficiently, and productively prepare your compliance program for shifting regulations.

#4. Establishing a Dedicated Compliance Team

A dedicated compliance team ensures effective oversight and management of compliance activities. This team should be responsible for all aspects of compliance monitoring, including implementing policies, conducting audits, and addressing regulatory changes.

Moreover, it ensures that compliance efforts are coordinated and that there is a clear point of contact for any compliance-related issues.

Remember, it’s the responsibility of the company to train and equip them with the resources and authority needed to enforce compliance practices.

#5. Employee Training and Awareness

Effective training helps employees understand their compliance responsibilities and why it is important to adhere to established protocols. These training sessions should cover relevant regulations, company policies, and best practices, and be updated to reflect any changes in the legal landscape.

Providing resources such as handbooks, online courses, and access to compliance experts further supports ongoing education.

This way, companies can reduce the risk of accidental violations and promote a proactive approach to regulatory adherence.

#6. Implement Compliance Monitoring Tools

Incorporating automated compliance monitoring tools can significantly enhance the efficiency and accuracy of compliance processes. These tools, such as compliance management software (like SentinelOne), help track regulatory changes, manage documentation, and streamline reporting.

Automation reduces the risk of manual errors and ensures that compliance tasks are completed consistently and promptly. By leveraging technology, organizations can gain real-time insights into their compliance status, quickly adapt to new regulations, and maintain comprehensive records.

Wrapping Up

Given the high-profile cases involving companies that have faced huge fines, staying compliant cannot be emphasized enough. An effective compliance program clearly avoids or minimizes these penalties, building a culture of integrity and transparency inside the organization.

We’ve explored key practices for enhancing compliance monitoring, including:

• Conducting regular audits and reviews
• Maintaining clear communication channels
• Implementing continuous improvement strategies

The use of automated compliance monitoring tools, the establishment of a dedicated compliance team, and the prioritization of employee training and awareness are equally important to ensure adherence to regulations and prevent breaches.

Take your compliance monitoring to the next level with advanced solutions like SentinelOne. Our complete compliance monitoring software provides visibility into your cloud infrastructure in real-time, automated threat remediation, and detailed reporting.

Visit SentinelOne Compliance Monitoring to explore how the platform can enhance your compliance strategy. For more details, contact us today or book a demo.

Compliance Monitoring FAQs

What Is Compliance Monitoring?

Compliance monitoring is the ongoing process of checking whether your organization follows all the rules, regulations, and internal policies that apply to your business. You can think of it as keeping a constant watch on your operations to make sure they meet legal requirements and industry standards.

This involves using both automated tools and manual reviews to track your activities and spot any areas where you might be falling short.

What Is An Example Of Compliance Monitoring?

A healthcare organization monitoring patient data handling to ensure HIPAA compliance is a common example. They would track who accesses medical records, how data is stored, and whether proper encryption is used.

Another example is a bank continuously checking transactions for anti-money laundering compliance, flagging suspicious patterns that might indicate illegal activity. These checks happen automatically through software and regular audits.

Importance Of Compliance Monitoring

Compliance monitoring helps you avoid costly fines, legal troubles, and reputation damage that come with regulatory violations. It gives you real-time visibility into potential problems before they turn into major issues.

Without proper monitoring, you might not know about compliance gaps until it’s too late and you’re facing penalties. It also builds trust with customers and partners who want to know you’re protecting their data properly.

Why Is Continuous Monitoring Essential For Compliance?

Continuous monitoring is essential because regulations change frequently and new risks emerge constantly. Traditional annual audits only give you a snapshot of compliance at one point in time, leaving gaps where violations can occur.

With continuous monitoring, you can detect and fix compliance issues as they happen, rather than waiting months to discover them. This approach reduces your risk of penalties and keeps you ahead of regulatory changes.

What Are Three Techniques For Monitoring Compliance?

The three main techniques are regular audits, automated monitoring systems, and self-assessments. Regular audits involve having internal or external teams review your processes and documentation to check compliance.

Automated monitoring uses software to continuously track activities and flag potential violations in real-time. Self-assessments let your organization evaluate its own compliance status and identify areas that need improvement.

How To Perform Compliance Monitoring?

Start by identifying all regulations that apply to your business and conducting a risk assessment to find high-risk areas. Set up clear policies and procedures that define compliance requirements for your team. Use automated tools to continuously monitor activities and generate alerts when issues arise.

Schedule regular audits and reviews to check that your monitoring systems are working properly. Train your employees on compliance requirements and make sure they know how to report problems.