Beyond Checkboxes: How Compliance Controls Protect Your Organization?
Payal Wadhwa
Oct 10, 2024
More often than not, when compliance falls through the cracks, it’s due to weaknesses in compliance controls. This may be because of a design flaw, an implementation error, or inadequacy in control testing or monitoring. Failing to update a policy or overlooking a minor regulatory requirement can cost you your sanity and an audit, resulting in a negative public perception.
With a robust system for implementing and maintaining controls, compliance won’t get in the way of your mission-critical tasks. Unfortunately, many companies see controls as mere checkbox exercises to tick out of the fear of audits, but, they’re much more than that.
Through this blog, we aim to explain the key concepts related to compliance controls, how they relate with risks, and how to build a strong system of controls with ease.
TL;DR:
Compliance controls enable an organization to meet regulatory requirements, safeguard against risks and operate efficiently. |
Compliance controls can be categorized as preventive, detective, and corrective bBased on time and interaction with risks. Alternatively, they can also be categorized as administrative, physical or technical based on their nature and as primary or secondary controls based on criticality. |
Continuous control testing and monitoring of controls can help maintain a robust security posture and ensure ongoing compliance |
What are compliance controls?
Compliance controls are policies, procedures, and mechanisms that enable an organization to minimize risks, protect critical data, and demonstrate adherence to regulatory laws and regulations. These controls can be preventive, detective, or corrective and are applied in areas such as information security, financial reporting or industry-specific requirements.
What are internal compliance controls?
Internal compliance controls are a set of policies and formal guidelines that an organization must follow to ensure compliance with internal policies and regulatory standards. These controls help maintain organizational integrity, minimize legal and compliance issues and safeguard critical assets from risks.
Types of compliance controls along with examples
Compliance controls can be categorized on different basis. The ones classified based on time and interaction with risks are preventive, detective, and corrective controls. Preventive controls react with risks before they turn into events while detective and corrective controls interact with risks when they occur.
1. Preventive controls
Preventive controls are proactive measures designed to minimize errors and risks before they harm the organization. They help build a strong control environment, ensure security and integrity of systems and enable the organization to meet compliance requirements.
Here are some examples of preventive controls:
- Separation of duties: Clearly defining roles and responsibilities to minimize errors and fraud
- Manager approvals: Ensuring that a person who raises the request is not the one approving it
- Firewall implementation: Installing network security devices to block potentially harmful traffic
- Encryption: Converting sensitive information into encrypted text that only authorized people can decrypt/access.
- Vendor risk management procedures: Introducing rigorous due diligence checks and setting a vendor onboarding processes
2. Detective controls
Detective controls are mechanisms that help identify risks and issues that preventive controls cannot prevent them from happening. The key purpose of these controls is to enable the organization to respond to the issues promptly to minimize the damage.
Examples of detective controls include:
- Intrusion detection systems: Monitoring traffic to identify suspicious activities
- Audit logs: Maintaining user activity logs to detect any unauthorized actions
- Access reviews: Periodically reviewing access permissions to ensure they align with job functions
- Secure code reviews: Examining source code for vulnerabilities missed at the development phase
- Internal audits: Conducting periodic audits to pinpoint non-compliance areas and control inadequacies.
3. Corrective controls
Corrective controls are measures taken to fix errors and issues after they occur to mitigate the damage. They help an organization to recover from incidents and strengthen security measures to minimize the chances of reoccurrence.
Take a look at these corrective controls:
- Patch management: Applying patches and updating software to fix the identified vulnerabilities
- Incident response plans: Implementing a well-documented plan to respond to security breaches or events
- Backup procedures: Backing up sensitive information and restoring it after a system failure
- Access revocation: Revoking access rights for a user after detecting unauthorized activities.
- Policy updates: Updating policy documents after an incident, compliance issue or an outdated practice.
Ensure zero blind spots and compliance chaos with Sprinto
Next, compliance controls can also be categorized based on the nature of controls as administrative, physical and technical controls.
1. Administrative controls
Administrative controls use policy modifications, procedural changes, and new practices to minimize the organization’s risk exposure. Examples include implementing risk assessment procedures, drafting vendor management processes, and creating incident response plans.
2. Physical controls
Physical controls focus on limiting physical access to assets, resources, and facilities to minimize unauthorized access or tampering. Examples include implementing surveillance cameras, biometric devices, and alarm systems.
3. Technical controls
Technical controls use technological measures to protect systems and networks and ensure regulatory compliance. Multifactor authentication systems, encryption, and access controls are a few examples.
Based on role and criticality, compliance controls can be categorized as primary or secondary controls.
1. Primary controls
Primary controls are the first line of defense that help address the risk directly and minimize its impact. For example, security awareness training and internal audits are key controls.
2. Secondary controls
Secondary controls support primary controls and act as an additional layer of protection. So, they are the second line of defense. Management reviews and log reviews are examples of secondary controls.
How do compliance controls interact with risks?
There are three key types of risks that compliance controls interact with: inherent risks, control risks, and residual risks. Let’s understand each of these and how a combination of controls helps mitigate the risks.
Inherent risks
Inherent risks occur naturally due to the nature of business operations, industry or environment. These risks persist before any compliance controls are put in place.
For example, a technology company faces an inherent risk of bugs and technical failures.
How will compliance controls react to this risk?
- Preventive controls such as a secure software development cycle will help minimize risks of technical failures.
- Detective controls, such as monitoring and issue tracking, will help detect software anomalies and enable proactive action.
- Corrective controls such as patch management and updates will minimize the chances of future occurrences.
Controls risks
Control risks occur when controls are inadequate, improperly designed, or ineffectively implemented, due to which the organization may fail to detect or minimize risks or meet a regulatory requirement.
For example, if there is no proper segregation of duties and the same employee initiates and approves transactions, it can lead to fraud or risk of oversight.
So how will compliance controls react to this risk?
- Corrective controls will be designed and implemented, and the organization will address violations of segregation of duties. Policy updates, training, and awareness sessions will ensure everyone is aware of their roles and responsibilities.
- Preventive controls such as role-based access controls, will limit access to systems and minimize unauthorized access
- Detective controls like monitoring and auditing user activities will help identify suspicious attempts. Similarly, access reviews will help ensure that the segregation of roles and access permissions works as intended.
Residual risks
Residual risks, as the name suggests are risks that remain even after an organization implements necessary controls and mitigation measures. This risk must remain within the organization’s risk appetite and is, therefore, crucial to understanding the impact of risk management efforts.
For example, a healthcare organization might conduct HIPAA training to raise employee awareness and protect sensitive patient data. However, there still exists a residual risk of an employee with malicious intentions misusing their access to view patient information.
To ensure that the residual risk remains within the organization’s risk tolerance levels, here’s how compliance controls will play their part:
- Preventive controls such as authentication controls, access controls and regular reviews will help minimize unauthorized access
- Detective controls such as monitoring and audit trails will help report malicious activities
- Corrective controls in case of a breach will help address risks through incident response plans and any policy updates
How Sprinto helps you understand the relationship between risk and controls:
For every risk, you can see a detailed risk profile. The inherent risk scores help you understand risk severity while the risk treatment plan section outlines the controls that can help mitigate the risks. You can also check the residual risk score post control implementation and the risk treatment strategy after the residual risk.
Compliance control testing and monitoring
Compliance control testing is the process of evaluating the effectiveness of internal controls in identifying and minimizing risks. It ensures that the controls work as intended to protect critical assets and meet compliance requirements.
There are two approaches to performing control testing:
Manual approach
Manual control testing relies on individuals independent from the controls being tested to ensure an impartial view of the control effectiveness. For this exercise:
- Determine which controls to test and the areas as well as the sample size to review.
- Develop a control testing procedure, including methods such as interviews, observation, document reviews, and technical testing
- Document and evaluate the findings to identify control deficiencies
- Create a final report for top management and discuss the follow-up plan to fix issues
While the method provides a great contextual understanding of the controls, it is resource-intensive and does not offer a scalable solution
Automated control testing
Automated control testing leverages technology to perform control testing procedures.
GRC tools like Sprinto come into play here. Sprint integrates seamlessly with your existing cloud stack and utilizes 200+ integrations and responsive APIs to build a connected view of risk and controls. The API-based evidence capture from the source systems enables automated control testing and evidence collection.
Unlike the mere checkbox exercise, Sprinto provides the benefit of an automation-first and agile control testing platform reducing manual work and delivering quick results.
Continuous control monitoring
Continuous control monitoring is an ongoing, real-time assessment of controls that promptly identifies and addresses any issues. This mechanism relies on software and tools to continuously gather data from systems and applications, providing a snapshot of the current control status.
Sprinto’s dashboard equips you to view controls in real time. You can view control checks as passing or failing and notify the control owner for proactive action. Multi-channel and time-bound alerts also support the process triggered whenever there is a compliance deviation or a control failure.
Check out this video to learn more:
Unlock the potential of smart automation
Building a pipeline of compliance controls requires in-depth risk assessments, scoping gaps, and streamlined workflows. You also need standardized control procedures and continuous tracking of control performance. It is necessary to ensure you stay ever-compliant while weaving a strong security fabric. That’s where automation helps, and tools like Sprinto come into play.
Sprinto minimizes the friction in the process and does all the heavy-lifting to give you maximum output with minimum inputs.
- The in-built policy templates eliminate the need for starting from scratch.
- Integrated risk management helps understand the interaction between risks and controls
- Ready to use training modules save you the costs of partnering with a training company
- Continuous control monitoring ensures that there are no blind spots and you stay ever-compliant
- In-built security tools such as MDM and role-based access controls save you the costs of acquiring them separately
- Automated evidence collection prepares you for audits without compromising bandwidth
- 1:1 guided implementation sessions and the friendly user interface help minimize the learning curve
Want to see the platform in action? Take a tour and streamline your compliance journey.
FAQs
What are the risks of not mapping controls to risk and compliance processes?
The risks of not mapping controls to risk and compliance processes include increased vulnerability to risks, regulatory non-compliance, a lack of positive public perception, and operational inefficiencies.
What are some common challenges in implementing compliance controls?
Common challenges in implementing compliance controls include:
- Navigating through a complex regulatory environment
- Mapping controls to risks and compliance requirements
- Managing data silos,
- Integration with existing systems
- Dealing with implementation costs.
What is the difference between control testing and monitoring?
Control testing evaluates the effectiveness of controls at a specific point in time, showing the current status of the controls. Control monitoring, on the other hand, is an ongoing process that continuously assesses the performance of controls.
What are key controls in compliance?
Key controls are primary procedures or the first line of defense that help protect the organization against security distractions. For example, if an organization processes online payments and implements multi-factor authentication (MFA) for all employees having access to the payment systems, then MFA is a primary control here.
What are compensating controls?
Compensating controls are secondary or alternative measures implemented to meet security requirements when primary controls are not feasible. These controls offer comparable protection against risk.