The High Cost of Non-Compliance: How Inaccurate IT Asset Data Can Lead to Regulatory Fines
By: Jon Davis
For IT and security leaders, ensuring compliance with regulations is more than just a box to check—it’s a financial necessity. The consequences of non-compliance can be staggering, leading to hefty fines, legal consequences, and damage to your organization's reputation. One of the most significant contributors to non-compliance? Inaccurate IT asset management. In this blog, we’ll explore the financial risks associated with non-compliance, how inaccurate IT asset management (ITAM) can lead to these issues, and the steps CIOs and CISOs can take to avoid them.
The Financial Impact of Non-Compliance
Non-compliance doesn’t just mean paying a fine—it often comes with a wide range of costly repercussions. Let’s look at the main financial risks:
1) Costly Regulatory Fines:
Recent years have seen organizations hit with massive fines for failing to meet regulations such as GDPR, HIPAA, and SOX. For example, under GDPR, fines can reach up to $20 million or 4% of the company’s global revenue, whichever is higher. Healthcare organizations are also regularly penalized under HIPAA for failing to secure patient data properly, ranging from $141 to $2.1M per violation. New banking laws in New York could see financial institutions facing noncompliance fines of $2500 per day and even $15,000 per day for habitual offenders
These fines are not only financially damaging but can cripple an organization’s reputation in the process.
2) Legal and Operational Costs:
Fines are just the tip of the iceberg. Non-compliance often leads to increased legal fees, the need for more frequent audits, and operational disruptions. Legal battles over data breaches or regulatory violations can drag on for years, costing organizations millions in legal fees and business downtime.
3) Reputation Damage and Loss of Trust:
Beyond the immediate financial impacts, non-compliance can irreparably harm your organization’s reputation. Customers and clients lose trust in organizations that fail to safeguard data or comply with legal standards, often resulting in lost business opportunities and a tarnished brand. Rebuilding that trust can take years—if it’s possible at all.
In some cases, it’s not. After falsely certifying compliance with cybersecurity requirements with the U.S. Department of Defense, Health Net Federal Services not only had to pay $11.2M in a settlement, but also lost their TRICARE West Region contract.
How Inaccurate IT Asset Management Leads to Compliance Failures
Non-compliance often begins with poor IT asset management practices. Here’s how:
1) Untracked or Mismanaged Assets:
When assets—whether hardware, software, or devices—are not tracked accurately, it becomes easy to overlook critical compliance requirements. Missing software licenses, unmonitored devices, or outdated hardware can quickly lead to violations. ITAM platforms help provide real-time visibility into all assets, ensuring that nothing is left unaccounted for, reducing the risk of non-compliance.
2) Outdated Software and Patch Management:
One of the most common causes of compliance failures is the lack of proper patching and software updates. Inaccurate tracking of software versions can mean that devices and systems are left unpatched, exposing them to security vulnerabilities. In fact, 32% of cyberattacks took advantage of unpatched software vulnerabilities. ITAM platforms allow you to stay on top of patch management by tracking software in real-time and ensuring updates are deployed as needed to meet regulatory standards.
3) Shadow IT and Unauthorized Devices:
Shadow IT refers to unauthorized devices and applications used within an organization without IT’s knowledge. These rogue assets can cause severe compliance risks because they are unmonitored and unprotected. Unfortunately, G2 found that 80% of workers admit to using SaaS applications at work without getting approval from IT. ITAM platforms help detect these unauthorized devices, ensuring that all assets are properly managed and meet compliance requirements.
Real-World Examples of Compliance Failures Due to Inaccurate ITAM
There are countless examples of how inaccurate IT asset management has led to costly compliance failures. Here are two notable cases:
1) GDPR Violation Due to Untracked Data:
A large European company faced significant GDPR penalties after discovering that it had failed to track IT assets containing customer data. Untracked laptops and storage devices held sensitive information, which went unsecured. Had the company implemented a better ITAM strategy, it could have prevented the violation by accurately tracking all devices containing personal data.
2) HIPAA Fine from Incomplete IT Inventory:
In one healthcare case, Horizon Healthcare Services Inc., was fined $1.1M for losing unencrypted laptops that put 3.7M patients’ protected data at risk. Better IT asset management practices could have ensured that every device was secured and accounted for, avoiding the costly fine.
How CIOs and CISOs Can Ensure Compliance Through Effective IT Asset Management
CIOs and CISOs play a crucial role in ensuring compliance by maintaining accurate IT asset management practices. Here are some key strategies:
1) Implementing ITAM platforms for Real-Time Visibility:
ITAM platforms provide CIOs and CISOs with real-time visibility into all IT assets, configurations, and software versions. This level of oversight helps organizations stay compliant by ensuring that assets are properly managed, secured, and updated in line with regulatory requirements.
2) Automating Compliance Audits and Reporting:
Compliance audits can be time-consuming and costly, but ITAM platforms streamline this process by generating accurate, up-to-date reports on asset usage, configurations, and security measures. Automated workflows ensure that all assets meet regulatory standards without manual tracking, saving time and reducing the risk of human error.
By implementing ITAM, CHG Healthcare gained a much better understanding of their security status and were able to expedite their compliance initiatives effectively. The strategic enhancement has been pivotal in strengthening their overall compliance framework.
3) Cross-Department Collaboration:
CIOs and CISOs must ensure that IT, security, and compliance teams are aligned on regulatory requirements. Fostering collaboration across departments helps create a culture of accountability where every team plays a role in maintaining compliance and accurate asset management.
Best Practices for Reducing Compliance Risks Through IT Asset Management
To ensure compliance and reduce risks, CIOs and CISOs should adopt these best practices:
1) Conduct Regular Audits and Asset Reviews:
Regular audits of IT assets help identify any gaps in management and ensure compliance is maintained. Establishing a routine for reviewing software licenses, security configurations, and device management is crucial.
2) Use ITAM platforms to Track Asset Lifecycles:
ITAM platforms help track the full lifecycle of IT assets—from procurement to decommissioning—ensuring that all assets are maintained, secured, and disposed of properly to meet regulatory standards.
3) Implement Training and Awareness Programs:
Ongoing training programs ensure that IT teams and employees understand compliance requirements and their role in maintaining accurate asset management. Continuous education is key to fostering a culture of compliance.
Accurate IT Asset Management is Key to Avoiding Regulatory Fines
The financial and reputational risks of non-compliance are too great to ignore. Accurate IT asset management is essential to ensure that your organization meets regulatory standards, avoids costly fines, and protects its reputation. CIOs and CISOs must prioritize ITAM practices to maintain visibility and accountability, ensuring that assets are properly managed and compliant at all times.
By leveraging ITAM platforms and following best practices, organizations can reduce compliance risks, streamline audits, and safeguard their future.
