Cloud Security Compliance: Navigating the Complex Regulatory Landscape
In today’s digital age, businesses are increasingly migrating their operations to cloud-based environments. This shift offers numerous benefits, such as scalability, flexibility, and cost-effectiveness. However, the cloud also brings a complex regulatory landscape that organizations must navigate to ensure they are compliant with various security standards and regulations. This blog post will explore the world of cloud security compliance, discussing the key regulations and standards organizations should be aware of, as well as best practices for achieving compliance.
Understanding the Key Regulations and Standards
General Data Protection Regulation (GDPR)
Enforced in May 2018, the GDPR affects organizations that process personal data of European Union (EU) citizens. The regulation mandates strict data protection measures and grants EU citizens increased control over their data. Failure to comply can result in fines of up to 4% of annual revenue (known as global turnover) or €20 million, whichever is greater.
When using a cloud service, there are a few entities in GDPR that you should be aware of. These are:
A data processor is an organization or individual that processes personal data on behalf of a data controller. Processing activities can include collecting, recording, organizing, structuring, storing, adapting, retrieving, consulting, using, disclosing, erasing, or destroying personal data. The data processor must follow the instructions provided by the data controller and is responsible for implementing appropriate security measures to protect the data. Examples of data processors can include cloud service providers, payroll service providers, or marketing agencies.
A data controller is an organization or individual that determines the purposes and means of processing personal data. The data controller has the primary responsibility for ensuring compliance with GDPR, including respecting the rights of data subjects, implementing appropriate security measures, and notifying relevant authorities and data subjects in case of a data breach. Data controllers may work with data processors to carry out the processing activities but must ensure that they only engage processors that provide sufficient guarantees of their ability to meet GDPR requirements. Examples of data controllers can include businesses, non-profit organizations, or government agencies.
A data subject is an individual whose personal data is being processed. In the context of GDPR, data subjects are typically European Union (EU) citizens or residents. The regulation grants data subjects specific rights in relation to their personal data, such as the right to access, rectify, erase, restrict processing, data portability, and object to processing. Data controllers and data processors must respect and facilitate the exercise of these rights to comply with GDPR.
Different countries with the EU/EEA have their own authorities under GDPR. Generally, a single country will take the lead for issuing penalties (fines) against non-compliant companies. By looking at the amounts of the top 5 fines issued under GDPR, you can quickly understand why companies prioritize GDPR compliance.
1. Amazon – €746 million ($781 million US$) – 2021
The biggest GDPR fine to date was imposed on Amazon Europe by Luxembourg’s National Commission for Data Protection (CNPD). This was after establishing that the online retailer did not get consent from data subjects before storing advertisement cookies on their computers.
2. Instagram – €405 million ($427 million US$) – 2022
In September 2022, the Irish Data Protection Commission (DPC) fined Meta-owned Instagram (a Meta company) for violating children’s privacy online, including publishing kids’ phone numbers and email addresses.
3. Facebook – €265 million ($275 million US$) – 2022
The Irish DPC fined Facebook owner Meta €265 million after Facebook’s users personal data was breached and found on an online hacking forum.
4. WhatsApp – €225 million ($247 million US$) – 2021
The Irish DPC fined Meta-owned WhatsApp for not properly explaining its data processing practices in its privacy notice. That’s right, even a poorly worded privacy notice that nobody reads lead to a quarter of a billion dollar fine.
5. Google LLC – €90 million ($99 million US$) – 2021
Health Insurance Portability and Accountability Act (HIPAA)
HIPAA is a U.S. regulation that sets standards for the protection of electronic Protected Health Information (ePHI). Organizations in the healthcare sector, or those that process healthcare data, must comply with HIPAA’s Privacy, Security, and Breach Notification Rules. It, along with GLBA (personal information in financial records) and COPPA (protecting children online) are the only federal privacy laws today. Everything else is state-driven.
HIPAA, the Health Insurance Portability and Accountability Act, is a U.S. regulation that sets standards for the protection of electronic Protected Health Information (ePHI). There are several parties involved in HIPAA, and their roles and responsibilities are crucial to ensuring compliance.
Covered entities are the primary organizations subject to HIPAA rules. They include healthcare providers (such as hospitals, clinics, and doctors), health plans (like health insurance companies and HMOs), and healthcare clearinghouses (entities that process nonstandard health information into standard formats). Covered entities must comply with HIPAA’s Privacy, Security, and Breach Notification Rules and are responsible for safeguarding ePHI.
Business associates are organizations or individuals that perform services for or on behalf of covered entities and have access to, create, maintain, or transmit ePHI in the process. Examples of business associates include billing companies, EHR (Electronic Health Record) providers, cloud service providers, and IT contractors. Business associates must sign a Business Associate Agreement (BAA) with the covered entity, which outlines the obligations and responsibilities of both parties in protecting ePHI. They must also comply with the HIPAA Security Rule and the Breach Notification Rule.
Subcontractors are third-party entities that provide services to a business associate, and in doing so, have access to, create, maintain, or transmit ePHI. Subcontractors are considered an extension of the business associate and must also sign a BAA and comply with the relevant HIPAA rules.
Penalties for HIPAA Non-Compliance:
HIPAA non-compliance can result in severe penalties, including fines and corrective action plans. The Office for Civil Rights (OCR) within the U.S. Department of Health and Human Services (HHS) is responsible for enforcing HIPAA rules. The fines for non-compliance are tiered based on the level of negligence and can range from $100 to $50,000 per violation, with a maximum of $1.5 million per year for each violation category.
Example of HIPAA Non-Compliance Penalty:
In 2017, Memorial Healthcare System (MHS) agreed to pay $5.5 million to settle potential HIPAA violations. The non-compliance issue arose after an employee of an affiliated physician’s office accessed ePHI without authorization, affecting more than 115,000 individuals. The HHS OCR investigation found that MHS failed to implement proper access controls and audit controls to review system activities. As a result, MHS faced substantial fines and had to implement a robust corrective action plan.
Understanding the roles and responsibilities of parties involved in HIPAA is essential for compliance and protecting sensitive ePHI. Organizations must continuously evaluate and improve their security measures to avoid non-compliance penalties and ensure the privacy and security of patient data.
Federal Risk and Authorization Management Program (FedRAMP)
FedRAMP is a U.S. government-wide program that standardizes the security assessment, authorization, and monitoring of cloud services for federal agencies. Cloud Service Providers (CSPs) seeking to do business with the government must demonstrate FedRAMP compliance.
The FedRAMP process is very similar to the NIST Risk Management Framework. A CSP works with a 3rd Party Assement Organization (3PAO) and first determines what categorization level they wish to obtain. From there, they select the appropriate controls from NIST 800-53, assess the controls using SP800-53A and then apply for an Authority To Operate (ATO). Once authorized, government agencies can consume the provider’s offerings. A complete list of authorized providers and assessors can be found in the marketplace at www.fedramp.gov.
Payment Card Industry Data Security Standard (PCI DSS)
PCI DSS is a set of security standards designed to ensure that all organizations that accept, process, store, or transmit credit card information maintain a secure environment. Compliance is required for any organization dealing with cardholder data.
It is critical to note that both the consumer and the provider play a part in PCI compliance. The provider must meet PCI compliance for their part of the shared responsibility, and the consumer application must meet PCI compliance as well. For example, a company that has a PCI application that doesn’t do any logging will be non-compliant, regardless of where it is run, including a PCI-DSS level 1 compliant CSP environment.
PCI Penalties and associated damages for non-compliance:
Non-compliant organizations can be subject to fines ranging from $5,000 to $100,000 per month, depending on the severity and duration of the non-compliance. The fines are imposed by payment card brands (Visa, Mastercard, American Express, Discover, and JCB) and are usually levied against the acquiring bank. The acquiring bank, in turn, may pass these fines down to the non-compliant merchant.
It’s important to note that many fines issued are done so in a private nature and are not published.
Increased transaction fees:
Acquiring banks might also increase transaction fees for non-compliant merchants, which can significantly impact the merchant’s profitability.
Organizations found to be non-compliant may need to invest in additional security measures, system upgrades, or third-party services to achieve PCI DSS compliance, which can be expensive.
Suspension or termination of card processing privileges:
In severe cases, payment card brands may suspend or terminate the merchant’s ability to process card payments, leading to revenue loss and potential business disruption.
Data breaches and non-compliance with PCI DSS can severely damage an organization’s reputation, leading to a loss of customer trust and potential decline in business.
Organizations may face lawsuits or other legal actions from customers or business partners in the event of a data breach resulting from non-compliance with PCI DSS.
International Organization for Standardization (ISO)
ISO 27001 is a globally recognized standard for information security management systems (ISMS). Organizations that achieve ISO 27001 certification demonstrate their commitment to maintaining a robust and systematic approach to managing sensitive company and customer information.
ISO 27002 is a controls catalog that includes a more in-depth explanation and best practices of the controls that are used for ISO 27001 certification.
ISO 27017 is essentially a version of ISO 27001 certification that is specific to cloud services. It builds on the controls in ISO 27002 to include guidance for both cloud service customers and cloud service providers. It also includes 7 controls not found in ISO 27002.
Best Practices for Achieving Cloud Security Compliance
Choose a Compliant Cloud Service Provider (CSP)
Select a CSP with a strong track record of compliance and a clear understanding of the regulations that apply to your industry. Ensure that the CSP has appropriate certifications, such as ISO 27001, and has other assessment reports such as System Organization Controls (SOC) 2 to support your compliance needs.
Implement a Strong Data Governance Framework
Establish a data governance framework that clearly defines roles, responsibilities, and processes for managing and protecting data. This framework should include policies and procedures for data classification, access control, encryption, and secure data storage and transmission.
Conduct Regular Risk Assessments
Regularly assess your organization’s risk exposure and the effectiveness of your security controls. This will help you identify vulnerabilities, prioritize remediation efforts, and continuously improve your security posture. A Cloud Security Posture Management solution can assist with this initiative.
Develop an Incident Response Plan
Create a detailed incident response plan to guide your organization through the process of detecting, containing, and recovering from security incidents. Train your employees on the plan and conduct regular drills to ensure readiness.
Foster a Culture of Security Awareness
Promote a culture of security awareness within your organization. This includes providing regular training and updates on security best practices, as well as communicating the importance of compliance to all employees.
For your IT staff that will assess, build and maintain cloud services, certification training on both Certificate of Cloud Security Knowledge (CCSK) by the Cloud Security Alliance and Certified Cloud Security Professional (CCSP) by ISC2 are leading options. At Intrinsec, we offer unique cloud security training solutions to equip your team members involved with strong knowledge of cloud security issues. Students can get both the CCSK and CCSP in one week with our special CCSK x CCSP bootcamp as well as our CCSK + Cloud GRC offering.
Navigating the complex regulatory landscape of cloud security compliance can be challenging. By understanding the key regulations and standards, selecting a compliant CSP, and implementing best practices, organizations can effectively protect their data and maintain a strong security posture. As regulations evolve, businesses must remain agile and adaptive to ensure ongoing compliance and safeguard their valuable assets in the cloud.