Governance and Compliance

• Governance
  • Monitoring
  • Revision
• Governance Structure
  • Boards
  • Committees
  • Government Entities
  • Centralized and Decentralized Structures
• Governance Elements
  • Policies
  • Standards
  • Procedures
  • Regulations and Laws
• Governance Considerations
  • Regulatory
  • Legal
  • Industry
  • Geographical
• Compliance
  • Compliance Reporting
  • Compliance Monitoring
  • Automation in Compliance
  • Consequences of Non-Compliance

Governance

Governance refers to overall management of the organization’s IT infrastructure, policies, procedures, and operations.

• Risk Management
• Strategic Alignment
• Resource Management
• Performance Measurement

Monitoring

Involves regularly reviewing and assessing the effectiveness of the governance framework.

• Helps identify any gaps or weaknesses.
• Weakness might have arisen due to changes in technology or regulations.

Revision

Involves updating the governance framework to address these gaps or weaknesses.

• Updates on regulations may require more stringent data protection.
• Adopting new procedures and implementing new IT systems.

Governance Structure

Boards

• Board of Directors elected by shareholders.
• Oversee organizational strategy and direction.
• Ensure accountability and compliance.
• Approve major decisions and policies.
• Represent stakeholders’ interests.

Committees

• Sub-groups within boards focused on specific areas.
• Examples: Audit Committee, Risk Committee, Compensation Committee.
• Provide detailed oversight and expert recommendations.
• Enhance board efficiency and effectiveness.

Government Entities

• Regulatory bodies and agencies.
• Enforce laws, regulations, and standards.
• Provide governance frameworks and guidelines.
• Monitor and ensure compliance with legal requirements.

Centralized and Decentralized Structures

• Centralized Structures
  • Decision-making authority concentrated at the top.
  • Ensures consistent decision-making and clear lines of authority.
  • Easier to implement and enforce policies.
  • Slow to respond to local or departmental needs.
• Decentralized Structures
  • Decision-making authority distributed across various levels.
  • Promotes flexibility and responsiveness.
  • Encourages innovation and local autonomy.
  • Quicker decision making and greater responsiveness to local needs.
  • Downside: Can lead to inconsistencies.

Governance Elements

Policies

Policies, influenced by laws and standards, provide strategic direction and priorities , guiding decision-making and compliance.

• Governance Policies
  • Shape decision-making processes for senior executives.
  • Ensure compliance and guide the creation of other policies.
• Organization-wide Policies
  • Direct behavior and activities toward specific or general goals.
  • Cover areas like human resources, finance, accounting, security, etc.
• Compliance-driven Policies
  • Imposed by laws, regulations, or contracts.
  • Documented and assessed for effective organizational use.
• Implementation through Procedures
  • Policies expanded into step-by-step instructions for execution.
  • Implemented by individuals to achieve organizational goals.

Key IT Policies:

• Acceptable Use Policy
• Information Security Policy
• Business Continuity
• Disaster Recovery
• Incident Response
• SDLC
• Change Management

For more information, please see Common Security Policies.

Standards

Organizations use standards as compliance documents and guidelines, which defines the specific technical requirements for security controls, including incident response procedures.

• International Organization for Standardization (ISO)
  • Develops international standards on various technical subjects, including information systems and security.
  • Solicits input from global experts before publishing.
• National Institute of Standards and Technology (NIST)
  • U.S. government agency publishing technical standards, especially for information technology and security.
  • Standards are requirements for U.S. government agencies and widely accepted globally.
• Internet Engineering Task Force (IETF)
  • Establishes communication protocol standards for global computer connectivity.
  • Enables computers to communicate seamlessly across borders.
• Institute of Electrical and Electronics Engineers (IEEE)
  • Sets standards for telecommunications, computer engineering, and related disciplines.

Procedures

Procedures typically contains the detailed steps to complete tasks supporting departmental or organizational policies.

• Provide supporting data and decision criteria.
• Address both one-time and regular occurrences.
• Establish measurement criteria for task completion.

Emergency Evacuation Procedure

• Outlines steps to take in case of emergency, such as fire.
• Evacuation routes, assembly points, and roles and responsibilities.

Data Backup Procedure

• Details how and when data should be backed up to prevent data loss.
• Steps for daily or incremental backups, or weekly full backups.~

Regulations and Laws

Regulations and associated fines and penalties can be imposed by governments at the national, regional, or local level. Note that regulations and laws can be imposed and enforced differently in different parts of the world:

• HIPAA (United States)
  • Governs the use of Protected Health Information (PHI).
  • Violation entails fines and/or imprisonment for individuals and companies.
• GDPR (European Union)
  • Controls the use of Personally Identifiable Information (PII).
  • Imposes financial penalties on companies handling EU citizens’ data, regardless of physical presence.
• Multinational Considerations
  • Multinational organizations navigate regulations at various levels.
  • Must comply with the most restrictive regulation across national, regional, and local levels.

Governance Considerations

Regulatory

• Compliance with industry-specific regulations and standards.
• Adherence to rules set by regulatory bodies and agencies.
• Regular updates and reviews to meet evolving regulatory requirements.
• Implementation of robust compliance programs.

Legal

• Ensuring all actions and decisions are legally sound.
• Adhering to corporate governance laws and regulations.
• Managing legal risks and liabilities.
• Implementing policies for legal compliance and ethical behavior.

Industry

• Understanding industry-specific governance best practices.
• Adapting governance structures to fit industry norms and requirements.
• Staying informed about industry trends and changes.
• Engaging with industry bodies and associations for guidance.

Geographical

• Complying with local laws and regulations in different regions.
• Understanding cultural and regional differences in governance practices.
• Managing governance across multiple jurisdictions.
• Ensuring consistent governance standards globally while accommodating local variations.

Compliance

Compliance refers to adherence to laws, regulations, standards, and policies that apply to the operations of the organizations.

• Legal Obligations
• Trust and Reputation
• Data Protection
• Business Continuity

Compliance Reporting

Systematic process of collecting and presenting data to demonstrate adherence to compliance requirements.

• Regular submission of compliance status to regulatory bodies.
• Internal reports to management and the board on compliance matters.
• Documentation of compliance activities and findings.
• Ensuring transparency and accountability through detailed reports.

Types:

• Internal compliance reporting
  • Ensures organization is following its internal policies.
  • Conducted by internal audit team or compliance team.
• External compliance reporting
  • Demonstrating compliance to external entities, such as customers.
  • Often mandated by law or contract.

Compliance Monitoring

The process of regularly reviewing and assessing organizational practices to ensure compliance with laws, regulations, and internal policies.

• Use of tools and systems to track compliance with regulations
• Regular audits and inspections to identify non-compliance issues
• Implementation of corrective actions to address compliance gaps

Key components:

• Due Diligence
  • Thorough assessments of regulatory requirements and organizational risks.
• Due Care
  • Steps taken to mitigate the risks idnetified through due diligence.
  • Implementing controls and measures to ensure ongoing compliance.
• Attestation
  • Formal declarations confirming compliance with regulations or standards.
  • To learn more, please see Attestations of Findings
• Acknowledgement
  • Recognition and acceptance of compliance requirements by all relevant parties.
• Internal and External Monitoring
  • Internally monitoring adherence to policies, procedures, and regulations through audits, reviews, and assessments.
  • Externally monitoring compliance through third-party audits, regulatory inspections, and industry certifications.

Automation in Compliance

Automated compliance systems can streamline data collection, improve accuracy, and provide real-time compliance monitoring.

• Healthcare providers, for monitoring patient data privacy compliance.
• Banks can monitor transactions for potential money laundering activities.

Consequences of Non-Compliance

• Fines
  • Financial penalties imposed by regulatory authorities.
  • Can significantly impact an organization’s financial health.
• Sanctions
  • Legal restrictions or prohibitions affecting business operations.
  • May include operational bans or trade restrictions.
• Reputational Damage
  • Erosion of public trust and confidence.
  • Potential loss of customers, partners, and investors.
• Loss of License
  • Revocation or suspension of critical operating licenses.
  • Can halt business operations and lead to significant revenue loss.
• Contractual Impacts
  • Breach of contractual obligations leading to penalties.
  • Potential termination of business agreements and partnerships.

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