IT risk assessment and compliance are pretty important, but often overlooked, especially in companies where innovation and speed are the name of the game.
With so many new regulations and standards coming into play, businesses need to assess their compliance risks. It is important to avoid any potential financial, legal, or reputational damage.
But, indeed, the promise of fast growth and cutting-edge tech can sometimes make us forget about the risks that might be hiding in the shadows. It’s normal, but it can’t go on like this.
That’s why we’re going to run through the basics of building a solid framework for compliance risk assessments.
What is Compliance Risk in IT?
Compliance risk assessment is the process of identifying and analyzing the potential risks that a company may fail to meet established compliance standards for IT.
The risks of non-compliance include fines, legal problems, or even damage to the company’s reputation.
These risks come from all sorts of places, like data breaches, cyberattacks, privacy violations, software licensing infringements, and more.
IT compliance risk isn’t just about following local laws. It’s also about meeting international standards like ISO 27001, which are important for things like data integrity and system security.
The Deloitte publication, “Compliance Risk Assessments,” highlights the financial implications of compliance risk, stating that it can lead to “negative impacts with regard to the organization’s bottom line, share price, potential future earnings, or loss of investor confidence.”
In the Australian business landscape, the Privacy Act 1988, which covers how organisations handle personal information, can impose hefty penalties for non-compliance, reaching up to AUD 2.22 million for businesses.
What is the Role of IT Risk and Compliance?
The role of IT risk and compliance is to make sure that the way we use technology and manage data is in line with the rules set out by regulators. This helps us avoid penalties and keep things running smoothly.
In “Path from Information Security Risk Assessment to Compliance,” Bill Wilson says that IT risk assessments, when combined with operational risk management, help to prioritise risks based on their business impact.
That way, your company can stay compliant while protecting its most important assets.
The compliance team sets up an organisational framework for spotting risks linked to regulatory breaches, especially in areas like cybersecurity and data protection. They also make sure that controls to reduce these risks are both effective and regularly checked.
In Australia, where IT governance frameworks like ITIL and COBIT are used a lot, integrating IT risk assessments into overall compliance programmes helps businesses meet legal obligations quickly and easily, without disrupting their usual processes.
If you want to get a better idea of what to look for, you can read “3 Examples of IT Risk Assessments You Should Know.”
Importance of IT Risk Assessment and Compliance for Businesses
In today’s world, where data is often seen as the new oil, it’s impossible to overstate the importance of IT risk assessment and compliance for businesses.
A solid IT risk management and compliance programme helps businesses avoid expensive penalties and legal battles. Also builds trust with customers, partners and stakeholders.
It shows you’re serious about data security and responsible IT practices. In the end, this can give you a big competitive edge in the market.
And as we are all aware, Australian businesses are facing some pretty tough compliance rules. Just like their global counterparts.
For example, the Deloitte survey on compliance risk shows that 40% of companies don’t do annual compliance risk assessments, which leaves them open to some pretty serious financial and operational problems.
This shows just how crucial it is to have a structured, regular IT risk assessment process in place to identify, analyse and mitigate risks, and to reduce the chance of being hit with non-compliance penalties.
On top of that, the Risk-Academy’s Guide On Compliance Risk shows how companies can use quantitative methods to assess and prioritise compliance risks using models like Monte-Carlo simulations.
This approach helps businesses work out the financial impact of things like data breaches, which can cost up to AUD 2.1 million in fines under Australia’s data breach notification laws. It makes sure that resources are allocated properly to deal with these issues.
Key regulatory frameworks
There are a few key regulatory frameworks in Australia that govern IT risk assessment and compliance. They’re designed to make sure businesses protect data, maintain operational integrity, and safeguard customer privacy.
One of the main frameworks is the Australian Privacy Act 1988, which includes things like the Notifiable Data Breaches (NDB) scheme.
This scheme says businesses have to tell people affected by a data breach and the Australian Information Commissioner if it’s likely to cause harm.
If you don’t comply with the Privacy Act, you could be looking at a fine of up to AUD 50 million, depending on how serious the breach is.
As well as the Privacy Act, frameworks like ISO 27001 and ISO 31000 set out internationally recognised standards for managing information security and risk.
ISO 27001 is all about setting up an information security management system (ISMS) to help businesses manage risks related to data confidentiality, integrity, and availability.
On top of that, APRA’s CPS 234, introduced by the Australian Prudential Regulation Authority, sets out the rules for managing cybersecurity risks, especially for financial institutions.
If you don’t stick to CPS 234, you could end up with some hefty fines and operational problems. So it’s really important for businesses in regulated industries to make sure they’re following the rules.
To gain a deeper understanding of the key considerations, we recommend reading “IT Risk Assessment for Businesses Amidst Australia’s 94,000 Cybercrime.”
Relationship between Risk Assessment and Compliance
Risk assessment and compliance are two sides of the same coin. They’re like two peas in a pod, with one helping to reinforce the other.
As the “Path from Information Security Risk Assessment to Compliance” shows, risk assessment is a way of spotting and ranking security risks.
If you know how a security breach could affect your business, you can make better decisions about which security controls to use and stay compliant with the relevant rules.
The Deloitte publication points out how a solid compliance risk assessment helps organisations understand their total risk exposure, decide which risks are the most important, and use their resources effectively to deal with them.
This proactive approach helps to avoid costly penalties and also encourages a culture of compliance within the organisation.
If businesses align their risk management with compliance frameworks, they can avoid the fines, damage to reputation, and operational disruptions that come with non-compliance.
This proactive approach is especially useful in Australia, where businesses have to stick to a lot of different rules, from the Privacy Act to CPS 234.
How Interscale Becomes Your Support System in IT Risk Assessment and Compliance
First thing first, we’re here to get to the heart of the matter and get straight to the point. We at Interscale offer IT risk assessments that are as unique as your business.
We’ll take a close look at your systems, find and fix any vulnerabilities before the hackers do, and help you build a strong, secure data protection plan.
We stick to the ISO 27001 rules, so you can be sure we’re playing by the global rules. We can even help you train your team to become a cybersecurity dream team.
Think of us as your financial advisor but for IT security. We’ll help you work out whether the cost of a potential data breach is worth the investment in top-notch security solutions.
It’s all about finding that sweet spot where your business can thrive without breaking the bank.
We get it. Marketing can sometimes be a bit much, right? So sorry if you’re feeling overwhelmed. Or, why not take a peek behind the curtain?
Kindly visit our Interscale IT Risk Assessment Services page, read our client’s stories, and do some due diligence.
Or if you are ready for coffee and croissants, let’s arrange a meeting. Let’s sort out your IT risk assessment and compliance before it’s too late.
In Closing
Regulatory frameworks like the Australian Privacy Act, ISO 27001, and APRA’s CPS 234 set out the rules for protecting sensitive data and keeping things secure.
That’s why we at Interscale are here to help you get through these complexities.
We provide tailored risk management solutions that align with industry standards.
But at the end of the day, making sure you have solid IT risk assessment and compliance practices in place is the best way to keep your business resilient in today’s fast-changing regulatory environment.
