Statutory vs Regulatory vs Contractual: Cybersecurity & Privacy Compliance

Compliance terms are pretty badly abused, even by professionals within the cybersecurity and privacy industries. Words have meaning and non-compliance can have negative ramifications. Cybersecurity, IT and privacy professionals routinely abuse the terms “law” and “regulation” as if they are synonymous, but those terms have unique meanings that need to be understood. 

ComplianceForge compiled the information on this page to help get everyone on the same sheet of music, since words do have meanings and it is important to understand the risks associated with cybersecurity and privacy requirements, since not all compliance obligations have the same weight.

Why Should You Care: Prioritizing Controls & Risk Management

Understanding the “hierarchy of pain” with compliance leads to well-informed risk decisions that influence technology purchases, staffing resources and management involvement. That is why it serves both cybersecurity and IT professionals well to understand the compliance landscape for their benefit, since you can present issues of non-compliance in a compelling business context to get the resources you need to do your job.

Beyond just using terminology properly, understanding which of the three types of compliance  is crucial in managing both cybersecurity and privacy risk within an organization. The difference between non-compliance penalties can be as stark as:

Statutory, Regulatory and Contractual Obligations Define "Must Have" vs "Nice To Have" Requirements

When discussing cybersecurity and privacy requirements, the term "must" is often thrown around as an absolute. This is most often due to an applicable law, regulation or contract clause that is compelling the control to exist. 

2022.2-statutory-vs-regulatory-vs-contractual-cybersecurity-privacy-compliance.jpg There is a need to understand and clarify the difference between "compliant" versus "secure" since that is necessary to have coherent risk management discussions. To assist in this process, it helps an organization to categorize its applicable controls according to “must have” vs “nice to have” requirements:
  • Minimum Compliance Criteria (MCC) are the absolute minimum requirements that must be addressed to comply with applicable laws, regulations and contracts.
  • Discretionary Security Requirements (DSR) are tied to the organization’s risk appetite since DSR are “above and beyond” MCC, where the organization self-identifies additional cybersecurity and data protection controls to address voluntary industry practices or internal requirements, such as findings from internal audits or risk assessments.

Secure and compliant operations exist when both MCC and DSR are implemented and properly governed:

Statutory Cybersecurity & Privacy Requirements

Statutory obligations are required by law and refer to current laws that were passed by a state or federal government. From a cybersecurity and privacy perspective, statutory compliance requirements include:

US - Federal Laws

US - State Laws

International Laws

Regulatory Cybersecurity & Privacy Requirements

Regulatory obligations are required by law, but are different from statutory requirements in that these requirements refer to rules issued by a regulating body that is appointed by a state or federal government. These are legal requirements through proxy, where the regulating body is the source of the requirement. It is important to keep in mind that regulatory requirements tend to change more often than statutory requirements. From a cybersecurity and privacy perspective, regulatory compliance examples include:

US Regulations

International Regulations

Contractual Cybersecurity & Privacy Requirements

Contractual obligations are required by legal contract between private parties. This may be as simple as a cybersecurity or privacy addendum in a vendor contract that calls out unique requirements. It also includes broader requirements from an industry association that membership brings certain obligations. From a cybersecurity and privacy perspective, common contractual compliance requirements include:

 

Questions? Please contact us for clarification so that we can help you find the right solution for your cybersecurity and privacy compliance needs.

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