Internal Controls and Data Security: Minimize Your Security Risk

The need for internal controls in a security program is crucial. They ensure you have proper measures to protect each risk scenario you are trying to avoid as well as a way to effectively measure them. Controls also serve the measurement of compliance to regulatory and other standards, enabling regulatory or governing bodies to measure adherence to a compliance framework. 

Companies all around the world are taking their security seriously in the face of new and familiar risks. Being able to remediate and mitigate risks is a common goal across the business world in order to have successful, continued operations. Developing internal controls is a valuable step towards ensuring the protection of your company from the inside. 

For an auditor, internal controls are as obvious and understood as anti-virus software. Let’s give some context to the rest of us as to the importance of internal controls, what they are, and how to implement them.

Internal Controls and Data Security

What are internal controls?

Internal controls are tools. The processes put in place to support an organization to meet its goals, comply with laws and regulations, and mitigate risk. Some internal controls will be obligatory, put in place via laws and regulations, for example HIPAA, GLBA, FISMA or SOX. Other internal controls will be taken on voluntarily to increase security or to meet specific risks. All companies are somewhat unique with their own requirements, therefore internal controls will be relevant to your company and will be adjusted to fit your risks, likelihoods and impacts. 

Internal controls can be made up of policies, processes and other activities that are put in place to help accomplish a number of security goals. For example:

  • Preventing attacks/breaches
  • Detecting intrusions or unauthorized alterations
  • Maintaining integrity, availability and confidentiality

Defining the internal controls for your company will involve a careful evaluation of your goals and requirements but will ultimately foster resilience and make your company stronger.

Why are they important?

Companies work hard to put all their external security controls in place to protect their company from outside threats and incidents that may have an effect from beyond the company. This is smart and offers a good level of protection- from the outside. 

Yet, the internal controls that take place inside the company will likely have the greatest effect on daily operations and outcomes. Internal controls are important in order to align the operations in the company and provide reasonable reassurance to actively achieve your goals. Here are some examples of the importance of installing internal controls that are likely to be common across companies:

  1. Prevent fraud – Use internal controls to ensure that business activities are only able to be run according to the rules. Set up controls to monitor any evidence to the contrary. SOX regulations (Sarbanes-Oxley Act of 2002) was instituted after several accounting scandals in the early 2000s. SOX internal controls, for example, are put in place to result in the annual audit work that obligates companies to show evidence of accurate secured financial reporting. 
  2. Protect Data – Internal controls are designed to protect data from unauthorized access, from distortion, erasure, privacy breaches and more. The controls will usually ensure the CIA triad- confidentiality, integrity and availability. The appropriate controls will increase reliability and accuracy- important for all types of information but particularly financial information.
  3. Help you meet compliance– Meeting compliance is hugely important to companies across industries and can really boost customer confidence as well as security and productivity. Internal controls will keep the important compliance procedures in place to ensure continual compliance. For example, ISO 27001 or SOC 2- both gold-standard compliances that are highly demanding in terms of policies and procedures in place.
  4. Stand as evidence of your efforts – In the event of an incident or investigation into your company, the presence of internal controls will stand witness to your efforts to provide a robust and effective security program. 

Internal controls can also be used to boost efficiency and productivity. They can streamline processes, reduce costs, ensure business continuity, and eliminate manual labor in places. These benefits overall combine to increase effectiveness and continuity.

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Types of Controls

Internal controls should be built into your security programs and privacy efforts. The COSO Framework is a set of guidelines for integrating internal controls into corporate operations. These controls, taken together, provide a level of reasonable assurance that the company is operating ethically, transparently, and in compliance with industry norms. COSO addresses 5 interconnected aspects of internal controls:

  1. Establish an Appropriate Control Environment – This is talking about your organization, the people in it, and the environment in which you work. An ‘appropriate’ environment would mean that the attitudes and values of the employees match company goals. It means appropriate physical security is in place and that the appropriate structures and processes are possible to implement.
  2. Assess Risk – Awareness is key! Take a full risk assessment to know what you’re dealing with: identify, analyze and mitigate the risks and manage them. Once risk is assessed, objectives can be defined, policies and processes aligned.  
  3. Implement Control Activities –  Control policies and procedures must be created and implemented to ensure that management directives are followed and objectives are met. They help to ensure that critical steps are taken to counter threats to the organization’s goals. Just a few examples include approvals, authorizations, verifications, reconciliations, reviews of operating performance, asset security, and role segregation.
  4. Communicate Information – Information and communication systems surround control actions. These systems allow the individuals who work for the company to record and exchange the data they need to run, manage, and control their operations. For example, if you see an internal control isn’t achieving its purpose, that will need to be communicated to higher-ups who can authorize a change in control or to technical experts who can see what isn’t working and implement a fix.
  5. Monitor – The entire process must be closely monitored and tweaked as necessary to make sure your internal controls are effective. As a result, the system will be able to react quickly to changing circumstances. A good practise is to automate the monitoring to eliminate human error, including forgetting to make certain changes or check things. A risk assessment and the effectiveness of present monitoring systems will primarily decide the scope and frequency of different reviews. 

The Role of Internal Controls in Data Privacy

Many of the well known and leading frameworks require internal controls and guide users to choosing and implementing them. For example, the NIST CSF, or the ISO 27000 series.

Making internal controls a part of your data protection program are essential for ensuring the success of your projects. It’s vital to know how your compliance program is doing; if a cyber security incident occurs, outside regulators looking into your program will be able to tell right away if your organization is truly devoted to compliance or just going through the motions.

Creating Internal Controls and Keeping them Updated

An important point to note: internal controls need updating at appropriate intervals and need continuous managing, just like every part of every sustainable system in the company. Using an automated Risk and Compliance Management platform, like Centraleyes, will oversee the monitoring and notify you when updates are needed. Automation is key to eliminating the need for manual spreadsheets or alarms to remember to check for updates etc. Having external threat intelligence built into your compliance management platform will ensure that geopolitical or global events that may effect your company can be taken into account in real time. 

How can Internal Controls Serve You Best?

Implementing controls will add integral value to your security programs and benefit your company overall but management of internal controls is an overwhelming task to do manually.  

From choosing which internal controls are appropriate for your company’s operations and even incident response plans, to taking risk assessments and implementing the internal controls, the Centraleyes Risk and Compliance Management platform provides automated solutions for every step of the process, and into the future with continuous monitoring and updating solutions. The 50+ pre-built frameworks mean the platform has the guide to implement appropriate internal controls for every industry. Most importantly, the platform will scale up with you and adapt to change as you grow, enabling the process to add new internal controls with ease. 

If you’d like to see the value of a leading automated risk and compliance management solution first hand, you can schedule a demo and try it out for yourself.

Start Getting Value With
Centraleyes for Free

See for yourself how the Centraleyes platform exceeds anything an old GRC
system does and eliminates the need for manual processes and spreadsheets
to give you immediate value and run a full risk assessment in less than 30 days