Enhancing Regulatory Compliance Management for MSPs

Why Is Compliance Management Critical for MSPs?

Compliance Management is critical for MSPs because they handle crucial and sensitive information that can put customers’ lives at risk. This aspect of running an MSP involves understanding and abiding by regulatory requirements, conducting risk assessments, forming good relations with vendors, and maintaining consistent compliance. 

Proper compliance management keeps MSPs from unwanted penalties and maintains a good reputation. As organizations that handle critical customer assets, your team must show a robust framework for safeguarding data and information. 

Best Managed Service Provider Compliance Practices

MSPs help other service organizations become compliant. It is only logical for every MSP to have its own safeguards and security protocols that will protect it from cybersecurity threats. 

The best way for service organizations to trust an MSP is to show a comprehensive, prepared, and robust internal system. 

Here are seven (7) best practices that every MSP should use to maintain compliance and competitive advantage. 

#1 Understand the Significant Compliance Regulations

There is more than one compliance regulation that helps protect sensitive customer information. That’s how critical this task is. Each regulation may vary depending on the nature of the industry and the information. 

Some regulations, such as the Health Insurance Portability and Accountability Act (HIPAA), were built for the healthcare industry. Every MSP must clearly understand all relevant compliance regulations for their team to be able to set up effective safeguards.

#2 Identify the Scope of Operations

MSPs offer a wide range of varying IT services. It is always a good practice to outline which services your organization specializes in to understand if you fit the needs of an inquiring company. 

Identifying your operation’s scope also helps in creating frameworks for your security – even for risk assessments. It allows you to focus on key areas rather than trying to use general models to assess your operations. 

#3 Perform Regular Risk Assessments

Performing risk assessments is a critical step for ensuring and managing compliance. This step allows you to identify potential threats to the information you handle, as well as threats of data breaches that can put your customer’s data at risk. 

Regular risk assessments can help MSPs adapt to evolving threats. These can also help MSPs improve their security controls and proactively address vulnerable areas. 

#4 Adress Regulation and Compliance Gaps

After conducting risk assessments, MSPs are more likely to identify any gaps or non-compliances in their system. This is an opportunity to strengthen your security controls and comply with regulations. 

As MSPs work in the tech industry, it is critical to have a deep understanding of the regulations that protect customer information. Small gaps in compliance can create rippling cybersecurity threats. 

#5 Establish a Robust Security System

It goes without saying that an MSP must have a comprehensive security system. It is fundamental in safeguarding your operations and compliance integrity. 

Policies relating to the security system must be clearly communicated to all of the employees of an MSP. These policies must also encompass working with third-party vendors. 

Implement security controls, such as advanced encryption, two-factor authentications, and training programs that must all be applicable to businesses you partner with.

#6 Establish a Monitoring System for Continuous Improvement

Consistent monitoring and information gathering are critical to ensuring compliance. Establishing a consistent monitoring system will allow you to track your compliance status, identify anomalies, and address any issues on time. 

Information gathered through monitoring can also be used to predict potential threats, especially with the use of AI-powered predictive models. This can also be used to assess areas for improvement and apply them to optimize operations. 

#7 Build Strong Relationships with Customers

The best way for an MSP to perform is to communicate with their customers well, and the best way to do this is to build strong relationships with them. This can help you understand their operations better and customize solutions that fit their working style. 

Having a secure and convenient line with your customers can help you address issues as an MSP faster. In turn, they can also communicate areas where improvements are needed. 

Critical Compliance Regulations and Frameworks for MSPs

Several compliance regulations govern the operations of MSPs, each with different requirements and focus. Understanding the applicable regulatory compliance requirements for an MSP is a critical part of compliance management. 

Here are seven of the most critical compliance regulations for MSPs. 

1. ISO 27001. This international standard provides a framework for building an information security management system (ISMS). This regulation is basically a program for managing and protecting information through the use of technology.
2. NIST CSF. The National Insititute of Standards and Technology Cybersecurity Framework (NIST CSF) is a program established to reduce cybersecurity threats. The program is mandatory for federal agencies and voluntary for private sectors. Depending on the organization’s maturity level and size, the framework’s application may vary. 
3. SOC 2. System and Organization Controls 2 is one of the two cybersecurity frameworks established by the American Institute of Certified Public Accountants (AICPA). The security framework contains guidelines on how to assess service operations, address vulnerabilities, and establish security protocols to prevent data breaches. SOC 2 is based on 5 Trust Services Criteria that all focus on different aspects of security.
4. CMMC. This regulation stands for Cybersecurity Maturity Model Certification. It is a program initiated by the U.S. Department of Defense with the objective of protecting sensitive and unclassified information that flows through the department and its contractors. 
5. HIPAA. This federal law stands for the Health Insurance Portability and Accountability Act. The law aims to protect sensitive patient health information. It helps healthcare organizations and MSPs build security protocols for protecting patient information from unwanted data breaches. 
6. PCI-DSS. The Payment Card Industry Data Security Standard is a security standard that protects the information of cardholders. It is basically enforced on vendors, banks, and brands that collect and process customer information through cards. 
7. GDPR. The General Data Protection Regulation is a law that affects members of the EU or businesses transacting with them. The law aims to protect personal data through a set of security protocols. 

All applicable regulations for MSPs aim to protect information from unlawful use or breaches. They set a safe environment for transactions between MSPs and service organizations they work with. 

MSPs can achieve structured compliance management with the help of I.S. Partners. Our organization is composed of seasoned experts who can navigate through the hardest cybersecurity regulations effortlessly. 

Risks of Non-Compliance for MSPs

The main risk of non-compliance with security regulations for MSPs is putting the safety of customer information in danger. These regulations were established to regulate operations in a way that will not put customer information at risk. 

Non-compliance with regulatory frameworks and laws can have heavy repercussions for MSPs. Below are some common risks of non-compliance for every MSP:

• Legal penalties with fine
• Data breaches and cyber attacks
• Damage to reputation 
• Loss of customer trust
• Business disruption and difficulty in operations
• Profit loss
• Compromised customer safety

The effects of non-compliance on an MSP can have long-lasting effects. Once cyberattacks penetrate your organization due to a lack of security protocols and compliance management, your reputation can be severely affected – leading to customer loss. 

In addition, breaches resulting from non-compliance involve hefty fines – not to mention the possibility of being sued by customers and service organizations. 

Common Challenges for Regulatory Adherence for MSPs

Running a Managed Service Provider business is hard, let alone the amount of security compliance that you have to follow. As a result, some MSPs may face significant challenges in meeting compliance and bridging gaps in their operations. 

These compliance challenges must also be understood in order to communicate your organization’s scope and limitations properly to customers. 

Complexity of Laws

It goes without saying that security laws involve complex compliance requirements. In addition, laws consistently evolve according to industry climate and other factors. As such, MSPs may find it hard to adapt and protect data privacy.

This challenge is especially true for smaller MSPs that do not have the capability to use advanced and versatile technology. 

Lack of Resources

Not all MSPs are big enough to sustain the requirements of different industries. This is the reason why some MSPs focus on a particular industry to provide services. Investing in training and tools to help fulfill compliance management for one industry involves a huge amount of capital, which can be a hurdle for smaller MSPs.

Inadequate Vendor Management

Some MSPs rely on third-party vendors and subcontractors to deliver services. Managing these vendor relationships while ensuring that they also comply with relevant regulations adds another layer of complexity to regulatory adherence.

This type of partnership requires MSPs to implement an added layer of security compliance to ensure that third-party subcontractors follow their level of security standards. 

Security Risks

With the increasing sophistication of cyber threats, MSPs face the challenge of maintaining robust cybersecurity measures to protect their clients’ data and infrastructure. 

Adhering to regulatory requirements for cybersecurity, such as implementing encryption, access controls, and regular security assessments, is crucial but challenging.

Failure to Secure Audits

MSPs require regular audits and inspections. These processes help ensure that the organization is compliant with a particular regulation. 

A part of undergoing audits is developing a comprehensive monitoring, reporting, and documenting system that will capture all the necessary information to prove compliance. Failure to establish such a system can make compliance more difficult for MSPs. 

Manage Regulatory Requirements With the Help of Experts From I.S. Partners

Compliance management can be a tough job, especially with the varying requirements of regulations. While some compliance regulations overlap in requirements, compliance is mostly about the fine details that most MSPs miss because of the lack of support. 

Enter I.S. Partners. Our team comprises expert IT and cybersecurity members who are well-versed in the different available compliance regulations. Allow our team to perform comprehensive assessments and audits on your security protocols and guide you to comply with the necessary requirements fully. 

Contact us today and allow our team to determine your critical needs. 

About The Author

Jena Andrews

Jena is a senior auditor and security consultant since 2021. She is specialized in compliance management, cybersecurity, IT security, and risk management. Jena is a certified information systems auditor (CISA) and project manager.

With a decade-long history in Project Management, Jena has focused the past five years on Compliance, IT and Operations auditing, Information Security, and Cybersecurity. She has conducted a plethora of compliance audits and security assessments in accordance with standards including SOC 1, SOC 2, HIPAA, PCI DSS, ISO 27001, and NIST 800-53, 800-171.

Jena is a proud B.S. graduate in Criminal Justice from West Chester University and holds esteemed CISA, PMP, and CCP certifications, further highlighting her expertise and commitment to professionalism.