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Understanding the Costs of Non-Compliance

July 2021
July 2021

Being compliant when carrying out business is one of the most significant concerns any company will have. After all, rules and regulations are set to protect customers, keep businesses out of trouble, and ensure that operations run smoothly. Should a company break any of these requirements, then a lot of time and money will have to be spent trying to deal with the consequences.

The question still stands—just how bad are the consequences of non-compliance? Is it as bad as many people claim, or can the claims be exaggerated? Unfortunately, some of the things that sound exaggerated are true.
In this article, we'll help you understand the costs of non-compliance to help you be aware of its severity:

Understanding the Costs of Non-Compliance

Based on a report done by the GlobalScape and Ponemon Institute, it was found that the average annual cost is nearly $15 million, a massive amount. Note that non-compliance costs are defined as the cost that resulted from a failure to comply with rules, regulations, policies, and other legal obligations. The numbers can range anywhere from $2million to up to $40 million or even higher. On the other hand, the compliance cost is nowhere near the average of non-compliance, sitting at around $5 million.

As you can see, the cost of being non-compliant is almost three times more expensive than being compliant. It makes sense then to invest your time, effort, and even money to keep your business compliant for the sake of saving costs. However, knowing just how much more expensive it is to be non-compliant, you may be wondering why so many businesses stay that way. In most cases, companies aren't spending enough to remain compliant.

The best way to be compliant is to factor in the total cost to be compliant. This includes consultant services, training, admin overhead, technologies, and more, but data security should always be expected as the highest cost. Data security alone can average approximately $2 million a year, although that amount is nothing compared to the cost of being non-compliant.

Annually, organisations can expect to spend up to $1 million on compliance platforms, another million dollars on incident response, and a little less on audits and assessments. Speaking of audits, running audits on one's own company, although expensive and time-consuming, can lead to long term cost savings.

Understand, however, that the costs related to remaining compliant, and even the consequences of non-compliance, can vary from industry to industry. For instance, a financial services company can expect to pay over $30 million to stay compliant, while a digital media company can spend less than $10 million.


Regardless of the amount you pay to stay compliant, understand that it will help save much more money than if you were to be non-compliant. As such, investing in compliance platforms, services, and more is crucial if you want to save money. However, know that investing in such solutions will save you much more than just cash. It can save your brand image from legal trouble, something which is priceless to any business.

Remember, reputation takes years to build and mere seconds to destroy. You would not want to subject your company to the risk of destroying one's reputation simply because you remain non-compliant.

Scaramanga is a swiss-based consulting firm offering data protection, information security, and compliance consulting to help companies do business with peace of mind. If you are looking for data privacy consultancy services, work with us today!