Compliance Catch-up – the Missed Opportunity for Startups

Compliance Catch-Up

Among the range of priorities that require the time and attention of startups, compliance is not always top of the to-do list. Unless they’re operating in highly regulated industries, leaders often prioritise revenue, growth, and investment. This focus can cause them to overlook the significance and immediacy of compliance requirements.

As a result, startups can be prone to kicking the compliance can down the road, meaning they inevitably need to play catch-up later. Some might question if the process of delivering gold-standard compliance takes time away from building a customer base or bringing a product to market quicker than the competition.

To an extent, this is understandable, but it’s also a risky approach that ignores some critical benefits compliance can offer startups looking to demonstrate credibility and trust. The other major downside is the genuine danger of a compliance violation which, depending on the circumstances and severity, can lead to a major loss of trust.

A Building Block for Business Success

Compliance should be viewed as a building block for creating a successful business – and it’s never too early to get started. When approached correctly, it represents a set of achievements that go way beyond box-ticking, particularly given the growing range of rules, standards, and regulations that are being enforced more than ever before.

Using the Right Mindset for Compliance

So, where should startups begin? It starts with adopting the right mindset. Business leaders need to understand that compliance serves to demonstrate the company’s commitment to its obligations. It showcases that the organisation is committed to upholding standards and that they are investing in building trust-based relationships.

Clearly, every startup should know its core compliance responsibilities before bringing any product or service to market. While some regulations are industry-specific and niche, others cover issues that are relevant everywhere, with the likes of GDPR among the most high-profile examples. The responsibilities are even more nuanced and mission-critical for startups in finance, healthcare, and other highly regulated sectors.

Compulsory and Voluntary Compliance Frameworks

Startups also need to focus on both compulsory and voluntary compliance frameworks. Take ISO 27001, for example, which is widely recognised internationally as one of the ‘de facto’ voluntary information security standards. Given that 83% of breaches involved external actors, and the primary motivation was overwhelmingly financially driven, at 95% of breaches  in 2023, it’s unsurprising that ISO 27001 certifications are growing at 20% a year across businesses, both large and small.

Without the right level of emphasis, compliance can create a backlog of responsibilities that are significantly more difficult to deal with later. If compliance suddenly becomes an urgent requirement, it can put teams under significant pressure, particularly if there is little or no internal experience and expertise to draw on. In reality, complying with today’s increasingly complex regulatory requirements can be onerous if no groundwork has been put in place. It’s not uncommon, for example, for organisations to be in the position of having to reconfigure entire storage systems to meet data privacy and cybersecurity frameworks.

Compliance Automation

Rapid advances in automation technologies are helping bridge compliance gaps for any organisation facing these challenges. For instance, today’s automated compliance tools can monitor an organisation’s security posture against each relevant set of standards in real time to flag any potential risk factors before they experience noncompliance.

Keeping Pace with Regulatory Change

This kind of transformational approach also helps businesses ensure their compliance programs  keep pace with the speed of regulatory change. This can be particularly valuable when a compliance audit is required, as it minimises the risks associated with undetected or unresolved breaches. Without it, organisations that violate compliance standards can face significant financial and reputational damage. While this can be challenging for any business to manage, it’s especially challenging for startups which have limited resources to address issues and violations.

Compliance Credibility is Better Than Compliance Catch-Up

Externally, any organisation that can demonstrate a comprehensive approach to compliance will always be in a better position to build trust with its stakeholders than one which can’t. In today’s digital era, where many startups handle customer data, compliance credibility is rapidly becoming a minimum requirement. For ambitious entrepreneurs and their teams, it is a vital piece of the jigsaw in creating effective and robust processes that ensure high standards. Compliance also demonstrates evidence that an organisation is focused on protecting its assets, people, and other crucial issues, particularly the environment. In this context, playing compliance catch-up is not just a tough organisational challenge; it’s a bad business decision.

Written by Daniel Marashlian, CTO, Drata

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