Cloud compliance: Full guide & best practices

Your business runs on data. Customer records, financial information, employee files—it's all stored and processed in the cloud. But with great data comes great responsibility. Are you doing enough to keep that data secure and compliant?

Failing to meet the ever-growing list of regulations and standards can cost you more than just money. It can damage your reputation, erode customer trust, and even land you in legal hot water. 

Understanding cloud compliance is crucial to avoiding these risks. In this piece, we explore the essentials of cloud compliance, including key standards, best practices, and challenges. 

What is cloud compliance?

Cloud compliance refers to the process of ensuring that your cloud-based systems and data meet the legal, regulatory, and industry standards that apply to your business. It involves implementing security controls, policies, and procedures to protect sensitive information and maintain the confidentiality, integrity, and availability of your cloud environment.

Compliance requirements vary depending on your industry, location, and the type of data you handle. For example, healthcare organizations must comply with HIPAA to protect patient privacy, while financial institutions must adhere to PCI DSS to secure credit card transactions.

Cloud compliance is a shared responsibility between you and your cloud service provider (CSP). While your CSP is responsible for securing the underlying cloud infrastructure, you are responsible for protecting your data and applications running on that infrastructure.

Key components of cloud compliance

To achieve and maintain cloud compliance, you need to address several key components:

Laws and regulations

These are the legal requirements that govern how you collect, store, and process data in the cloud. They may include national laws like GDPR or industry-specific regulations like HIPAA.

Governance

This involves establishing policies, procedures, and controls to ensure that your cloud environment meets compliance requirements. It includes defining roles and responsibilities, setting access controls, and monitoring for potential violations.

Standards

These are best practices and guidelines for securing cloud systems and data. They provide a framework for implementing security controls and demonstrating compliance to auditors. Common standards include ISO 27001, SOC 2, and NIST.

Audits

These are independent assessments of your cloud environment to verify that you are meeting compliance requirements. They may be conducted by internal teams, third-party auditors, or regulatory bodies. Audits help identify gaps in your compliance posture and provide evidence of your compliance efforts.

Why is cloud compliance important?

Cloud compliance is critical for several reasons:

• Protecting sensitive data: Compliance standards are designed to ensure that you have appropriate security controls in place to protect sensitive information like personal data, financial records, and intellectual property. By adhering to these standards, you reduce the risk of data breaches and unauthorized access.
• Avoiding legal penalties: Failing to comply with regulations like GDPR or HIPAA can result in significant fines and legal consequences. 
• Maintaining customer trust: Compliance demonstrates to your customers that you take their data security seriously. It helps build trust and credibility, especially in industries like healthcare and finance where data privacy is paramount.
• Enabling business opportunities: Many companies require their vendors and partners to demonstrate compliance with certain standards before doing business with them. By achieving compliance, you can open up new business opportunities and compete in regulated markets.

Key cloud compliance standards and regulations

Here are some of the most important compliance standards and regulations to be aware of:

General Data Protection Regulation (GDPR)

GDPR is a European Union (EU) regulation that sets strict requirements for how organizations collect, process, and protect the personal data of EU citizens. It applies to any company that handles the data of EU residents, regardless of where the company is based.

GDPR requires companies to obtain explicit consent before collecting personal data, provide individuals with access to their data, and notify authorities of data breaches within 72 hours. Violating GDPR can result in fines of up to €20 million or 4% of global annual turnover, whichever is higher.

Health Insurance Portability and Accountability Act (HIPAA)

HIPAA is a U.S. law that establishes national standards for protecting sensitive patient health information. It applies to healthcare providers, health plans, and healthcare clearinghouses that handle protected health information (PHI).

HIPAA requires covered entities to implement administrative, physical, and technical safeguards to ensure the confidentiality, integrity, and availability of PHI. Violations are assessed on a per-violation or per-record basis, ranging from $100 to $50,000, with annual penalties capped at $1.5 million. Penalties vary based on the level of negligence, from unknowing violations to willful neglect, and may include criminal charges.

Payment Card Industry Data Security Standard (PCI DSS)

The PCI DSS establishes security requirements for organizations handling credit card data. These requirements apply across all industries and company sizes, covering any business that processes, stores, accepts, or transmits cardholder information.

PCI DSS requires organizations to implement controls like firewalls, encryption, and access controls to protect cardholder data. Failure to comply can result in fines, legal liability, and termination of the ability to accept credit card payments.

Federal Risk and Authorization Management Program (FedRAMP)

FedRAMP is a U.S. government program that provides a standardized approach to security assessment, authorization, and continuous monitoring for cloud products and services. While mandatory for federal agencies using cloud services, private sector organizations can voluntarily obtain authorization—particularly valuable for those seeking government contracts.

FedRAMP requires cloud service providers to implement cybersecurity controls based on NIST 800-53 and undergo regular audits by accredited third-party assessment organizations (3PAOs). Widely recognized as the gold standard for cloud security, achieving FedRAMP authorization demonstrates a robust cybersecurity framework and can open up opportunities to work with government agencies.

Common challenges of cloud compliance

Achieving cloud compliance is not always easy. Here are some common challenges organizations face:

Data sovereignty and localization laws

Many countries have laws that require certain types of data to be stored and processed within their borders. These data sovereignty and localization laws can complicate compliance efforts, especially for organizations that operate in multiple jurisdictions.

To overcome this challenge, work with your cloud provider to ensure that your data is stored in compliant locations and consider using a multi-cloud or hybrid cloud approach to maintain control over your data.

Multi-tenancy concerns

In a multi-tenant cloud environment, multiple customers share the same infrastructure and resources. This can raise concerns about data isolation and access controls.

To address this challenge, ensure that your CSP has strong logical and physical separation between tenants and implements proper access controls to prevent unauthorized access to your data.

Lack of visibility and control

When you move to the cloud, you may lose some visibility and control over your data and systems. This can make it harder to monitor for compliance violations and respond to incidents.

To overcome this challenge, use cloud monitoring and logging tools to gain visibility into your environment and establish clear incident response and communication plans with your cloud provider.

Rapid regulatory changes

Compliance regulations are constantly evolving, making it challenging to keep up with the latest requirements. This is especially true in industries like healthcare and finance where regulations are complex and frequently updated.

To stay ahead of regulatory changes, establish a compliance monitoring program to track new developments and work with your CSP to ensure that their services meet the latest requirements.

8 cloud compliance best practices

Now that you understand the challenges of cloud compliance, here are some best practices to help you achieve and maintain compliance:

1. Conduct regular security audits

Regular security audits help you identify gaps in your compliance posture and ensure that your controls are working as intended. Conduct internal audits at least annually and implement continuous monitoring systems for real-time compliance tracking. Consider engaging a third-party auditor for an independent assessment.

For example, a healthcare organization might conduct a HIPAA compliance audit to ensure that their cloud-based electronic health record (EHR) system meets all the required security and privacy controls, while maintaining ongoing monitoring of patient data access and system security alerts.

2. Implement strong access controls

Access controls are critical for preventing unauthorized access to your cloud environment. Implement role-based access controls (RBAC) to ensure that users only have access to the resources they need to do their job.

3. Use encryption for data at rest and in transit

Encryption helps protect your data from unauthorized access and tampering. Encrypt data at rest using cloud-native encryption services or third-party encryption tools. Encrypt data in transit using secure protocols like TLS.

4. Ensure data backup and recovery plans

Data backup and recovery are essential for maintaining the availability and integrity of your cloud environment. Implement a robust backup and recovery plan that includes regular backups, offsite storage, and testing of recovery procedures.

5. Develop a cloud-specific incident response plan

Incident response in the cloud can be more complex than in a traditional on-premises environment. Develop a cloud-specific incident response plan that includes procedures for detecting, investigating, and mitigating security incidents in the cloud. 

Coordinate closely with your CSPs, as they often play an important role in incident detection and mitigation through managed security services. Your plan should also account for visibility limitations in certain service models—particularly SaaS environments where you have minimal control over infrastructure and software layers.

6. Use cloud monitoring and logging tools

Cloud monitoring and logging tools help you gain visibility into your cloud environment, detect potential vulnerabilities, and identify compliance violations. While native tools like Amazon CloudWatch or Google Cloud's operations suite provide essential infrastructure monitoring, consider implementing dedicated security information and event management (SIEM) platforms like Splunk or Datadog for comprehensive security and compliance monitoring across your entire environment.

7. Implement least privilege access

Least privilege access means granting users only the permissions they need to perform their job duties. This helps reduce the risk of accidental or malicious data exposure. For example, a research institution might implement least privilege access to ensure that only authorized researchers can access sensitive data sets stored in the cloud.

8. Educate and train staff on cloud security best practices

Human error is one of the leading causes of security incidents in the cloud. Educate and train your staff on cloud security best practices, including how to identify and report potential security threats.

Achieve and maintain cloud compliance with Rippling

Managing cloud compliance can be a complex and time-consuming process, especially for organizations with limited IT resources. 

Enter Rippling—a comprehensive workforce management platform that includes powerful solutions for automating and simplifying cloud security compliance. With Rippling, you can:

• Automate user provisioning and deprovisioning across your cloud apps
• Enforce strong password policies and multi-factor authentication
• Monitor and log user activity for auditing and incident response
• Implement RBAC and least privilege access
• Manage device security policies and software updates
• Generate compliance reports and gather evidence for audits

By consolidating your cloud compliance efforts into a single platform, Rippling helps you reduce the risk of data breaches, improve your compliance posture, and save time and resources. You can have peace of mind knowing that your cloud environment is secure and compliant with the latest regulations and standards.

Cloud compliance FAQs

Who is responsible for cloud compliance?

Cloud compliance operates under a shared responsibility model between you and your cloud service provider. Your CSP is responsible for securing the underlying infrastructure, while you are responsible for securing your data and applications running on that infrastructure.

It's important to understand your CSP's compliance certifications and the specific controls they have in place. However, you cannot rely solely on your cloud provider for compliance. You must also implement your own security controls and policies to ensure that your use of the cloud meets all applicable regulations and standards.

What is regulatory compliance in the cloud?

Regulatory compliance in the cloud refers to ensuring that your use of cloud services meets the specific legal and regulatory requirements that apply to your industry or jurisdiction. These requirements can vary widely depending on the type of data you handle and where you operate.

Common regulatory compliance standards in the cloud include HIPAA for healthcare data, PCI DSS for payment card data, and GDPR for personal data of EU citizens. Failing to meet these requirements can result in significant fines and legal liabilities.

What are some examples of cloud-relevant compliance standards?

Here are some examples of compliance standards that are relevant to cloud computing:

• ISO 27001: A global standard for information security management systems
• SOC 2: A standard for assessing the security and privacy controls of service providers
• NIST 800-53: A set of security and privacy controls for federal information systems
• CSA STAR: A standard developed by the Cloud Security Alliance for assessing the security and privacy controls of cloud service providers
• HITRUST CSF: A security framework for managing healthcare data 

Achieving compliance with these standards can help demonstrate to customers, partners, and regulators that you have strong security and privacy controls in place for your cloud environment.

This blog is based on information available to Rippling as of November 20, 2024.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.