The Growing Cost of Non-Compliance and the Need for Security-First Solutions

Organizations across the world are facing mounting pressures to comply with a complex web of regulations. Failure to meet these requirements doesn’t just result in inconvenience or minor setbacks – it can translate into significant financial and reputational damage. According to a recent study, the average cost for organizations that fail to comply with data protection regulations is $14.82 million, a staggering 45 percent increase from 2011. This number reveals a sharp increase in both the scale and complexity of regulatory violations, and the harsh reality that non-compliance is a costly risk many companies cannot afford to take.

In comparison, the average cost of compliance is $5.47 million – still substantial, but far less than the financial burden incurred from failing to adhere to legal and regulatory standards. This stark contrast highlights an uncomfortable truth: failing to meet compliance standards is a risk that businesses must take seriously. Organizations today are dealing with the immediate fines, penalties, and the long-term consequences of operational disruption, loss of trust, and diminished revenue.

The impact of non-compliance goes far beyond immediate financial penalties. With global cybercrime costs projected to reach $10.5 trillion this year, every compliance failure adds to this growing threat. A single breach can disrupt operations, invite regulatory scrutiny, and reduce productivity – but the most damaging consequence is often the lasting reputational harm that drives customers and business partners away. From legal settlements to remediation efforts, non-compliance touches nearly every part of an organization. Taking a proactive approach to security and compliance isn’t only about avoiding fines, it’s essential for protecting long-term stability and success.

Why Is Non-Compliance So Expensive 

Non-compliance can cause significant disruptions to an organization’s operations, often making it difficult to focus on their standard business practices. Data breaches, security failures, and other regulatory violations can trigger lengthy investigations, system overhauls, and costly public relations campaigns aimed at restoring consumer confidence. These disruptions can also lead to the diversion of key resources that would otherwise be dedicated to driving innovation and growth.

Legal settlements and penalties can quickly become a significant burden as well. Regulatory bodies across the globe are increasing their scrutiny and enforcement actions. Failing to comply with well-established regulations like HIPAA or GDPR, or newer ones like the European Union’s Digital Operational Resilience Act (DORA) and NY DFS Cybersecurity requirements, can result in penalties that can reach millions of dollars. But the costs do not stop there. Once a company has been found to be non-compliant, it often faces reputational damage that extends far beyond the immediate legal repercussions. Customers, clients, and business partners may question the integrity of an organization that has demonstrated an inability to safeguard sensitive data, leading to the potential loss of valuable contracts, partnerships, and consumer trust.

The long-term effects on an organization’s reputation can have far-reaching consequences. Rebuilding trust with customers, stakeholders, and partners can take years, and in some cases, may not be fully achievable. When an organization loses its reputation for being secure and trustworthy, it not only loses customers but also faces a diminished ability to attract new business or talent. For organizations operating in high-stakes industries such as finance, healthcare, or government contracting, this loss of trust can be particularly devastating.

The Importance of Security-First Solutions 

With the costs of non-compliance continuing to rise, the need for organizations to adopt security-first solutions within their IT security has never been greater. A security-first approach goes beyond just checking off boxes to meet regulatory requirements. It involves implementing robust, proactive security measures that safeguard sensitive data and systems from potential breaches. This approach protects the organization from fines and builds a strong foundation of trust and resilience in the face of evolving cyber threats.

One area where organizations often overlook security is in their access management systems, especially when it comes to mainframe applications. Many businesses still rely on outdated, insecure methods of connecting to critical systems through terminal emulators or “green screen” interfaces. These systems, often running legacy applications, can become prime targets for cybercriminals if they are not properly secured. With credential-based attacks rising, organizations must rethink how they secure access to their most vital resources.

Security-first solutions in this area focus on integrating modern identity and access management (IAM) protocols with legacy systems to enhance security without compromising accessibility. By strengthening the authentication and authorization processes for green screen access, businesses can significantly reduce the risk of unauthorized access and breaches. These solutions offer phishing-resistant, password-less access options, eliminating common vulnerabilities associated with traditional login methods. As cyberattacks become more sophisticated and prevalent (or frequent), organizations need to ensure that their access management systems are not just secure but also adaptive to emerging threats.

The implementation of such security-first solutions also ensures that organizations remain compliant with evolving regulations, such as HIPAA, DORA, and PCI-DSS 4.0. Regulatory frameworks like these require businesses to meet strict standards for protecting sensitive data and securing systems against unauthorized access. With frameworks evolving, organizations must stay ahead of the curve by adopting security measures that meet current requirements and anticipate future challenges.

Regulatory Pressures and the Need for Compliance 

The regulatory environment continues to evolve in response to rising cybersecurity threats and the increasing complexity of global business operations. One of the most significant regulatory initiatives is DORA, which requires financial institutions in the EU to enhance their operational resilience. This regulation, which went into effect in January, mandates that financial institutions implement stronger security measures and robust incident response protocols to ensure their systems can withstand and recover from cyber incidents. For U.S. companies with customers in the EU, compliance with DORA is essential, making the integration of security-first solutions even more critical.

At the same time, organizations handling payment card data are under increasing pressure to meet the new PCI DSS 4.0 standards, which will be in full effect by the end of March. These updated requirements are designed to bolster payment system security and ensure the privacy of payment data. Companies that fail to comply with these standards face penalties and could lose the ability to process payment card transactions, which could have devastating effects on their business.

As cybersecurity risks grow, staying compliant with evolving regulations like DORA and PCI 4.0 is essential for avoiding fines and for maintaining trust and operational stability in this complex business environment.

Conclusion

The cost of non-compliance is rising, and businesses can no longer afford to take a passive approach to security and regulatory adherence. The financial, operational, and reputational risks associated with non-compliance are simply too high. Cyber threats are evolving, and regulatory frameworks are becoming more stringent, so organizations must adopt a proactive, security-first approach that integrates modern security practices into all aspects of their operations.

With secure access to critical systems and data and implementing strong encryption standards, aligning with the latest regulatory requirements, organizations can mitigate the risks associated with non-compliance. Moreover, they can build the trust necessary to thrive in the face of rising threats and mounting regulatory demands. Businesses that prioritize security will be better positioned to navigate the complex nature of compliance and safeguard their future success.

About the Author

Puneet joined Rocket Software in 2018 as the Vice President of Quality and DevOps and was promoted to the President of the Application Modernization Business Unit in 2023. In his time at Rocket Software, Puneet has held multiple leadership roles leading the Quality and DevOps and Product engineering teams and has been instrumental in standardizing Rocket Software’s Quality and DevOps toolchain. Along with having touched nearly every Rocket Software product at some point during his tenure at Rocket Software, he also helps drive initiatives like Rocket.Build, Community Connectors and acquisition integrations. Before joining Rocket Software, Puneet held leadership roles at Dell EMC, RSA, and CA and spent over 10 years in the identity and access management space. Puneet serves as a president on the board of a nonprofit focusing on community and culture. Puneet’s love for community service keeps him busy outside of Rocket Software. Puneet holds a B.S. in Computer Science from Northeastern University.

Puneet can be reached at https://www.linkedin.com/in/puneetkohli/