What Are Compliance Metrics? How to Measure & Monitor? 

“Compliance effectiveness and the value of compliance are tough to measure. That’s unfortunate because regulators want to see that sound compliance policies are in place and efforts are being made to track their effectiveness. If the regulators are finding compliance problems, then there may be a breakdown somewhere in the first, second or third lines of defense in that company,” – Tom Rollauer, Governance, Regulatory and Risk Strategies executive director, at Deloitte. 

Measuring compliance metrics in IT ensures adherence to regulations, breaks down abstract concepts like security into quantifiable and tangible outcomes, and provides a complete picture of your security posture. This article explores the importance of compliance metrics, what to measure, and how. 

What are compliance metrics?

Compliance metrics are quantitative and qualitative measures of your business’s performance. These are evaluated in terms of policy violations, financial loss, mitigated risks, non-compliance with regulations, time to recover, impact of breaches on key operations, and effectiveness of compliance programs. To evaluate your compliance metrics, it is critical to understand KPIs. 

What are KPIs?

KPIs (Key Performance Indicators) evaluate how well you are performing for key compliance initiatives. An example of compliance KPIs is how well you are adhering to the internal or external policies, industry regulations, or how employees are responding to awareness programs.

Why should you track compliance metrics?

Compliance metrics are a key indicator of your compliance program’s performance. They evaluate your current posture against the requirements of one or more regulatory frameworks. This helps IT and compliance teams gain insight into the controls that are working and the ones that are failing or require attention.

For example, security and privacy frameworks like SOC 2, NIST, ISO 27001, and PCI DSS mandate a list of controls to protect information security and data privacy. If you want to comply with one of these or similar regulations, audit success won’t be easy without measuring and monitoring compliance metrics.

Not all regulations are mandatory and depend on the type of data you process, but if they are compulsory, failure to adhere to their requirements is the inevitable path to legal penalties and loss of customer confidence. You wouldn’t know if you are headed toward a legal disaster without the right metrics that teams can use to identify and remediate the gaps on time.

Understanding the bits and nuances of compliance is not easy, especially for company executives and upper management roles. Compliance metrics break down its complexities into easy to understand formats such as the percentage of progress and level of risks. This equips them with the data needed to make important decisions to prioritize business objectives.

Metrics that matter: what to measure and how

If you want to track the progress and effectiveness of your compliance program, it is critical to have clarity on what exactly to measure. We spoke to our audit partners and customer success representatives to know that metrics make and break compliance. We gathered seven compliance metrics examples that you should consider measuring: 

Average time taken to identify issues

The average or mean time to identify every non-compliant incident is a critical qualitative metric. Suppose your team does not identify a non-complaint activity or a vulnerability quickly. In that case, it may escalate into a serious matter and give way to severe consequences such as loss of confidential data or as a legal issue.

For example, if a critical file is not protected with multi-factor authentication, unauthorized malicious insiders can gain access and misuse the data to their advantage. Keep track of:

• Average detection time
• Time to resolution
• Issue identification rate
• Frequency of audits
• Automated detection efficacy
• False positive rate
• Employee reporting rate
• Compliance monitoring coverage

Average time taken to resolve issues

Related to the previous metric, the average time to resolve issues provides insight into how quickly your team manages the identified gaps or vulnerabilities. Timeliness is a critical indicator of good compliance practices as high risk non-compliant activities are time sensitive.

Let’s understand this with an example of an antivirus tool that is not running on the latest version. Malicious actors with access to sophisticated malware can easily exploit this vulnerability, damaging files critical to key business operations. Unless you quickly respond, they will continue to contaminate more systems. Keep track of:

• Average response time
• Number of resolved issues
• Rate of resolution improvements
• Resolution time by issue severity
• Time to implement corrective actions
• Effectiveness of resolution methods
• Percentage of issues resolved on time
• Resolution bottlenecks

An effective way to improve the mean identification and resolution time is by continuously monitoring your compliance status. Businesses struggle to monitor large infrastructures and end up with blind spots, rushing through control tests, and haphazardly patching gaps – ultimately spiraling into chaos. 

Tools like Sprinto help you stay in control by continuously monitoring your apps, code repos, and infrastructure using a fully automated program that identifies anomalies in real time and builds a centralized view of control health. It alerts teams of non-compliant activities to ensure on time remediation and zero gaps.

Stay Ahead with Automated Continuous Compliance. Get a demo now.

Cost to mitigate compliance lapses

The cost to mitigate compliance failures is calculated against your total annual or quarterly budget. Costs associated with mitigating compliance lapses include the price of detection and response tools, loss of productive hours, and impact on business operations. It is an important metric as all these ultimately affect your bottom line.

Understanding the cost of compliance failures helps senior management determine whether your compliance program is worth the investment. It also helps you identify the main areas of noncompliance that are draining your bank. Keep track of:

• Total mitigation costs
• Cost per incident
• Cost of corrective actions
• Resource allocation for mitigation
• Mitigation cost trends over time
• Budget variance for mitigation
• Cost-effectiveness of mitigation strategies
• Indirect costs (e.g., downtime, productivity loss)
• Cost savings from preventive measures
• External consulting and legal fees

Cost to legal consequences

As we previously outlined, if a compulsory regulation applies to your business, non-compliance can attract legal penalties like fines. While businesses rarely fall into legal trouble, it does happen.

Unlike the cost of compliance lapses, the price of violating regulations is not calculated against the budget as these are largely unpredictable and unexpected. Board members and upper management don’t think their business would face legal consequences – until they do.

The cost of non-compliance with regulations is not the price you pay but also the impact it has on your business. In some cases the losses bleed into brand reputation and in rare but severe instances the business can be banned from operating. Keep track of:

• Total legal costs
• Fines and penalties paid
• Legal fees
• Settlement amounts
• Costs of litigation
• Indirect costs (e.g., reputational damage, loss of business)
• Legal cost trends over time
• Budget variance for legal expenses
• Cost impact on overall financial performance

Gap between actual and accepted compliance level

The gap between your current level of progress to the finish line of desired goals indicates the effectiveness of your compliance management program. It is an objective measure of your security posture that highlights the areas that require your attention and effort.

The term “acceptable” here can indicate either of these metrics – your risk tolerance level against industry benchmarks, risk profile, requirements of a regulatory framework, or stakeholder expectations. Keep track of:

• Compliance gap analysis results
• Number of unmet compliance requirements
• Severity of compliance gaps
• Trend of compliance gap over time
• Percentage of compliance objectives met
• Rate of gap closure
• Impact of gaps on operations
• Remediation efforts and timelines
• Stakeholder impact due to gaps
• Compliance gap root cause analysis

Employee awareness training results

Employees are responsible for executing compliance activities with minimum pitfalls, so it is critical to ensure they understand their obligations.

Your compliance training and awareness program should be aligned with the regulatory requirements. Conduct a session as and when changes are introduced in the regulation. Keep track of:

• Percentage of training completion rates
• Post-training assessment scores
• Frequency of training sessions
• Training feedback and evaluations
• Employee engagement in training
• Training effectiveness trends
• Reduction in non-compliance incidents post-training
• Knowledge retention rates
• Correlation between training and compliance improvements
• Cost of compliance training programs

Training employees is mandatory for a number of compliance frameworks like GDPR, ISO 27001, and PCI DSS. But achieving organization wide alignment and tracking the status of completion can become chaotic for HR departments. Compliance management tools like Sprinto’s offer built-in security training modules that help you launch fully customized training programs for each role and regulation and use a centralized tracking system to oversee progress. See Sprinto in action.

Recurring compliance issues

If you find the same issue surfacing time and again, it is a reflection of a poor compliance program. Recurring activities of non-compliance is an additional cost component. If you are preparing for an audit, it is an indicator that you don’t take compliance seriously. Avoid this by closing issues as soon as they occur. Keep track of:

• Number of recurring issues
• Frequency of recurrence
• Root cause analysis of recurring issues
• Impact of recurring issues
• Trends in recurrence rates
• Effectiveness of remediation efforts
• Changes in recurrence after corrective actions
• Stakeholder impact due to recurring issues
• Cost associated with recurring issues
• Employee involvement in resolving recurring issues

Manage, measure, and monitor metrics with confidence

If you are still measuring compliance efforts using outdated tools and siloed systems, these won’t be feasible for long. As you scale, measuring compliance gets harder and creates more gaps than it solves for unless you automate the processes. Compliance automation tools like Sprinto helps you:

• Set up and manage a highly automated compliance tracking program that tracks all custom metrics using industry benchmarks. 
• Notifies your teams of anomalous behavior with in-depth context and suggested corrective measures. 
• Saves the cost and effort of managing compliance efforts manually by eliminating siloed systems and consolidating control heath tracking and risks into a single console
• Launch and monitor training programs based on your framework’s requirements and automatically collect evidence of completion. 

Want  to know how we can help your business? Talk to our compliance experts today. 

FAQs

What are compliance KPIS?

Key performance indicators are metrics that measure the effectiveness of your compliance process, compliance performance, and compliance strategies.

What are key risk indicators in compliance?

Key risk indicators is a metric that measures the probability of a vulnerability translating into a risk. By messing this metric, you know if there is a chance of an event or incident that may exceed your organization’s risk appetite. 

What are some examples of compliance metrics in GRC?

Some compliance metric examples include predicted vs actual risks, average time to mitigate issues, rate of recurring issues, and the total cost to legal consequences.