Data Governance in Regulated Industries

Data governance encompasses the policies, processes, and roles that an organization implements to ensure secure, reliable, and high-quality data management. In regulated industries, data governance is greatly influenced by the need to comply with external laws and regulations specific to that industry, known as data compliance.

A well-constructed and thought-out data governance framework and implementation strategy are crucial to any business that values the efficiency, usability, and safety of its data. Data governance is essential for modern enterprises to ensure that the entire organization is aligned on data collection, usage, storage, and disposal. It also puts trusted data in the hands of professionals who need it most.

In highly regulated industries such as finance, healthcare, and government services, creating a data governance framework poses the additional challenge of ensuring that policies and processes comply with legal regulations. Failing to meet these requirements can result in violations when collecting and using sensitive data, while also leaving systems vulnerable to malicious attacks. Not incorporating data compliance regulations into data governance plans can also result in serious penalties.

In this article, we’ll review some of the most common regulations affecting data practices in highly regulated industries, the teams responsible for maintaining compliance using data governance, and how technology makes data compliance easier.

What is Regulatory Data Governance?

Regulatory data governance refers to how data compliance influences overall data governance plans. Data governance oversees nearly every aspect of how data is utilized within an organization, helping ensure that all data users adhere to laws and regulations. These external legal requirements are often more stringent than internal policies and are the driving force to ensure that sensitive data is collected, stored, and disposed of in accordance with standards and regulations.

If any person across the organization fails to comply with a data regulation, the entire company can be at risk of a violation, leading to potential fines and penalties. Regulatory data governance ensures that the whole organization is working to uphold policies. Maintaining compliance is just one way organizations in regulated industries can achieve sustainable growth through data governance.

What is Considered a Regulated Industry?

In essence, a regulated industry refers to any sector in which businesses must adhere to rules and regulations set by the government. Certain businesses have specific processes that could potentially put public or consumer data at risk. This usually involves the risk of exposure or theft of personal data, which can compromise consumers’ privacy or financial security.

For instance, the financial services industry is heavily regulated because the unauthorized release of a person’s bank account number can make them vulnerable to criminals stealing money from their account. This kind of data release can jeopardize the financial security of the account holder. Similarly, in the healthcare industry, the release of a patient’s data can impact their safety by exposing them to identity theft, while the disclosure of their medical history can compromise their privacy and potentially affect future treatments.

Common Data Compliance Regulations

Financial transactions and medical information are two of the most highly regulated types of data, but other industries also need to protect personal data to keep up with the increasing number of laws and regulations governing digital privacy.

Privacy laws in Europe are particularly stringent, so organizations that do business in that part of the world need particularly secure regulatory data governance. Here are some of the most common regulations impacting businesses that operate in the U.S. and globally:

Health Insurance Portability and Accountability Act (HIPAA)

While HIPAA has been around long enough for healthcare and health insurance best practices to become standard, this act still significantly impacts the day-to-day operations of these businesses. HIPAA ensures that insurance and healthcare organizations restrict patient and medical data access, making it available only to providers, the patient, and entities authorized by the patient.

Internal and external access control is crucial to upholding this data compliance law. Data platforms in the healthcare industry are incredibly secure, and HIPAA release forms are signed by patients so that only authorized individuals can access their information. Security, retention, and disposal are other critical areas of data governance compliance to help ensure that medical history and patient data are kept confidential.

General Data Protection Regulation (GDPR)

The European Union (EU) created GDPR, but compliance is required by all businesses that work with customers and companies located in the European Economic Area. This includes EU member nations, Iceland, Liechtenstein, and Norway.

This information privacy law was created to minimize the amount of data collected by organizations that do business in the EU, and it also places strict requirements on how companies handle data breaches. The law cuts down on the ambiguous data collection language previously used by businesses, and ensures that individuals and consumers understand that their information is being collected and how it is used.

The GDPR is one of the most far-reaching data governance laws and affects nearly every part of a data governance plan. Even marketers and advertisers have special considerations they must follow to keep personal data practices compliant, and they must inform customers of data collection and usage changes. Additionally, legal language like the rights of erasure and transfer of personal data means that the regulatory data governance plan needs a team to manage information requests.

California Consumer Privacy Act (CCPA)

Along with the California Privacy Rights Act, the CCPA is the best example of how California has some of the strictest data privacy laws in the nation. This act requires organizations to inform Californians what personal data is being collected and whether it’s being sold. It prevents retaliation when consumers exercise the following privacy rights:

• The right to access collected personal data.
• Decline the sale of their data.
• Request the destruction of their collected personal data.

Healthcare and financial data are not protected under the CCPA. Instead, these types of data are protected under HIPAA and the Gramm-Leach-Bliley Act. The CCPA legislation prompted the creation and implementation of cookie preferences and “manage your privacy preferences” features incorporated into most websites.

With CCPA, Californians must be informed whenever a company’s privacy policies are updated or changed. This means that data privacy managers need to be proactive about any organizational changes concerning personal data.

Gramm-Leach-Bliley Act (GLBA)

The original purpose of the GLBA was to govern companies that offer any combination of investment banking, commercial banking, brokering securities, and insurance. However, one of the longest-lasting legacies of this act centers on privacy for financial institution customers.

It requires organizations to provide individuals with privacy notices when they become customers and once a year after that. The organizations must also inform customers of their rights under the Fair Credit Reporting Act, particularly of their right to refuse to have their information shared with unaffiliated third parties.

The section of the GLBA that relates most to data governance is the Safeguards Rule, which requires organizations in the financial industry to submit information security plans detailing their governance strategy. A 2021 amendment to the GLBA details new security control requirements that must be followed by data governance managers. It holds boards of directors responsible for failing to do so.

AI and Machine Learning’s Roles in Compliance and Data Governance

AI and machine learning have been making the lives of many data professionals easier. Their benefits can be similarly applied to regulatory data governance in highly regulated industries. Here are a few ways that tools leveraging AI and machine learning can aid regulated industries’ data governance plans:

• Automation: When an organization collects massive amounts of transactional or personal data subject to compliance, ensuring that all laws and regulations are being followed can be taxing and time-consuming. However, with data systems and platforms enhanced with AI, organizations can implement compliance rules and have them seamlessly applied across large datasets. AI and machine learning can also analyze an organization’s data usage and storage to determine whether stakeholders are following all the compliance rules in the industry-specific data governance plan.
• Enhancing Security: In addition to analyzing how data is used within the organization, AI can also analyze access patterns to check for signs of potential threats and attacks. At large businesses, pouring through logs is time-consuming and inefficient, but organizations can set up quality AI tools to pinpoint suspicious behavior and send alerts. Because cybercrime and attacks are becoming more advanced, machine learning can be taught to automatically learn new threat indicators and incorporate them into access pattern analysis.
• Maintaining Quality: Some data compliance laws, like HIPAA, require businesses to maintain a certain degree of data quality or accuracy. AI can review large datasets to detect missing information or inconsistencies and even correct inaccurate data. Machine learning can then analyze patterns of inconsistent data and pinpoint pipelines or systems responsible for missing data so organizations can make improvements.

Using Actian for Regulatory Data Governance

In highly regulated industries, data governance procedures need to be analyzed and monitored to ensure businesses don’t suffer heavy penalties for non-compliance. Actian Data Intelligence Platform supports governance and compliance procedures as part of a data management strategy.

With Actian data quality monitoring and data observability, organizations automatically receive insights and alerts when the accuracy of data dips below a set standard. For more information on creating a comprehensive governance plan that ensures compliance without slowing innovation, check out more articles about data governance.

About Actian Corporation

Actian empowers enterprises to confidently manage and govern data at scale, streamlining complex data environments and accelerating the delivery of AI-ready data. The Actian data intelligence approach combines data discovery, metadata management, and federated governance to enable smarter data usage and enhance compliance. With intuitive self-service capabilities, business and technical users can find, understand, and trust data assets across cloud, hybrid, and on-premises environments. Actian delivers flexible data management solutions to 42 million users at Fortune 100 companies and other enterprises worldwide, while maintaining a 95% customer satisfaction score.