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Corporate Compliance Insights
Home Compliance

Is the Cloud a Compliance Nightmare?

by Shawn Mills
January 6, 2015
in Compliance
Is the Cloud a Compliance Nightmare?

Using cloud hosting to remotely store your organization’s data and applications looks like an attractive proposition. But how can you be sure your new infrastructure will meet compliance standards? With 35 percent of companies required to comply with four or more mandates, like HIPAA, PCI or SOX, the service provider and internal procedures must gel in order to avoid hefty non-compliance fees from messy data breaches.

The cloud doesn’t have to be a compliance nightmare, though. With proper planning, documentation and a solid service partner, you can keep data safe while gaining the flexibility of the cloud.

What is Cloud Computing and How Does it Impact Compliance?

Cloud computing is a great way for companies to save money and time procuring new servers and information systems. You can rent a virtual server, configurable to any combination of memory and storage, complete with an operating system. This is known as Infrastructure as a Service. Or you can get Software as a Service, like Salesforce, which is software that runs entirely online without you installing it on your computer. You probably already use cloud storage like Dropbox or Google Drive, with data stored in remote data centers instead of on your hard drive.

While cloud services let you quickly and easily access computing resources, they are also outside of your control, or the control of your IT department. One survey found that 80 percent of IT professionals did not even know how much of their regulated data was being stored in the cloud or on mobile devices. That’s because it’s so easy for employees to set up their own cloud solutions.

There are many opportunities for data loss in this process. The data has to pass through many networks, making it possible to intercept it. Information can be stored on the same equipment that is being rented by other users, so it must be segregated or it runs the risk of leaking. One way to control some of this “shadow IT” is setting up a company-wide, IT-sanctioned cloud system that meets all of your user needs: collaboration, storage, applications, etc.

As you make the switch from capital expenditure on your own equipment to operational expenditure on cloud services, you also shift from an internal security process to operational security, performed in conjunction with your provider and your internal teams.

Ask yourself these questions: Where is my information being stored? Who can access it and when? How is it secured in the cloud?

Security Measures Required in the Cloud

Depending on the compliance mandate, different security measures are required. While they take time and money to implement, all of them are worthwhile for a truly secure environment.

Endpoint protection like encryption (PCI, HIPAA and others), firewalls (PCI), identity management (various  regulations), regular patching and updates, antivirus and network activity monitoring are all standard security methods that can keep data safe and alert you to any suspicious activity as it occurs.

Be sure to keep a close eye on your encryption keys and SSL (secure socket layer, a certificate that tells computers a website or application is safe) certificates, as if these are expired or leaked, your data could be compromised.

Finding a Compliant Cloud Provider

Many cloud service providers are audited for common compliance standards like HIPAA and SSAE 16 Type II. These measures are documented. If they claim to be audited, request their audit report. This should include how they control facility access (with physical security measures), where data is stored and who has access to it, any encryption measures in effect and what kind of monitoring and notification system is in effect.

For some compliance measures or for particularly sensitive data, you might want to encrypt all data, both while it is in storage and while it is in transit. HIPAA requires this. User identity controls (log-in information, two factor authentication) and incident response plans (after detecting a data breach) are both baseline requirements for most compliance solutions.

Be sure to closely examine the Service Level Agreement (SLA), the contract terms you’ll sign with your cloud provider. See if the contract meets your compliance requirements, and if not, negotiate.

Ultimately, compliance and security in the cloud depends on a unified effort between your own IT team, compliance officers and the cloud service provider. Without your own internal plans, documentation and data security measures, all the efforts and audits on the provider’s side could be for naught.


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Shawn Mills

Shawn Mills

Shawn Mills headshot 1-6-15Shawn Mills is the President and a founder of Green House Data, a data center services company offering cloud hosting, colocation, and managed IT services. He has 15 years of experience in technology and IT, previously leading a VoIP company to acquisition and founding the Wyoming Technology Association. Shawn has spoken at industry events including Data Center World and published articles in Data Center Knowledge, Manufacturing Digital, and EdTech Magazine.

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