Cloud-managed services are an integral solution for organizations. Data sovereignty is a growing concern because enterprises move most of their data to the cloud, which is subject to the laws of the country in which it is stored. Organizations are now facing a far more complicated regulatory environment. A study reports over 137 countries with related data protection and sovereignty legislation; this means organizations have to be far more careful about cloud compliance and data security.

Let us discuss in detail how companies can leverage cloud-managed services to ensure regulatory compliance with different regional regulations.

Table of Contents:

What is Cloud Regulatory Compliance?

Regulatory compliance refers to the adherence to laws, regulations, and industry-specific standards when using cloud-managed services.

Moving to the cloud necessitates moving data and adapting business processes. Organizations should evaluate compliance implications so that their existing policies support cloud operations.

Some of these requirements come from internal governance frameworks, customer commitments, and external regulations, which vary with location, industry, and type of data.

To remain compliant, organizations need to constantly apply strong security measures and perform regular audits that comply with established standards governing clouds.

Common Cloud Compliance Requirements

Several regulations provide standards and best practices for secure data handling in the cloud, guiding cloud compliance initiatives.

Some of the common cloud computing frameworks include:

1. General Data Protection Regulation (GDPR)

GDPR unites and reinforces data protection laws under the European Economic Area (EEA). It is relevant to organizations globally when they deal with EEA personal data. Penalties due to noncompliance may be substantially high, making adherence indispensable for data security and privacy.

2. FedRAMP, the Federal Risk and Authorization Management Program

FedRAMP makes it easier for the US government to standardize security assessment, approval, and ongoing oversight of cloud services. For cloud service providers to satisfy the stringent regulations established by government authorities, this must be followed.

3. Health Insurance Portability and Accountability Act (HIPAA)

HIPAA requires any U.S. organization to handle sensitive patient data to protect it. Clinics, hospitals, insurance companies, and their representatives are all covered by this. Respecting HIPAA when it comes to cloud computing will prevent unauthorized individuals from accessing patient data.

4. ISO 27000 Series

This series comprises standards providing guidelines on information security management, including cloud-specific controls. Although it is not obligatory, complying with ISO 27000 boosts confidence, decreases risks, and facilitates compliance with other data protection laws.

5. Payment Card Industry Data Security Standard (PCI DSS)

PCI DSS determines security requirements for organizations that process card payments. In the cloud, compliance involves certain measures that shield dynamic and scalable structures from unlawful access.

Increased Relevance of Data Sovereignty over Cloud Services

There are several critical ways through which data sovereignty affects businesses. Failure to observe local legislation attracts heavy fines and penalties. In a world where clients’ data concerns are rising, companies that comply with strict data sovereignty legislation showcase a level of client trust.

Moreover, keeping data within protected local legislation is safer in terms of data breaches and general cloud security measures.

1. Data Sovereignty, Localization, and Residency

Let us understand these three concepts:

  • Data sovereignty is defined as data being stored in one country or the other. For instance, data kept within the EU’s borders must comply with GDPR.
  • Data localization is a policy that requires data storage within a country’s borders. For instance, Russia’s Federal Law 242-FZ simply requires that the personal data of Russian citizens be stored in Russia.
  • Data residency is a business decision to store data in a particular location. Once stored, that data will be subject to data sovereignty rules specific to that region.

2. Key Data Regulations to Remember

  • General Data Protection Regulation Europe: GDPR is one of the strictest regulations in the world. The personal data of EU citizens shall not be transferred to countries that do not have sufficient levels of protection. Fines for non-compliance could be up to 4% of global turnover or €20 million, whichever is higher.
  • California Consumer Privacy Act USA: This law provides California residents with control over the data collection, use, and selling process. Violations can be as high as $7,500 per incident.
  • Personal Data Protection Act Singapore: The PDPA controls how personal data collected and used by bodies and corporations in Singapore should be handled.

Concerns in Cloud Adoption

Companies heavily depend on cloud providers to protect sensitive data and applications. The cloud’s intricate nature, with multiple entryways, presents weaknesses for malicious actors. In essence, cloud-based data faces a heightened risk of cyberattacks.

Here is a closer look at these challenges:

1. Data Security Concerns

Here is a closer look at these challenges:

  1. Shared Responsibility Model: This approach has two sides. It relieves CIOs of the task of overseeing physical infrastructure, but it also raises questions about accountability. CIOs need to review their Shared Responsibility matrices to understand the specific security measures and constraints of cloud providers. It allows them to put in place complementary security measures like access controls and encryption to protect data in the cloud.
  2. Data Breaches: Cloud environments introduce new attack vectors, making data breaches a persistent threat. Encryption is paramount. Encrypted data is rendered useless if intercepted while in transit or at rest. Regular penetration tests and vulnerability assessments ensure security weaknesses are remedied before being exploited against your organization.
  3. Insider Threats: Discontented employees or individuals with breached credentials pose a notable danger. Multi-factor authentication, which necessitates an additional verification step in addition to the usual username and password, can enhance security further.

2. Data Privacy in the Cloud

Here are some data privacy challenges to take into account:

  1. Data Residency: Data privacy regulations, such as the General Data Protection Regulation, often mandate that data remain within specific geographic boundaries, which can be challenging for international organizations.
  2. Data Sovereignty: Data sovereignty laws dictate which entities have control over data access. Some countries restrict foreign access to citizens data. Awareness of data sovereignty regulations that impact their organization’s data helps CIOs select cloud vendors that adhere to those rules.

3. Regulatory Compliance Concerns

Here’s a snapshot of some regulatory compliance concerns:

  1. Adherence to Industry Regulations: CIOs must verify that the cloud provider’s infrastructure and security practices align with industry standards. Moreover, it is essential to collaborate with cloud providers with a proven history of compliance with relevant regulations.
  2. Data Governance: A strong data governance framework in the cloud environment guarantees data accuracy, consistency, and accountability. This framework must define clear ownership of data, categorize data based on sensitivity, and implement detailed access controls that limit data access according to user roles and duties.

Strategies for Managing Data Sovereignty in Cloud Services

Data sovereignty challenges are significant but can be managed effectively using the following strategies:

1. Selection of Appropriate Cloud-Managed Services

Choosing relevant cloud services provides data residency and sovereignty, which secures regulatory compliance. Major players let organizations choose by selecting one or more data centers to conform to regional regulatory requirements. Make sure your provider can offer the following:

  • Transparency regarding the location where the data will be stored and processed.
  • International and regional compliance standards should include data protection in regions such as GDPR, ISO 27001, and SOC 2.

2. Implementing Strong Data Loss Prevention Measures

DLP tools can curb unauthorized access and data breaches in stores spread across regions. Data Loss Prevention policies should be specific to the regulations of the countries where such stores are made, so that regional security requirements are met as well. Ensuring DLP measures help prevent accidental violations of data sovereignty laws.

3. Regular Audits and Compliance Checks

Auditing cloud computing environments is an ongoing process for businesses to ensure that every obligation is still governed by the laws of the local region where they operate. For such purposes, review of SLAs, cloud provider contracts, and internal security should be aligned with demands on data sovereignty.

4. Disaster Recovery Plans with RTO and RPO Compliance

Maintaining compliance demands making sure your Disaster Recovery Plan (DRP) adheres to the local data sovereignty requirements. A DRP must cover a concise Recovery Time Objective (RTO) and Recovery Point Objective (RPO) so that data can be recovered both fast and accurately in addition to complying with regional laws.

5. Maintaining Security at Cloud-Based Networks

This includes encrypting data in both resting and motion states, having robust access controls in place, and continually monitoring cloud computing environments for present and future threats. Organizations can control local data protection laws at high security standards and ensure that no breaches occur that may lead to regulatory penalties.

Best Practices to Ensure Data Sovereignty

Failure to comply with data sovereignty laws can lead to fines and penalties, business disruption, and damage to reputation. Listed below are a few of the key strategies applicable to most organizations:

1. Know Where Your Data Resides

Data sovereignty is first achieved through knowledge of how and where your data is physically stored, processed, and transmitted. This knowledge can be matched against the appropriate regional laws under which your operations are conducted to know if those are already complied with and to what extent risks might be associated.

2. Data Localization

Data localization involves housing data inside the country where it is sourced, thereby aligning it with the laws at the local level. It might make compliance easier, but it reduces the complexity a firm experiences when crossing borders with its data.

3. Protect Private Data

Data that contains healthcare, educational, and financial information requires double layers of protection to abide by legal and ethical guidelines. Data encryption for data at rest and in motion ensures that even if such data moves out of the country, no unauthorized people gain access to it.

4. Choose Your Cloud Services Well

When relying on third-party cloud services, companies must ensure that providers adhere to regional data regulations. Organizations must ascertain that their providers offer the right controls to store data within regions.

5. Geofencing for Data Storage

Geofencing limits how far data can travel, ensuring it stays within acceptable areas under regulatory standards. In this way, organizations also prevent the wrong conclusion that violating cross-border transfer requirements is legal.

6. Engagement with Legal and Compliance Teams

Legal and compliance teams should be engaged from both within and outside of the organization so as not to lose the mandates of continuous compliance. This would entail maintaining regular audits of contracts with cloud providers and interpreting arising laws that vary by region for where data is stored or processed.

7. Establish Data Protection Arrangements with Third-Party Cloud Managed Service Providers

When outsourcing cloud-managed services, legally binding DPAs should be established. In these, each party outlines roles and responsibilities over data protection matters. A DPA should clearly outline data processing boundaries, compliance responsibilities, and breach notification policies.

Wrapping Up

By prioritizing compliance and adhering to the best practices outlined in this article, you can ensure that organizations meet all necessary cloud compliance requirements while effectively mitigating associated risks.

Beyond best practices, leveraging suitable compliance management solutions can significantly bolster your compliance efforts.

Consider Hurix Digital, a platform designed to streamline compliance management. It offers robust capabilities for modeling and capturing critical insights across your environments, release operations, and data.

This holistic view empowers proactive identification and mitigation of compliance requirements, enabling a culture of adherence within your organization.

Contact us today to learn more!