1 00:00:00,090 --> 00:00:01,200 In this lesson we are going 2 00:00:01,200 --> 00:00:04,019 to discuss non-compliance consequences. 3 00:00:04,019 --> 00:00:06,030 In the world of information technology, 4 00:00:06,030 --> 00:00:07,830 compliance is not just a matter 5 00:00:07,830 --> 00:00:10,350 of good business practice, it's a necessity. 6 00:00:10,350 --> 00:00:13,110 Non-compliance can lead to severe consequences 7 00:00:13,110 --> 00:00:16,470 including fines, sanctions, reputational damage, 8 00:00:16,470 --> 00:00:19,470 loss of license, and contractual impacts. 9 00:00:19,470 --> 00:00:20,640 In this lesson we are going 10 00:00:20,640 --> 00:00:23,400 to explain the consequences of non-compliance. 11 00:00:23,400 --> 00:00:24,690 First up, fines. 12 00:00:24,690 --> 00:00:28,410 Fines are monetary penalties imposed by regulatory bodies 13 00:00:28,410 --> 00:00:31,110 for non-compliance with laws and regulations. 14 00:00:31,110 --> 00:00:33,000 In the IT and cybersecurity realm, 15 00:00:33,000 --> 00:00:34,980 these fines can be substantial. 16 00:00:34,980 --> 00:00:38,280 For instance, under the general data protection regulation, 17 00:00:38,280 --> 00:00:42,720 GDPR, companies can be fined up to 20 million euros 18 00:00:42,720 --> 00:00:45,750 or 4% of their annual global turnover, 19 00:00:45,750 --> 00:00:49,500 whichever is higher, for serious data breaches. 20 00:00:49,500 --> 00:00:51,330 In 2019, for example, 21 00:00:51,330 --> 00:00:55,290 British Airways was fined 183 million pounds 22 00:00:55,290 --> 00:00:57,990 by the UK's Information Commissioner's Office 23 00:00:57,990 --> 00:01:01,470 for a data breach that affected 500,000 customers. 24 00:01:01,470 --> 00:01:03,360 Next, sanctions. 25 00:01:03,360 --> 00:01:05,280 Sanctions are strict measures taken 26 00:01:05,280 --> 00:01:07,982 by regulatory bodies to enforce compliance. 27 00:01:07,982 --> 00:01:10,020 These can range from restrictions 28 00:01:10,020 --> 00:01:12,810 on business operations, outright bans. 29 00:01:12,810 --> 00:01:15,450 For example, in 2017 the Chinese government 30 00:01:15,450 --> 00:01:18,060 sanctioned several local and foreign companies 31 00:01:18,060 --> 00:01:21,090 for non-compliance with this new cybersecurity law. 32 00:01:21,090 --> 00:01:23,370 The sanctions included warnings, fines, 33 00:01:23,370 --> 00:01:25,860 and the confiscation illegal income. 34 00:01:25,860 --> 00:01:27,540 Reputational damage. 35 00:01:27,540 --> 00:01:30,090 Reputational damage refers to the negative impact 36 00:01:30,090 --> 00:01:33,210 on a company's reputation due to non-compliance. 37 00:01:33,210 --> 00:01:35,880 In the era of social media and online reviews, 38 00:01:35,880 --> 00:01:39,000 this damage can be significant and long-lasting. 39 00:01:39,000 --> 00:01:42,000 Take the case of Equifax, credit reporting agency 40 00:01:42,000 --> 00:01:44,880 that suffered a massive data breach in 2017. 41 00:01:44,880 --> 00:01:47,250 The breach, which exposed the personal information 42 00:01:47,250 --> 00:01:52,250 of 147 million people, severely damaged Equifax reputation. 43 00:01:52,440 --> 00:01:54,870 The company faced widespread criticism 44 00:01:54,870 --> 00:01:57,560 and its stock prices dropped by more than 30% 45 00:01:57,560 --> 00:01:59,910 in the weeks following the breach. 46 00:01:59,910 --> 00:02:02,400 Next on the list is loss of license. 47 00:02:02,400 --> 00:02:04,410 In some cases, non-compliance can lead 48 00:02:04,410 --> 00:02:06,870 to the loss of a company's license to operate. 49 00:02:06,870 --> 00:02:08,550 This is particularly relevant 50 00:02:08,550 --> 00:02:10,560 in industries where companies are required 51 00:02:10,560 --> 00:02:13,650 to maintain certain certifications or licenses. 52 00:02:13,650 --> 00:02:17,340 For instance, in 2016, the New York State Department 53 00:02:17,340 --> 00:02:19,800 of Financial Services revoked the license 54 00:02:19,800 --> 00:02:22,320 of a small Bitcoin company for non-compliance 55 00:02:22,320 --> 00:02:24,510 with its cybersecurity regulations. 56 00:02:24,510 --> 00:02:26,790 The company was unable to meet the state's 57 00:02:26,790 --> 00:02:28,980 stringent cybersecurity requirements 58 00:02:28,980 --> 00:02:30,780 leading to the loss of its license. 59 00:02:30,780 --> 00:02:34,560 Finally, non-compliance can also have contractual impacts. 60 00:02:34,560 --> 00:02:36,540 Companies that fail to comply with laws 61 00:02:36,540 --> 00:02:39,900 and regulations may find themselves in breach of contract, 62 00:02:39,900 --> 00:02:43,290 leading to legal disputes, financial penalties, 63 00:02:43,290 --> 00:02:45,180 or the termination of contracts. 64 00:02:45,180 --> 00:02:47,490 For example, a software development company 65 00:02:47,490 --> 00:02:50,025 that fails to comply with data protection regulations 66 00:02:50,025 --> 00:02:53,490 could be in breach of its contracts with clients. 67 00:02:53,490 --> 00:02:56,039 The clients could sue the company for damages, 68 00:02:56,039 --> 00:02:58,770 terminate their contracts, or both. 69 00:02:58,770 --> 00:03:01,470 So remember, consequences of non-compliance 70 00:03:01,470 --> 00:03:04,830 in the IT and cybersecurity world can be severe. 71 00:03:04,830 --> 00:03:06,450 Fines can reach into the millions 72 00:03:06,450 --> 00:03:08,220 or even billions of dollars. 73 00:03:08,220 --> 00:03:11,053 Sanctions can restrict or halt business operations. 74 00:03:11,053 --> 00:03:14,010 Reputational damage can lead to a lost business 75 00:03:14,010 --> 00:03:16,260 and a declining stock price, while the loss 76 00:03:16,260 --> 00:03:19,320 of a license can shut that company down entirely. 77 00:03:19,320 --> 00:03:22,800 Finally, non-compliance can lead to contractual disputes, 78 00:03:22,800 --> 00:03:26,460 financial penalties, and the termination of contracts. 79 00:03:26,460 --> 00:03:27,840 To avoid these outcomes, 80 00:03:27,840 --> 00:03:30,060 companies must prioritize compliance. 81 00:03:30,060 --> 00:03:32,005 This includes understanding and adhering 82 00:03:32,005 --> 00:03:35,040 to all relevant laws and regulations, 83 00:03:35,040 --> 00:03:37,950 implementing robust cybersecurity measures, 84 00:03:37,950 --> 00:03:41,520 regularly reviewing and updating their compliance programs. 85 00:03:41,520 --> 00:03:43,773 By doing so, companies can protect themselves 86 00:03:43,773 --> 00:03:46,680 from the severe consequences of non-compliance 87 00:03:46,680 --> 00:03:48,637 and ensure their long-term success 88 00:03:48,637 --> 00:03:53,637 increasingly complex world of IT and cyber security.