Top 10 Best Practices for Ensuring EDI Compliance and Data Security

Posted by Brooke Lester on Oct 2, 2024 3:19 PM

Team brainstorming EDI compliance best practices using sticky notes on a glass wall

Key Takeaways: 

  • Robust encryption is essential. Use industry-standard protocols to safeguard data.
  • Perform continuous monitoring and audits. Detect suspicious activity and maintain regulatory compliance with regular monitoring and auditing.
  • Implement access control measures. Require employees to use multifactor authentication to access systems.

Imagine this. A fictional company experiences a major data breach due to lack of encryption on EDI transactions, and that breach results in lost revenue, damaged relationships with trading partners, and fines for non-compliance totalling several million dollars, among other major issues. The thing is- that’s not necessarily a fictional scenario. Every company faces these exact risks every single day.

Why EDI Compliance and Data Security Matter

Cyber threats are on the rise and have the potential to disrupt your organization’s daily operations and compromise sensitive customer and partner data. The growing reliance on EDI (electronic data interchange) increases the need for robust EDI data security measures. 

The need for strict compliance is always at the forefront as well. Regulatory compliance has become more crucial as our world has become more digital. Sensitive information is heavily regulated in all industries, but industry-specific regulations are even more stringent in areas like healthcare, finance, and retail.

Best Practices for Ensuring EDI Compliance and Data Security

#1: Use Strong Encryption for All EDI Transactions

The use of encryption is extremely important to protect sensitive EDI data during transmission. Encryption safeguards against cybercriminals and other bad actors from intercepting confidential information while in transit and at rest. In most cases, encryption is required in order for your organization to meet legal obligations related to compliance standards.

Actionable tip: Use industry-standard encryption protocols such as AES-256 for secure data exchange. This encryption standard is a good choice due to its robust capabilities.

Infographic showing how encryption secures edi transactions

#2: Regularly Monitor and Audit Your EDI Systems

Once your EDI systems are implemented you’ll need to focus on continuous monitoring to detect and prevent any suspicious activity that could compromise your organization’s data security.  You can analyze trends and behaviors in the data available from continuous monitoring to anticipate future vulnerabilities.

Additionally, EDI system auditing is important to ensure compliance with regulations like GDPR and HIPAA. The audits can confirm that your EDI practices meet evolving legal and regulatory standards reducing the possibility of financial penalties for falling short on compliance. Use an EDI compliance checklist to ensure you don’t fall short in this area.

#3: Implement Access Control and User Permissions

Strong access control and user authentication are crucial for preventing unauthorized access to EDI data in part by significantly reducing the risk of data breaches.

Tip: Use multi-factor authentication (MFA) for key system users.

MFA adds an additional layer of security by requiring your users to provide two or more verification factors before gaining access, which greatly enhances the security of your EDI systems.

#4: Ensure Your EDI Software is Always Updated

It’s important for your organization to keep your EDI software updated with the latest security patches to avoid vulnerabilities that cybercriminals could exploit. Consider implementing automated updates where possible to minimize manual oversight. Automation helps reduce the risk of human error and ensures that you’re always running the latest software version.

#5: Develop a Data Backup and Recovery Plan

Frequent backups can prevent data loss and ensure business continuity in the event of system failures, cyberattacks, or other unplanned disruptions. They safeguard sensitive EDI data from accidental loss and will allow your organization to quickly restore critical data and minimize downtime.

Group collaborating at conference table on EDI compliance best practices

Karmak is a real-life example of a business that was able to recover from a ransomware attack due to the fact that they had a solid backup plan. They quickly deployed their cyberattack crisis response plan to immediately reduce the severity of the attack and rebuilt affected systems in a minimal number of weeks. 

#6: Train Your Team on EDI Security Protocols

Regular employee training on security protocols is essential for raising awareness and understanding within your organization particularly because employees are the first line of defense against EDI data security threats.

The following tips can help you set up annual training sessions:

  • Develop a comprehensive training program at the outset. 
  • Vary your training formats to account for diverse learning styles by including workshops, online modules, and hands-on simulations.
  • Schedule regular refreshers at needed intervals to ensure everyone is up to date on changes in regulations and emerging threats.

#7: Secure Your EDI Network Infrastructure

You’ll need to secure the underlying network infrastructure to prevent unauthorized access, thwart cyber attacks, and protect sensitive data. There are some key security measures that will help you achieve this including:

Firewalls: Implement firewalls with predetermined security rules to monitor and control both incoming and outgoing traffic.

Intrusion detection systems (IDS): IDS monitors incoming traffic for potential security breaches and other suspicious activity.

Secure VPNs: Virtual Private Networks (VPNs) will allow your employees secure remote access to your EDI systems and prevent sensitive data from being intercepted.

Actionable tip: Segment your network to isolate EDI systems from other business systems.

#8: Conduct Vulnerability Assessments Regularly

Schedule regular vulnerability scans to identify new vulnerabilities in a timely manner. Use automated tools to assess configurations, identify outdated software, and check for known vulnerabilities. Qualys is a cloud-based service that offers continuous vulnerability management. For a more cost-effective solution, OpenVAS is an open-source tool you can use to perform vulnerability assessments.

#9: Ensure EDI Vendor and Partner Compliance

Make sure that your trading partners and vendors are compliant with security standards. The security practices of your trading partners impact the integrity and security of your EDI operations. Create formal agreements that require your partners to meet specified security protocols, and remember that non-compliant partners can expose your organization to risks.

#10: Prepare for Incident Response

A well-defined incident response plan can reduce downtime and normal operations after a data breach or compliance failure. You can minimize the impact of a data breach if you react quickly. It’s important to isolate affected systems right away to prevent further damage. Make sure to notify affected parties and deploy a fix into production to address the security gaps.

Conclusion

By implementing these EDI compliance best practices, your organization can significantly reduce the risk of data breaches, compliance fines, and operational downtime. A proactive approach to compliance and security not only helps safeguard sensitive data within your organization but also enhances business relationships and trust with your trading partners cultivating an environment ideal for long-term collaboration.

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