What is Compliance Gap Analysis?
An organization’s current policies, procedures, and practices are evaluated to find any areas that do not satisfy the requirements of particular regulatory standards or frameworks, like SOC 2, ISO 27001, CMMC, and many more. This process is known as a compliance gap analysis. Through this procedure, firms can identify areas of their compliance posture that need improvement and define remedial measures.
The purpose of compliance gaps analysis
A compliance gap analysis’s primary purpose is to evaluate an organization’s present compliance status and find any discrepancies between what the framework requires and what is in place.
It allows organizations to:
- Highlight deficiencies in policies, procedures, or controls
- Establish a roadmap for remediation
- Enhance their overall security and compliance posture
- Avoid potential legal or financial consequences of non-compliance
In short, a gap analysis provides the critical insight needed for businesses to make informed decisions about where to allocate resources and how to strengthen their compliance efforts.
What a Compliance Gap Analysis does for a Compliance Program
The role of a compliance gap analysis in a compliance program
Whether a business is attempting to stay compliant as frameworks and rules change over time or is becoming compliant for the first time, a compliance gap analysis forms the basis of its compliance efforts. It can be an excellent method to get a compliance program off the ground quickly, especially if you’re just starting out.
Organizations can find areas where they deviate from particular industry or regulatory standards and frameworks and rectify them early in their compliance journey by performing a gap analysis. This lowers the risk of non-compliance and improves overall operational resilience by allowing firms to resolve possible problems proactively rather than right before or during an audit.
Additionally, a gap analysis helps prioritize and direct resources to areas that are most at danger of fines, penalties, or harm to one’s reputation if left unaddressed.
An example of a compliance gap analysis
Let’s examine an example of why an organization might perform a gap analysis for a specific case in order to gain a better understanding of the goal of a gap analysis and how it fits into a compliance program.
Consider a gap analysis of PCI compliance. Companies that process, store, transmit, or affect the security of cardholder data frequently perform gap analyses to find gaps in their data security procedures, especially with regard to the processing and protection of cardholder data, in light of the strict standards of PCI DSS.
During this procedure, a retail company would evaluate its current cardholder data environment (CDE) and contrast it with the criteria of PCI DSS. The gap analysis may show that access controls are inadequate or that some encryption algorithms are out of date. Therefore, improving encryption technology and limiting user access to cardholder data may be part of the repair approach.
Compliance Gap Analysis vs Risk Assessment
Although both a risk assessment and a compliance gap analysis are essential parts of a compliance program, their functions, needs, and scopes differ.
- Purpose: In order to help organizations understand their present compliance status prior to conducting a more thorough audit, a compliance gap analysis focuses on finding gaps between current practices and framework standards. The following step in the risk management process, known as risk response, is informed by the results of a risk assessment, which analyzes potential threats and vulnerabilities as well as the possibility that they would cause harm.
- Scope: The scope of a risk assessment is more expansive than that of a compliance gap analysis, which is primarily focused on adherence to regulatory or framework compliance. It takes into account not only compliance risks but also operational risks, security risks, and other business threats, weaknesses, and difficulties.
- Requirements: A gap analysis is an optional evaluation that companies can perform in order to start or continue their compliance journey and to track their compliance posture at any point in time. Contrarily, several frameworks call for risk assessments on a regular basis. PCI DSS compliance, for instance, requires yearly risk evaluations.
Procedure for Compliance Gap Analysis: Manual Method
1. Describe the scope
Define the assessment’s scope precisely as the first step in a compliance gap analysis. This entails determining which rules, guidelines, or structures the company must assess. The company may need to evaluate compliance with frameworks like PCI DSS, HIPAA, or GDPR, depending on the sector and data they handle. Depending on client or business demands, they could also have to adhere to specific regulations, such as ESG guidelines.
Clearly defining the scope guarantees that only pertinent policies, procedures, and controls are examined and helps to focus the attention. Organizations run the danger of squandering time and money on topics that might not directly affect their unique compliance requirements if their scope is not well defined. Early comprehension of the scope also enables the company to efficiently coordinate its resources and efforts, guaranteeing a thorough and focused investigation.
2. Evaluate existing controls, rules, and processes.
Following the definition of the scope, a comprehensive assessment of the organization’s existing policies, controls, and processes must be carried out. This involves looking at the procedures, documentation, and technology that are presently in use to protect data and guarantee adherence to the relevant framework criteria. The effectiveness with which these controls are being applied and if they have been updated to meet the most recent criteria should also be assessed during the assessment.
To ensure that the evaluation is comprehensive, this step frequently comprises cross-functional teams, including departments from IT, legal, HR, and compliance. The manual method can be time-consuming and resource-intensive since it necessitates gathering evidence and manually testing controls to determine how effectively they satisfy compliance standards.
3. Identify gaps
Comparing the organization’s current procedures and controls to the particular demands of the regulatory framework is the next stage. Finding any gaps where policies, procedures, and controls don’t match compliance standards is made easier with the help of this comparison.
Among the gaps are:
- missing or insufficient controls
- outdated regulations
- incomplete documentation
It takes a thorough grasp of the organization’s internal procedures as well as the framework requirements to identify these gaps. The manual method is a laborious and time-consuming procedure that frequently entails looking through extensive spreadsheets and comparing each requirement to the organization’s procedures.
It’s critical to record every gap found in this stage and outline any possible hazards connected to it.
4. Prioritize high-risk gaps
Prioritizing gaps is crucial because not all of them are equally urgent or risky. The severity of non-compliance, the possibility of a breach or issue arising, and the repercussions of non-compliance—such as fines, data breaches, or reputational harm—are all taken into account when ranking the gaps according to their possible impact on the company.
Assessing the level of danger involved in each gap can help prioritize tasks; high-risk gaps should be handled right once, while lower-risk problems can wait. The manual method frequently entails qualitative risk assessments, where professional judgment is required to determine which gaps need to be addressed right away.
A high-priority compliance gap is when sensitive data, such medical records or customer payment information, is not encrypted while it is in transit and at rest. Encryption is a control required by many standards, including as PCI DSS, HIPAA, and GDPR, to protect sensitive data. Significant dangers, such as fines and penalties, data breaches, and a decline in customer trust, arise from not using encryption.
5. Create a remediation plan
Create a remediation plan that details the precise steps the organization will take to fix the gaps, including timeframes, resource allocation, and responsibilities, after the holes have been identified and prioritized. Given the intricacy of each task and the resources at hand, the strategy ought to be practical.
Moving the organization toward compliance requires a solid remediation plan. The organization runs the risk of falling behind on filling important holes without a defined plan, which could expose them to dangers. Because adopting controls and the actions required to remedy any defective controls are usually cross-functional, the manual method to remediation planning frequently necessitates careful coordination and collaboration among several departments.
6. Monitor progress
In order to make sure that the gaps that have been found are being adequately filled, compliance calls for ongoing oversight. This stage entails monitoring remediation efforts on a regular basis to make sure that deadlines are being fulfilled and that steps are being done to move the company closer to compliance. As framework standards change, monitoring aids in spotting any potential new holes.
When carried out by hand, this stage frequently entails status conferences, audits, and frequent reports from every team in charge of various remediation areas. This approach can be difficult to sustain over time without specialized resources, knowledge, and technology, even though it is essential for making sure that compliance activities remain on course.
How automation can help simplify and speed up the gap analysis process:
Finding the gaps in an organization’s security and compliance posture and figuring out how to close them is a constant task that calls for knowledge and resources, both of which many risk and compliance experts say they lack. Insufficient resources and a lack of experienced staff were the two main reasons given in the 2023 Thomson Reuters Risk & Compliance Survey Report as barriers to a team’s confidence in their capacity to handle compliance problems.
Organizations that lack the time-consuming tasks involved in a manual approach to compliance gap analysis, such as managing spreadsheets, manually scanning regulatory websites to track changes and evaluate the impact on their organization, and performing other labor-intensive tasks, may resort to automation and technology.
Automation can speed up and greatly simplify this process by cutting down on the amount of time spent on labor-intensive and repetitive processes. The process of compliance gap analysis can be revolutionized by automation in the following ways:
- Pre-written frameworks and control mapping: Automation solutions come with pre-written frameworks that automatically map requirements to tests and controls. Time and effort are greatly reduced as a result of the removal of the need to manually gather and map out framework requirements in spreadsheets. Along with ensuring correctness and consistency, pre-built frameworks usually make use of common controls to minimize duplication of effort and allow an organization to achieve various framework needs with a single control.
- Automated data collection: By utilizing integrations, automated solutions can extract pertinent data from many sources, eliminating the need for manual data collection from multiple systems to evaluate the controls in place at your company. By doing this, the need for human data entry is removed and the most recent data is guaranteed to be available for analysis.
- Simplified gap identification: Using automated testing, automated systems may rapidly assess your current controls in relation to the most recent framework criteria. This significantly cuts down on the time needed to find compliance gaps, which is normally a laborious and prone to mistakes procedure.
- Advice on remediation: In addition to detecting weaknesses in your company’s compliance posture, a compliance automation platform provides detailed instructions on how to close such weaknesses and accelerate time-to-compliance.
- Effective remediation tracking: By monitoring developments and allocating duties to pertinent parties, automation solutions can also assist in managing remediation efforts. This offers accountability and improved departmental cooperation while giving you real-time insight into how well your company is filling gaps.
- Continuous monitoring in real time: To guarantee compliance, automated compliance technologies can keep an eye on your systems and procedures all the time. When gaps or inconsistencies are found, these systems can send out real-time notifications, enabling organizations to take immediate action before the issues worsen.
- Regulatory updates: An automated compliance tool should display any impact on your organization and reflect the most recent changes in legislation and standards, including PCI DSS 4.0.1, rather than requiring you to manually search regulatory websites to keep current. This eliminates the need for ongoing manual monitoring and guarantees that your compliance program remains up to date with changing regulations.
