In the realm of data management, two terms often surface as critical yet frequently confused: data governance and data compliance. While they may seem similar, each plays a distinct role in how data is handled, protected, and utilized within an organization.
Understanding these differences is not just a matter of semantics — it's essential for any business that wants to leverage data effectively while staying on the right side of regulations. In this blog, we’ll define data governance and compliance and take a look at the key differences between them.
What is data governance?
Data governance refers to the overall management framework that defines who can take action, with what data, under what circumstances, and using what methods. It is a comprehensive approach that ensures data is consistent, trustworthy, and doesn't get misused.
Key components include:
Foundational governance:
- Security: Implementing measures to protect data from unauthorized access and breaches and adhering to regulations like GDPR.
- Access and data stewardship: Establishing clear documentation of who owns and has access to data within platforms, including managing permissions and creating processes to govern access.
Structural governance:
- Classification: Organizing data through systematic classification and using data dictionaries to ensure consistency and proper data placement.
- Transformation: Setting rules for standardizing data values and ensuring data is appropriately formatted.
Quality governance:
- Monitoring: Setting up alerts and notifications for errors, inconsistencies, and incomplete data.
- Reconciliation: Proactively checking data for inconsistencies, missing elements and anomalies to improve overall data quality.
Data governance provides the strategic oversight and policy framework that guides these activities, ensuring data is managed consistently and in compliance with organizational standards and regulations. For more info on data governance, check out our full guide to the 6 building blocks of data governance.
What is data compliance?
Data compliance deals specifically with adhering to laws and regulations governing data protection and privacy. This legal framework ensures that an organization's data handling practices conform to statutory requirements, typically designed to protect individual privacy and prevent data breaches.
Crucial elements of data compliance include:
- Adherence to laws and regulations: Ensuring all data handling respects laws such as the GDPR, HIPAA, or CCPA, depending on geographical and sector-based requirements.
- Audit readiness: Keeping accurate records and processes that will stand up to external audits by regulators.
- Risk management: Identifying and mitigating risks that could lead to data breaches or non-compliance penalties.
Data compliance is a critical subset of data governance aimed specifically at legal conformity.
The interplay between data governance and compliance
Effective data governance can simplify compliance efforts. A robust governance framework provides the necessary infrastructure and clarity for managing data, which can help meet compliance requirements more easily. Conversely, the demands of data compliance can influence and shape an organization's data governance policies to ensure they are robust enough to meet legal standards.
Key differences between data governance and compliance
Understanding the distinctions between data governance and data compliance can clarify their roles within an organization:
- Scope and focus: Data governance has a broader scope, encompassing the entire strategy for managing data, including quality, accessibility, and security. Data compliance is focused specifically on meeting external legal and regulatory requirements.
- Objective: The main objective of data governance is to ensure data is managed in a consistent, efficient, and secure manner that supports business objectives. Data compliance aims to protect the organization from legal penalties and ensure that data practices meet required legal standards.
- Activities involved: Data governance involves setting up a framework for data management, including defining roles, developing policies, and implementing procedures. Data compliance involves ensuring these policies and procedures are in compliance with specific laws and regulations.
Why should marketers care about data governance?
For marketers, the precision of campaign targeting and personalization hinges significantly on data governance. Ensuring that your data is well-organized and maintained leads to clearer insights and more effective strategies.
Here are just a few of the benefits marketers stand to gain from well-executed data governance.
- Enhanced decision-making: Data governance ensures marketing decisions are based on accurate, reliable data, leading to more effective strategies and better outcomes.
- Improved customer insights: Accurate and comprehensive customer data enables personalized marketing, boosting engagement, satisfaction, and loyalty.
- Increased efficiency: Automating data management processes reduces manual effort, allowing marketing teams to focus on strategic activities and improve productivity.
- Enhanced compliance and security: Strong data governance protects against data breaches and regulatory penalties, building customer trust and safeguarding your brand.
- Better ROI on marketing investments: High-quality data enables precise targeting and optimization, driving higher returns on marketing efforts.
For more info check out our blog on the key benefits of data governance.
What are the risks of poor data governance?
In marketing, poor data governance can lead to a chain reaction of setbacks. If data isn't properly managed, every subsequent decision based on that data could lead your strategies astray.
Worst case scenario:
- Misguided decisions: Flawed data can result in misguided marketing strategies that waste budget and miss targets.
- Lost opportunities: Without reliable data, you may miss out on optimizing marketing campaigns or capturing valuable market segments.
- Brand damage: Inaccurate data can lead to campaigns that harm rather than help your brand image.
Why should marketers care about data compliance?
In marketing, where personal data is gold, compliance isn't just legal; it's a strategic asset. Understanding and adhering to data compliance ensures that your marketing strategies respect privacy laws and build trust with your audience.
Some of the benefits marketers can get from a good compliance strategy include:
- Trust and credibility: Compliance shows your commitment to data protection, earning trust from customers and partners.
- Market advantage: By staying compliant, you differentiate your brand in markets where consumers are sensitive to data privacy.
- Avoidance of penalties: Adhering to data laws protects your business from potentially devastating fines and legal issues.
What are the risks of poor data compliance?
Data compliance missteps in marketing can be costly, not just in terms of fines but also in the erosion of customer trust and brand integrity.
Worst case scenario:
- Legal repercussions: Non-compliance can result in severe fines and sanctions that can cripple marketing budgets and stain your company’s reputation.
- Customer distrust: Failure to comply with data protection standards can lead to loss of customer trust, which is often irreversible.
- Operational disruptions: Legal battles or restructuring to achieve compliance can divert focus from core marketing activities, disrupting operations and strategic momentum.
Case Studies and Real-World Examples
1. Equifax Data Breach (2017)
Equifax’s data breach involved the exposure of sensitive personal information, including Social Security numbers, birth dates, addresses, and in some cases, driver’s license numbers of approximately 147 million individuals. The breach was caused by a vulnerability in a web application framework that Equifax used, which had a known security flaw that Equifax failed to patch in a timely manner.
Compliance failures:
Equifax’s failure was rooted in inadequate data governance and compliance practices. Despite having knowledge of the vulnerability, Equifax did not act promptly to apply a security patch. This lapse in security measures and failure to respond to known risks reflects poorly on the company’s adherence to best practices for data protection and regulatory requirements. The breach highlighted Equifax’s shortcomings in maintaining effective data security protocols and risk management practices.
Consequences:
The $700 million settlement included provisions for consumer compensation, credit monitoring services, and other penalties. This case exemplifies how lapses in data governance and compliance can lead to severe financial and reputational damage.
2. British Airways Fine (2019)
The British Airways breach exposed personal and financial details of around 500,000 customers. Attackers used a malicious script to collect information entered on the airline’s website, including credit card details and personal data. This breach was the result of poor security measures that allowed unauthorized access to customer information.
Compliance failures:
British Airways failed to implement adequate security measures to protect customer data, which directly contravened the GDPR requirements for data protection and privacy. The inadequacy in their data governance policies, such as insufficient encryption and lack of effective access controls, led to the breach. The ICO’s fine was a direct result of these compliance failures, reflecting the serious impact of not adhering to stringent data protection regulations.
Consequences:
The £183 million fine served as a stark warning about the importance of adhering to GDPR standards. The breach affected British Airways' reputation, leading to a loss of customer trust and significant operational impacts.
Conclusion
Both data governance and data compliance are crucial for managing data effectively in today's digital world. While they serve different purposes, they are interdependent. Good data governance facilitates compliance, and stringent compliance requirements can enhance governance frameworks.
Organizations must understand both to ensure not only that they are protecting themselves from regulatory penalties but also that they are making the most of their data in a secure, organized, and strategic manner. Understanding and implementing both aspects effectively is vital for any organization that wants to use its data as a strategic asset while minimizing risk.
