Libby Bevin

Compliance testing, also known as conformance testing, is a periodic, independent, and objective assessment of compliance-related processes or controls. As the name implies, you’re testing those controls to see how well they actually work.

Compliance testing plays a major role in identifying vulnerabilities in existing compliance risk management controls; many regulations also require testing as part of an organization’s compliance obligations, and testing should follow an established process, as well as a risk-based approach.

All that said, testing can be a complicated endeavor. This article will unpack the best practices typically involved, so that you can understand the issues here and plan your own testing program wisely.

What Are the Benefits of Compliance Testing?

Compliance testing has multiple benefits that help to assure your IT systems work as planned. For example, testing can identify which of your employees might not understand compliance obligations that your business has, and then you can follow up with extra training as needed. Testing might also uncover defective technical controls around, say, encryption; which you could then correct with new controls.

Continued testing through a monitoring program means you’ll find potential threats and weaknesses before a cybersecurity risk comes to fruition. You can think of compliance monitoring and testing as preventive measures, such as visiting the doctor annually, even if you don’t feel sick.

Steps to Effective Compliance Testing

To minimize risk and make certain that your compliance management system is working correctly, you must have an effective compliance testing program in place. These tests will help your company to avoid legal violations, which can be complicated and costly to resolve. By following the steps below, you can create a testing process that will catch potential problems before they occur. Consider employing automation for some of these steps to give your compliance officer or compliance team stronger tools.

1. Create a requirements library Whether your company already has a small compliance testing program or you’re developing a new program, the first thing you have to do is build a requirements library. That library establishes the requirements that apply to your company. You will use it to identify the existing controls (or lack thereof) that mitigate your company’s compliance risk.

   A requirements library is an inventory of in-scope requirements that you will use to identify the compliance risks to your organization. To establish the library, you must identify all the statutory, regulatory compliance, or contractual requirements that apply to your company’s operations.

   You might want to first consider consulting with a subject matter expert in your industry who can help you identify the in-scope requirements. Then work with the executives from each business unit, including your legal team, to assure you capture all applicable requirements.

   Next, map the requirements to their applicable business functions and work with the business unit executives to define the compliance risks. This can take the form of an internal audit. You should also validate the applicability of the requirements with the business owners to help them clearly understand the importance of each requirement and what could happen if it’s not met.

   Once you’ve mapped the requirements and identified the risks, you should identify the controls you have in place to mitigate the compliance risks. This is a great opportunity to determine how many controls mitigate each compliance risk; it’s also where you should focus on compliance testing in the future, to minimize duplicate testing.

   Ultimately the requirements library should be a “single source of truth” for your company’s compliance requirements. Maintaining the requirements library within a governance, risk, and compliance (GRC) software tool assures that you preserve the integrity of that source of truth. You can also implement compliance controls to prevent unauthorized users from making unintended additions, deletions, or other changes that could compromise the requirements library.

2. Conduct a compliance risk assessment Begin this step by defining the parameters of the compliance risk assessment, including the categories, risk profiles, and factors you will measure, as well as the data sources that will be used to conduct the risk assessment.

   The next step is to evaluate the inherent risk for each risk – that is, the risk of violating a requirement when your business process has no controls to prevent that risk at all. Then evaluate the effectiveness of the control that does mitigate this risk, and consider what’s left over: the residual risk that still exists even after the control is in place.

   Use the residual risk to prioritize which controls should be tested first or most often. The higher the residual risk, even after a control is in place, the more often you want to test that control.

3. Develop the compliance testing methodology After performing the risk assessment, develop a compliance testing methodology to determine how you’ll test in-scope requirements or their associated controls.

   To develop the testing methodology, you have to define the following:

   • Testing approach, including purpose, scope, and objective.
   • Sampling method that you’ll use when performing testing.
   • Process you’ll follow when you identify compliance violations or issues.
   • Remediation methods when you find defective controls.
   • Reporting requirements, including stakeholders.
4. Communicate the testing methodology Communicate the testing methodology to the business unit that’s being audited as well as to the relevant parties and member firms that perform the testing to reduce duplication of efforts.

   Communicating a clearly defined methodology early in the testing process can minimize resistance from the teams being audited, by letting them know what they should expect and when.

   Your methodology may evolve every year as your compliance program becomes more mature. For example, your objective for the first year may just be to assure that all areas comply with the applicable laws by testing all the requirements in the library. In succeeding years, you won’t need to limit compliance testing just to verify compliance. You may also want to test the controls that mitigate the compliance risk.

5. Establish the testing schedule
   Use the residual risk established in the compliance risk assessment to determine how often you should test for each requirement. The schedule will vary depending on the size of your team and the company’s objectives. For example:
   • High residual risk: quarterly (or more frequently)
   • Medium residual risk: semiannually
   • Low residual risk: annually
6. Group the requirements by business function or overall regulation, and state when each of these groups will be tested. Add the established timeframe as a data point in your risk assessment to confirm that you have testing coverage for all requirements. Once you’ve completed the schedule, communicate it to the business units so they all understand when you’ll be testing them and what you’ll be testing against.
7. Perform testing Notify the business units about the planned audits well in advance, and include what you’ll require of process owners and department heads. Allocate enough time to submit document requests and review the evidence you’ve gathered.

   Obtain the data and materials you’ll need to perform testing against the regulatory requirements. Then test per the established testing methodology you’ve communicated to the audited business unit. This ensures that your testing process stays consistent by eliminating confusion and frustration for the leaders of your business units.

   Document the testing programs and preserve evidence of the results of the testing. Follow up on findings to assure that the issues or control gaps you’ve identified aren’t false positives.

   Communicate the final results to the business units and obtain the approval or agreement from the affected business function on any issues you’ve identified. When you’ve completed all the testing steps, draft and issue the final report of your results to the relevant parties, such as the audit committee.

8. Implement an issues management process Once you’ve identified and confirmed the issues or control gaps, you must follow an issues management process to manage those issues from identification through remediation. Start by entering the issues you’ve identified in the issues management system (JIRA, for example). Then assign ownership by determining which business function is responsible for the compliance violation based on the mapping you did when you were creating the requirements library.

   Determine the severity of the compliance violation on your company. When you rate violations of law, you should also assess the pervasiveness, duration, and severity of the violation.

   Be sure to document the underlying cause of each issue and work with the affected business units to document the remediation plan to address that underlying cause, including milestones you want to achieve and when you want to achieve them.

9. Validate remediation When you’ve completed the milestones of the remediation plan, validate that the plan worked as intended. Validation should assure that the corrective actions addressed the immediate issue and that the long-term remediation prevents the issue from recurring. You may be required to perform the test again to validate that the remediation plan worked. You will also need evidence that you completed the remediation plan.
10. Monitor sustainability You should establish a period of sustainability that must be achieved before closing the issue – for example, the compliance violation should not occur again for at least two months. Based on the organization’s risk appetite, you could increase the number of months.

    At the end of the sustainability period, you must gather and maintain evidence that the issue did not recur. If the issue does not recur, then you can close the issue. However, if the issue did recur during the sustainability period, you’ll have to reestablish the underlying cause and adjust the remediation plan accordingly.

RiskOptics Offers a GRC Solution for Compliance

If you operate in a regulated environment, you’re expected to have a compliance management system. If you want your compliance management system to be effective, you must perform testing against the statutory, regulatory, or contractual requirements that affect your company.

Performing compliance testing in an ad-hoc manner can lead to increased regulatory scrutiny since you won’t be able to provide evidence that you have a fully functioning compliance testing program.

By following these steps, you’ll be able to get your company’s compliance testing program off the ground.

Contact RiskOptics today to get a demo and see how we can help you with your compliance needs.

Compliance is often viewed as a “one and done” activity – an annual rite of passage, for example, performed during yearly audits. That is an archaic approach to compliance in the modern business world, and won’t suffice any longer.

Instead, organizations must adopt a mindset of continuous compliance, where adherence to regulatory requirements becomes integral to day-to-day operations.

How can a company achieve that evolved state? This article will guide you through the advantages that continuous compliance brings, and offer six essential processes to assure ongoing compliance.

What Does Continuous Compliance Mean?

Continuous compliance takes an active approach within the organization to assess the efficiency of data protection controls. Unlike traditional compliance practices, continuous compliance entails ongoing monitoring and evaluation.

By staying vigilant, organizations can assure they meet and exceed compliance requirements, maintain a robust compliance posture, and address evolving regulatory compliance demands. In other words, continuous compliance lets organizations demonstrate their commitment to meeting compliance standards.

What Are the Benefits of Continuous Compliance?

Continuous compliance brings several significant benefits.

1. Active risk management

   Continuous compliance drives better, earlier detection of potential risks, allowing prompt actions to be taken. This approach reduces the likelihood of fines, penalties, legal actions, reputational damage, and operational disruptions resulting from non-compliance.

2. Strengthened security measures

   Continuous compliance enhances security by enabling organizations to monitor and implement security controls, which reduces the risk of data breaches and other security threats. Such an approach helps to safeguard sensitive information, instills stakeholder trust, and maintains a strong security posture.

3. Efficient audits and reporting

   Continuous compliance simplifies audits by keeping an updated record of compliance activities. Organizations can respond to audit requests efficiently and demonstrate regulatory adherence with compliance documentation.

6 Steps to Ensure Continuous Compliance

To achieve continuous compliance, organizations should take the following six steps.

1. Start with the right people

   A robust compliance program depends upon a corporate culture that respects information security. The foundation of any culture is the individuals within the organization. While senior management plays a key role in providing oversight, all employees need to recognize the importance of compliance.

   Although many employees understand the value of the compliance process, sometimes there’s a gap in their ability to implement what’s needed. In those instances, the journey toward continuous compliance begins during the initial hiring process and permeates throughout the company.

2. Identify critical assets and data

   Effective cybersecurity compliance relies on identification, cataloging, and risk assessment. Cloud computing, however, has transformed the data storage landscape, requiring a different, more holistic understanding of physical and cloud-based data repositories. Compliance teams will need to work hard to identify all the critical assets and data in that world.

   PCI compliance is a great example. Retailers must have complete knowledge of the whereabouts of all their point-of-sale (PoS) systems. In a hybrid cloud solution, organizations must identify their physical location, private cloud infrastructure, and third-party public cloud assets. When using AWS hybrid cloud to improve operations, it’s imperative to assure solid security measures across all assets at each location.

3. Establish control measures

   Implementing effective controls generally means following established compliance standards such as NIST, GDPR, PCI DSS, COSO, HIPAA, and ISO – but translating these requirements into actionable protections can present challenges.

   While some controls, such as firewall rules or encryption practices, may share similarities, they also have nuanced variations that depend on specific contexts. To bridge this gap, organizations should prioritize remediation efforts, vulnerability management, and robust access management protocols.

4. Facilitate continuous data environment monitoring

   Facilitating data environment monitoring allows organizations to detect compliance issues or deviations from regulatory requirements at an early stage. Monitoring the data environment in real time makes it possible to identify potential non-compliance issues or suspicious activities as they occur.

   On the other hand, continuous monitoring of data environments provides insights into an organization’s compliance performance. By tracking relevant key performance indicators, organizations can assess their adherence to regulatory requirements, uncover patterns in compliance incidents, and gauge the effectiveness of their control measures.

5. Maintain documentation

   Documentation proves the existence and efficacy of controls, which in turn allows organizations to prove their commitment to regulatory adherence. Examples of crucial documentation for continuous compliance include:

   • Security policies, procedures, and protocols. Clearly defined and well-documented security policies establish guidelines for safeguarding sensitive data and ensuring compliance.
   • System logs. Detailed records of system activities, including user access, changes, and events, provide insights for monitoring and identifying potential compliance issues.
   • Software configurations. Documentation of software configurations outlines the specific settings and parameters implemented to assure security and compliance standards are met.

6. Promote effective communication within the organization

   Effective communication among stakeholders is vital for achieving continuous compliance within your organization. While appointing the right people to oversee IT compliance functions is also vital, their efforts alone aren’t sufficient without seamless communication among them.

   Unfortunately, organizations often encounter challenges with cross-departmental communication. Stakeholders frequently fail to recognize the interconnectedness of different business units.

   To address such challenges, organizations must invest in streamlined workflows and use standardized frameworks for regulatory compliance. These measures will facilitate consistent information sharing, promote department collaboration, and enhance overall compliance management.

The Components of Continuous Compliance

Continuous compliance rests on a foundation of six fundamental components.

1. Policy and procedure

   One key to continuous compliance is assuring that organizational policies align with regulatory requirements. This means you should regularly review and update these documents to reflect changes, and then conduct compliance audits to evaluate the policies’ effectiveness.

2. Security and access control

   Safeguarding sensitive data and preventing unauthorized access is paramount to continuous compliance. Organizations must implement security measures, such as access controls and encryption protocols, to protect against cyber-attacks.

3. Audit and reporting

   To maintain adherence to regulatory requirements, organizations need to conduct regular compliance audits. These audits assess the organization’s compliance with relevant laws, internal policies, and industry standards. Detailed records of audit findings and remediation actions are essential for accurate reporting and demonstrating compliance during the next audit.

4. Incident response and management

   Having a well-defined incident response plan helps mitigate the effect of cyber-attacks. Compliance with incident reporting obligations requires organizations to notify relevant parties about security incidents.

5. Business continuity and disaster recovery

   Every business faces the risk of disruption – from key suppliers disappearing, from ransomware attacks, from weather disasters, and more. Companies need to draw up business continuity plans in advance of such scenarios, so that they can navigate such disruptions and return to “normal” operations as quickly as possible.

6. Vendor management

   Can you believe that only 35 percent of organizations monitor the security and privacy practices of the third parties they share sensitive or confidential information with? To keep your company’s security in check, conduct a vendor risk assessment and ensure a privacy agreement is in place.

How ZenGRC Enables Continuous Compliance

The ZenGRC is a compliance management solution that provides tools to streamline compliance processes. It provides role-based authorizations, allowing individuals within your organization to access the specific compliance information necessary to assure that your compliance controls, policies, and procedures function as expected.

The ZenGRC is equipped with a range of compliance frameworks such as ISO, HIPAA, PCI DSS, and NIST. It provides comprehensive features, including cybersecurity risk assessments, internal audit templates, and document management.

Get a demo to learn how the ZenGRC can help you create a solid organizational compliance program.