Compliance Challenges in Cloud Data Governance
Adopting cloud computing allows organizations of all shapes and sizes to access data and collaborate in the most flexible ways imaginable. While it brings many benefits, it also brings along compliance issues in data governance, particularly when data crosses borders. Ensuring data is safe, private and organized is paramount.
The American Data Privacy Puzzle
The United States lacks a single, comprehensive federal data privacy law. Instead, cloud compliance is shaped by a complex patchwork of federal and state regulations that govern how data must be collected, stored, processed and protected.
At the federal level, the 1914 Federal Trade Commission Act addresses unfair or deceptive practices, including failures in data security. The Federal Information Security Modernization Act oversees the government and its cybersecurity vendors. It requires alignment with the FedRAMP for cloud services, creating a standardized security assessment and authorization approach.
That’s not all. Several states add layers of nuances to the already complex privacy puzzle. The California Privacy Rights Act is the most comprehensive, expanding consumer rights and mandating strict data controls. Meanwhile, the Utah Consumer Privacy Act is the most lenient and favorable to businesses, covering only organizations with $25 million in revenue and offering minimal consumer rights.
Sector-Specific Standards
In addition to federal and state data privacy laws, cloud professionals must also account for sector-specific compliance standards that govern data handling within regulated industries.
In health care, the Health Insurance Portability and Accountability Act (HIPAA) mandates safeguards for the confidentiality and security of protected health information. The HITECH Act further bolsters HIPAA by stimulating the adoption of electronic health records and improving privacy and protection requirements for digital health data.
Compliance with the Sarbanes-Oxley Act (SOX) is essential in the financial sector. SOX enforces stringent internal controls over financial reporting, information security and auditability to prevent corporate fraud and ensure transparency.
Organizations handling payment transactions must also adhere to the Payment Card Industry Data Security Standard (PCI DSS). PCI DSS applies to any entity that stores, processes or transmits cardholder data and covers requirements in four key areas — data protection, secure networks, access control and encryption.
Cross-Border Compliance
Data sovereignty is critical for cloud professionals, as compliance depends on the jurisdiction’s laws where data is stored. Different countries have different laws. The EU follows the General Data Protection Regulation (GDPR), while the U.S. has the Clarifying Lawful Overseas Use of Data (CLOUD) Act. The EU is one powerful watchdog in particular, fining Amazon with $887 million in 2021 — the highest fine ever imposed in GDPR history — due to poor personal data processing.
However, the contradictions between the GDPR and CLOUD cannot be starker. For one, the GDPR prohibits unauthorized data transfers to non-EU countries due to differences in protection regulations. Meanwhile, the CLOUD Act allows unrestricted government access to data by U.S.-based cloud providers, irrespective of where the physical storage is located.
This tension surfaced in the 2013 legal battle between the U.S. and Microsoft involving its Ireland data centers. The digital communications provider had to comply with a U.S. search warrant for user data stored outside U.S. soil. This data sovereignty issue sparked the creation of the CLOUD Act in 2018.
Beyond the EU and U.S., countries such as Brazil, Saudi Arabia and the UAE are enforcing data localization laws, adding further regulatory layers cloud teams must address.
How to Ensure Data Security and Integrity
Cloud professionals must implement robust data governance frameworks through industry best practices to protect sensitive information and maintain compliance. This involves a combination of policy, process and technology-driven strategies to ensure data security and integrity throughout the cloud life cycle.
- Automated compliance monitoring: Continuously assess systems for alignment with regulatory requirements, instantly flagging risks or violations. These tools help reduce manual oversight and support real-time enforcement.
- Data encryption: This is essential to protect data from unauthorized access. Strong encryption standards and secure key management practices help safeguard critical assets.
- Access controls: Access should be granular and role-based, ensuring only authorized personnel can view or modify sensitive data. Implementing least privilege principles minimizes exposure and reduces the attack surface.
- Audit trails: These provide detailed logs of system and user activity. These logs support forensic investigations, enable accountability and are required to comply with HIPAA and SOX laws.
Together, these strategies build a solid foundation for data governance in the cloud.
Closing the Cloud Compliance Gap
The complex intersection of legal, operational and strategic imperatives complicates managing cloud data governance. Cloud reliance continues to grow and only a proactive compliance planning strategy aligned with state, federal, industry or international standards can help effectively manage the fluidity of these swiftly changing regulations.
