5 Top Emerging Risk and Compliance Trends for Legal Entities | MinuteBox Cloud Entity Management

5 Top Emerging Risk and Compliance Trends for Legal Entities

Cybersecurity matters have emerged as one of the biggest issues facing global businesses. The global average cost of a cybersecurity breach now stands at $4.45 million.

When looking at the numbers on a regional level, the data is even more alarming. For example, in the United States alone, during 2006, the average cost of data breaches was $3.54 million. Fast forward 17 years, and that cost has escalated by over 150% to an average of $9.48 million, according to Statista.

It’s not just the direct financial costs of data breaches that concern organizations. There’s also the matter of corporate compliance. Data security breaches affect corporate compliance protocols that, left unattended, could subject legal entities to even greater financial costs.

What is the role of cybersecurity in compliance?

Cyber compliance is a series of corporate processes designed to maintain data privacy and security. These processes must align with regulatory standards and by-laws to protect sensitive corporate records.

Protecting sensitive data and abiding by the laws aren’t the only reasons to invest in quality cybersecurity measures. Cyber compliance also makes practical business sense that supports growth initiatives. Compliance helps preserve trust with existing and future customers, while also improving overall security measures for the corporation.

Cybersecurity breaches occur seemingly at random, and no entities seem impervious to such a breach. In August 2023, for example, the UK Electoral Commission was the victim of what it described as “a complex cyber-attack As many as 40 million UK citizens’ personal information was accessed through the UK’s hacked electoral registers.

Given the reach, breadth, and impact of cybersecurity breaches, legal entities must take proactive measures to protect their sensitive records and maintain corporate compliance. Here’s a breakdown of five of the biggest emerging cybersecurity compliance trends.

1. Reinforcing databases against threats of artificial intelligence

Artificial intelligence (AI) is disrupting many traditional industries and workflows. While there are many benefits to incorporating AI into business practices, there are also an abundance of risks that could compromise corporate security and compliance.

Malicious actors can leverage AI to develop sophisticated malware that penetrates cybersecurity firewalls. These attacks risk becoming more prevalent if AI is primarily used by legal entities to manage cybersecurity. In one fell swoop, the defence mechanism can be turned into the commencement of a cyber attack.

To minimize the risk of these circumstances, ensure your cybersecurity measures are balanced by AI, machine learning technology, and human managers. Using technology can help automate and streamline many cybersecurity sequences. But you should always have human workers overseeing the platforms and ensuring no security measures are overlooked by the technology.

2. Ethics of using AI to enforce data security

There’s also the matter of business ethics regarding AI. Two key ethical concerns regarding the global adoption of AI solutions are the effects on data security and consumer privacy.

For AI to function properly, it requires substantial volumes of data to make decisions. As a result, there are growing concerns about how AI platforms collect and manage that data. If AI is collecting and analyzing sensitive data without giving consent or proper security clearances, the corporations using that technology could be liable for violations of privacy laws.

If your organization intends to use AI, ensure your corporate compliance framework includes the proper protocols to do so. Data must be handled with sensitive care and using strict security measures to avoid compromising any individual or corporate rights to privacy.

3. Security compliance rules and regulations

In the summer of 2023, the Securities and Exchange Commission (SEC) adopted new security compliance rules. The new regulations require legal entities to disclose any cybersecurity incidents and provide annual summaries of their cybersecurity risk management, governance, and strategies.

The SEC deems any corporate data as the intellectual property of shareholders and stakeholders. According to the SEC, transparent disclosures of any compromises of that intellectual property will protect investors, corporations, and the public at large from unlawful uses of sensitive corporate data.

Ensure your compliance reporting structure includes any risks that compromise your corporate data security. Failure to provide transparent reports of this information risks leaving your entity exposed to the penalties of non-compliance.

4. Mitigation of third-party risks from partners or vendors

Very few corporate entities operate on an island. Relationships with affiliate partners or third-party vendors are vital to further grow the interests of the business.

However, in an increasingly interconnected world, those third-party relationships may not be as secure as they once were in the past. Integrations with these vendors that lack the proper security parameters could leave sensitive data vulnerable to cyber-attacks.

As part of a compliance framework, ensure all third-party vendor relationships are backed by robust security measures. Creating risk management policies that vet and evaluate third-party vendors reinforces your corporate security and strengthens the trust of all stakeholders.

5. Automation of more cyber compliance processes and workflows

Finally, corporations increasingly rely on technology (non-AI technologies) to help automate many compliance tasks and workflows. Entity management platforms are a prime example of these solutions, and the market size for entity management software solutions will reach $3.85 billion by 2026.

Entity management platforms like MinuteBox have built-in compliance frameworks that guide legal and compliance teams to build robust compliance protocols. The platform is very intuitive and user-friendly, relying on drag-and-drop modules to help formulate and organize compliance protocols in a centralized domain.

Users of entity management software report valuable time savings and operational efficiencies. The platform accelerates time spent managing corporate compliance protocols, while still maintaining the highest standards for data security and privacy protection.

As a result, expect more organizations to embrace these modern solutions for corporate compliance and data security. To hop onto the bandwagon, join the MinuteBox revolution and take the leading step towards modernized corporate compliance.