514-887-6463

Consequences of Non-Compliance And How To Avoid Them

By Mindsec Staff 5 September, 2024

Most companies ignore the costs of non-compliance until they face the consequences: difficulty to close deals  struggling to enter and sell in new markets, or being subjected to regulatory fines.

This happens either due to ignorance towards local regulations and responsibilities, or because they’re too focused on growing, to the point where they leave compliance at the bottom of their priority list.

To save you from making the same mistake (and paying the price), in this article we’ll dive into the consequences of non-compliance divided in two main categories:

  • Non-Compliance With Privacy Regulations, which involves substantial fines, potential lawsuits, legal claims, reputational damage, and the loss of consumer trust.
  • Non-Compliance With Cybersecurity Standards, which brings operational disruption, increased insurance premiums, a competitive disadvantage, and increased difficulty to penetrate new markets.

We’ll also explain how being compliant  , prevents incidents that could impact your company’s reputation, and saves your team thousands of hours per year by keeping you on the right side of security standards and privacy regulations at all times, from day one.

Article’s Contents:

  • Non-Compliance With Privacy Regulations
    • Financial Penalties and Legal Costs
    • Damage to Reputation and Loss of Trust
  • Non-Compliance With Cybersecurity Standards
    • Operational Disruptions And Decline In Performance
    • Increased Insurance Premiums
    • Competitive Disadvantage And Restricted Access To Markets
  • Mindsec: The Key To Becoming Compliant From Day One

Non-Compliance With Privacy Regulations

Financial Penalties and Legal Costs

The first consequences of non-compliance on the list are the hefty financial penalties. For example, Quebec’s Law 25 fines alone add up to $25M for non-compliant companies and their CEOs.

A recent example of the e is illustrated by what happened to CDK Global, an Illinois-based company providing management software to over 15,000 car dealerships in Canada and the USA, who fell victim to a ransomware cyberattack in June 2024 that left its 15,000 clients unable to process any of the following for over 2 weeks:

  • Vehicle sales contracts
  • Service repair orders
  • Financing agreements
  • Parts inventory management
  • Customer relationship management
  • Insurance

These dealerships were forced to go back to pen and paper during one of the busiest times of the year, dragging their performance to the ground. Consulting firm Anderson Economy Group estimates the affected parties missed out on 56,000 cumulative vehicle sales totaling $1.02 billion in losses.

For not complying with privacy and cybersecurity standards, CDK Global is now facing 8 lawsuits from affected dealerships because their and their customers’ data wasn’t adequately protected.

These amounts can impact a  , divert funds from growth initiatives,  due to increased scrutiny from regulatory bodies, all of which can be prevented with some foresight and the help from an accomplished compliance that can guide  you through the process.

Damage to Reputation and Loss of Trust

Beyond the financial costs of non-compliance, the negative publicity can tarnish a brand’s reputation and break the trust with their customers and the general public, resulting in lost business opportunities and a decrease in sales/revenue, just like with CDK Global.

Fixing the relationships with upset stakeholders is a long process requiring lots of public relations, customer assurance programs, and surviving a barrage of lawsuits and fines. Furthermore, if a business is perceived as unreliable in privacy and/or cybersecurity matters, they’ll struggle to form new alliances and pursue growth opportunities.

can save you  fines and protect your company’s reputation down the line, especially if you don’t have the time to learn what privacy regulations your business is subject to.

 

Non-Compliance With Cybersecurity Standards

Operational Disruptions And Decline In Performance

The third consequence of non-compliance is its ability to disrupt your company’s operations.

For example, a data breach forces you to halt your business’ core activities in favor of investigations, audits, and remediation efforts, taking away your team’s attention from their usual productivity and ultimately impacting your revenue.

Once vulnerabilities are identified, you must invest time and resources to fix them with corrective measures like updating your systems, retraining your staff, and revising your internal policies, all of which cost money, consume time, and further delay your business objectives.

All of this has an undeniable impact on your workforce’s morale and makes employees uncertain about their growth opportunities in the near term. This stress can lead to a decrease in motivation, job satisfaction, and an increased turnover that affects your company’s performance.

Increased Insurance Premiums

Insurers may outright refuse to provide coverage for businesses with poor compliance records. And without insurance, companies become increasingly vulnerable to security breaches, loss of data, and their corresponding non-compliance fines, which can end in their bankruptcy.

You see, insurers view non-compliant businesses as a higher source of risk deserving higher premiums for cybersecurity and liability coverage. The added financial burden means there’s less capital to invest in areas like research and development, marketing, innovation, and growth.

Don’t take this risk! Working with an accomplished compliance partner  can keep you compliant with cybersecurity standards, guide your regulatory efforts, and save your business from critical emergencies that may cost you precious time, money, and peace of mind.

Competitive Disadvantage And Restricted Access To Markets

Compliance with privacy regulations and  . As such, businesses who adhere to cybersecurity standards also use it as a selling point to attract better customers and partners than their competitors thanks to their ability to provide peace of mind.

Since many international opportunities require strict adherence to local regulation, non-compliance can also restrict your access to new markets. This prevents companies who don’t meet these standards from expanding and competing globally.

For example, in tech, security  In finance, non-compliant firms struggle to attract clients since they can’t grant them the peace of mind that their assets are secure.

Mindsec: The Key To Becoming Compliant From Day One

As we’ve established, the consequences of non-compliance go from loudly impacting your organization’s financial stability, to quietly damaging your reputation and operational efficiency.

Putting compliance at the top of your priority list helps you avoid financial pitfalls, safeguard your company’s assets, and build long-term trust with customers, partners, and employees.

This is easier said than done, and trying to accomplish it all on your own will undoubtedly be an uphill battle. Luckily, you don’t have to. Mindsec offers automated solutions paired with expert guidance for dozens of privacy and cybersecurity standards to protect your company’s capital, preserve your reputation, and help you thrive in international markets.

Book a free demo today to learn what privacy frameworks and cybersecurity standards you’re subject to and how we can help you stay compliant without draining your company’s resources, burning out your team, and with less than 2 hours of your input per week.

Mindsec Staff

Mindsec staff

Why Stall? Book A Call!

If you’re not sure if our service is right for you, book a free call with our team to learn more about all the ways Mindsec can help you.

Book a Call