Cloud Compliance: Challenges, Regulations, & Best Practices

Cloud compliance keeps your cloud environment in line with regulatory and industry standards. In conjunction with cloud security controls, which prevent unauthorized access, this practice helps organizations greatly reduce risk, avoid penalties, and maintain customer trust.

As an experienced managed cloud provider, TierPoint helps businesses navigate even the most complex regulatory environments. We’ve compiled what you need to know about cloud compliance, including common standards, challenges, and best practices.

What Is Cloud Compliance?

Cloud compliance is the practice of aligning your cloud-based data, applications, and infrastructure with internal security policies, regulatory requirements, and industry standards. It serves to reduce legal and reputational risks while protecting sensitive information and assets in the cloud.

A strong cloud compliance framework establishes guidelines, policies, and controls to help businesses meet relevant legal mandates and standards.

How the Shared Responsibility Model Impacts Cloud Compliance

Cloud service providers and customers share responsibility for cloud compliance. While the cloud provider is typically responsible for the security and compliance of the underlying infrastructure, the customer must protect resources within the cloud. This includes maintaining compliant application configurations, data governance policies, and user access controls.

One of the biggest issues with cloud compliance happens when customers misunderstand the extent of their responsibilities in the cloud. Once you understand your compliance requirements, it’s important to document who will fulfill each one instead of making assumptions. For example, while your provider may offer data encryption tools, your team may be responsible for classifying data and implementing the right levels of encryption.

Even when responsibility falls on the cloud provider, organizations should regularly do their due diligence to ensure contractual obligations, like PCI DSS compliance guarantees, are met. Using a cloud provider doesn’t automatically transfer legal accountability when non-compliance occurs.

Why Does Cloud Compliance Matter for Businesses?

Cloud compliance matters because it ensures your business satisfies the legal and ethical requirements necessary to protect your data, finances, and brand integrity. This is especially important as the financial and reputational risks associated with non-compliance continue to rise. Consider these facts:

• GDPR violations alone can result in penalties of up to €20 million (over $23 million) or 4% of an organization’s global annual revenue, depending on the nature and severity of the violation.
• Non-compliance increases cloud risks, including data breaches, which cost an average of $4.44 million each in 2025.
• 86% of customers expect data privacy rights, and 82% will abandon brands for breaking their trust.

The consequences of non-compliance can also include legal sanctions and the long-term erosion of customer trust, which can be incredibly hard to rebuild. On the other hand, the World Economic Forum reports 78% of security leaders agree that following cyber-related regulations effectively reduces risks.

Compliance in cloud computing has evolved from a back-office priority to a matter that leadership should actively monitor.

What Are Examples of Regulations and Standards Affecting Cloud Computing?

Depending on your geography, sector, and data types, your cloud computing environment may be required to abide by industry and regulatory standards like the GDPR, HIPAA, PCI DSS, and ISO 27000 Family of Standards. Understanding what might affect your organization can help you map requirements to controls and effectively address gaps.

General Data Protection Regulation (GDPR)

The GDPR is a law that protects the security and privacy of personal data for individuals in the European Union. It applies to any organization, regardless of location, that processes EU resident data.

GDPR, including its emphasis on data sovereignty, has become a central pillar of cloud regulatory compliance. Organizations using cloud services must ensure that personal data is stored, accessed, and transferred in accordance with GDPR requirements. For example, when moving information across borders, approved transfer mechanisms may need to be used.

Some U.S. states are beginning to adopt similar data privacy standards, most notably with the California Consumer Privacy Act (CCPA). This makes proactive governance especially important for maintaining compliance in the long term.

Health Insurance Portability and Accountability Act (HIPAA)

HIPAA is designed to secure protected health information (PHI) for patients in the United States, preventing disclosure without knowledge and consent. Any organization that stores or transmits medical records must abide by HIPAA regulations, including healthcare providers and cloud service providers that house medical records.

When leveraging cloud computing in healthcare, organizations must share accountability with providers through a signed business associate agreement (BAA). HIPAA-covered entities also need to implement technical safeguards, like sensitive data encryption at rest and in transit, to demonstrate sufficient healthcare cloud security guardrails.

Payment Card Industry Data Security Standard (PCI DSS)

PCI DSS is a global security standard for any business that stores, accepts, and processes payment card information. Requirements include a secure network, strong access control measures, and a vulnerability management program. 

Many organizations who accept payment cards utilize a third-party processor to reduce compliance risk, but this approach doesn’t remove responsibility. To comply with PCI DSS, organizations need to have specific cloud controls in place. These include end-to-end encryption, granular identity and access management (IAM) roles, multi-factor authentication (MFA), and robust firewalls. 

ISO 27000 Family of Standards

The ISO 27000 family of standards provides a systematic approach for managing information security. The core framework for InfoSec management, ISO 27001, is supported by ISO 27017, which outlines specific controls recommended for cloud environments. Complying with these guidelines helps cloud partners and the customers meet global benchmarks to manage security risks.

System and Organization Controls 2 (SOC 2)

SOC 2 is a compliance framework that offers guidance for service providers to protect client data. Developed by the American Institute of Certified Public Accountants (AICPA), it ensures data management practices uphold security, availability, processing integrity, privacy, and confidentiality.

These standards are often followed by cloud-based service providers and SaaS companies. Businesses often use SOC 2 Type II reports to demonstrate the effectiveness of their security and operational controls over time.

What Are Common Compliance Challenges in the Cloud?

A strategic approach is required to avoid common cloud compliance challenges, including:

• Limited visibility across cloud environments 
• Misconfigurations and human error 
• Data residency and sovereignty issues 
• Vendor management complications 
• Regulatory change management issues

Limited Visibility Across Cloud Environments

Data can easily become fragmented across multiple providers, especially as organizations shift to multicloud and hybrid environments. This cloud complexity can limit visibility into security, governance, and compliance efforts, making it harder to identify risks and maintain regulatory alignment.

Without comprehensive monitoring and controls in place, shadow IT can further complicate risk management by introducing unvetted applications and services that operate outside of compliance guardrails.

Misconfigurations and Human Error

Human error is still a major contributor to cloud security failures. Significant compliance risks can be attributed to simple mistakes like leaving a storage bucket public, not overriding a placeholder password, or forgetting to change API keys. Small misconfigurations can create vulnerabilities that accidentally expose data to unauthorized parties.

Data Residency and Sovereignty Issues

Many regulatory standards include requirements for data storage and processing to be kept within specific geographic confines. When data is in the cloud, keeping it in specific countries to satisfy data sovereignty requirements can become more difficult. Organizations need to work with providers to ensure data remains within the right cloud regions.

Vendor Management

Cloud customers bear a significant amount of responsibility for meeting compliance requirements, but vendors are also bound to certain expectations. Organizations should continuously verify that cloud service providers and other third-party SaaS partners are maintaining their certifications and contractual obligations, so that they’re not held responsible for any data exposure. 

Regulatory Change Management

Businesses have to meet changing legal requirements with greater agility each year. Keeping up with global mandates around topics like AI governance and digital operational resilience can mean making changes in the cloud almost instantaneously. This can place a significant strain on IT and compliance teams.

What Are Cloud Compliance Best Practices?

The importance of cloud compliance makes it critical to implement best practices like comprehensive security controls, regular audits, and compliance automation to properly govern your infrastructure and assets.

1. Assess and Optimize Security and Compliance Guardrails

When you start with strong guardrails, you can prevent major issues associated with compliance gaps. Confirm the following measures are in place.

 Identity and Access Management (IAM)

When you’re evaluating your compliance measures, start by understanding who has access to what. Assess your configurations in cloud-native identity systems, like Microsoft Entra ID or AWS IAM, to ensure you’re operating with Zero Trust principles in mind.

Zero Trust architecture ensures that no device is trusted by default, requiring reauthentication, often using MFA, each time. It also follows the principle of least privilege (PoLP), requiring minimal access levels, to limit the ability of bad actors to infiltrate the cloud environment or have outsized access. 

Data Protection and Encryption

Strong cloud data protection is mandated by many regulations throughout the data lifecycle. It requires strong classification, handling, and encryption practices. Data classification can help teams identify sensitive information, like publicly identifiable information (PII) and protected health information (PHI), and set handling policies accordingly based on how sensitive the data is. Data should be encrypted in transit, at rest, and in use so that if it’s intercepted, it is not useful.

Network Security and Segmentation

Dividing the cloud network into smaller zones can restrict lateral movement and limit the risks associated with data breaches. This prevents the entire network from getting compromised even if there is an incident. 

Continuous Monitoring and Logging

If you need to perform an audit later to find out what happened in a security breach or another type of incident, it’s important to have logs to see where unauthorized access or another anomalous activity occurred. Keeping detailed logs of all user logins, configuration changes, and API calls can help you pinpoint a problem early. Consider using tools like AWS CloudTrail or Azure Activity Log to help capture these changes and flag them as high-priority.

Documentation is also increasingly required by regulatory agencies and can help prove compliance.

2. Map Regulatory Requirements to Controls

It may feel less overwhelming to view each regulatory standard your business needs to follow as its own project, but oftentimes, requirements have shared characteristics across frameworks. By mapping the requirements to a unified set of controls, your business only has to worry about complying once with overlapping standards. This reduces the effort required to maintain compliance and makes it easier to update practices with changing standards over time. 

3. Implement Policy as Code (PaC) and Compliance as Code (CaC)

Managing cloud compliance can be complex, especially in dynamic environments where resources are constantly being deployed and updated. Policy as Code (PaC) and Compliance as Code (CaC) help simplify this process by embedding governance, security, and compliance requirements directly into infrastructure and application code.

4. Automate Compliance Checks and Alerts

Establishing compliant configurations is only half the battle. Automated compliance checks continuously compare live cloud environments against approved security baselines and compliance requirements, detecting configuration drift in real time. This allows teams to quickly identify and remediate issues before they create security gaps or compliance violations

If you’re looking for a centralized way to address these problems, you can leverage cloud security posture management (CSPM) tools, like AWS Security Hub, Google Cloud Security Command Center, and Azure Security Center. These offer centralized dashboards where you can see your risks and automate alerts. 

5. Leverage Well-Architected Frameworks

You don’t have to figure out how to meet compliance standards from scratch. Major cloud providers offer well-architected frameworks that help organizations design, operate, and optimize cloud environments according to industry best practices. For example, AWS, Microsoft Azure, and Google Cloud all provide guidance for security, reliability, and operational excellence.

While these frameworks are not compliance standards themselves, they can strengthen cloud compliance efforts by helping organizations implement controls that align with common regulatory and governance requirements. For example, recommendations related to IAM, encryption, and disaster recovery often support compliance objectives found in regulations like HIPAA, PCI DSS, and SOC 2.

6. Regularly Assess Cloud Tools, Platforms, and Partners for Compliance

It’s important not to assume that your environments are compliant, and that goes for what your partners control as well. Regularly review the compliance certifications of your third-party providers and ensure they are still meeting your required standards. 

7. Establish Data Retention, Archiving, and Deletion Policies

One effective way to maintain compliance is by establishing and revisiting thorough policies for data retention, archiving, and deletion. Many regulations have requirements for how long data should be kept, as well as when data must be deleted. Your organization should have a workflow for how and when data moves. Additionally, create proper documentation of your processes to be ready should you get audited.

Key Takeaways

Strengthen Your Cloud Compliance with TierPoint’s Hybrid Cloud Expertise

As the cost of non-compliance soars, investing in cloud security and governance is critical to protecting your organization’s ROI. TierPoint’s Managed Public Cloud services can help you simplify compliance, aligning your controls with industry and regulatory standards. Our hybrid and multicloud expertise can further support consistent governance across your IT ecosystem, even as your organization scales. Learn how we can enhance your security and compliance measures today.

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