What is SOC 2 Compliance?
Achieving Service Organization Control (SOC) compliance helps companies reach satisfactory system-level controls based on the guidance of the American Institute of CPAs (AICPA). This standard helps to guarantee the security and privacy of the data of your consumers. It provides a foundation for data protection by outlining five trust service principles:
- security
- availability
- processing integrity
- confidentiality
- privacy
SOC 2 does not contain an exhaustive list of procedures, tools, or controls. Instead, it lists the requirements for maintaining strong information security, letting every firm select the procedures and practices pertinent to their particular goals and operations.
Below is a list of the five trust services requirements:
Security
Security is the prevention of unauthorized data and system access. That can be achieved using two-factor authentication and a firewall, among other IT security features.
Availability
It is said to be available if the hardware, software, or data is kept up to date and has controls for use, monitoring, and maintenance. This criterion also evaluates how well your business evaluates and mitigates potential external risks while maintaining minimally acceptable network performance levels.
Integrity
Processing integrity guarantees that systems carry out their intended functions without delay, mistake, omission, or unauthorized or unintentional alteration. That indicates that data processing processes are allowed, thorough, accurate, and function as they should.
Confidentiality
The ability of the business to safeguard the information that should only be shared with a particular group of people or organizations is covered by confidentiality. That includes client information that should only be shared with firm employees, proprietary information that must be kept confidential, such as business plans or intellectual property, or any other information that must be safeguarded by law, rules, contracts, or agreements.
Privacy
Privacy criteria measure the ability of a company to protect personal data from unwanted access. Typically, this data comes in identity, social security, address details, and other identifiers like race, ethnicity, or health details.
SOC 2 Type 1 vs. Type 2: What is the Difference
The design controls’ applicability to the service organization’s system is described in a SOC 2 Type 1 report. It provides system information at a specific time, scope, organization management, system description, and controls.
The “as of” date, the features of a system at a certain moment, is crucial to understanding this report. The auditor will base their report on the description of the controls and an examination of the supporting paperwork.
The SOC 2 Type 1 report indicates that a SaaS company conforms with the auditing process used by the AICPA. This report has many advantages that every service organization may take advantage of.
SOC 2 Type 1 reports are especially beneficial for service businesses to increase their competitiveness. It reassures prospective clients that a service organization has completed the specified auditing method and that their data is secure if they deal with a SOC 2-compliant company.
Due to the rise in cybercrime incidents, there is a greater demand from customers for SOC 2 Type 1 reports. Nowadays, businesses prefer collaborating with suppliers who can demonstrate their proficiency in handling or managing sensitive data. Companies handling client data, such as healthcare organizations and financial institutions, are increasingly regarded as being required to have this report.
Once a service entity has finished its readiness assessment, creating a SOC 2 Type 1 report is also a short process. Especially given that the other kind of SOC 2 report, Type 2, can take up to a year to complete.
In addition, since auditors only need a limited amount of information to assess a service organization’s compliance position, audits for this report are typically less expensive. Involving the staff is likewise unnecessary, as is providing as much supporting evidence as one would need when filing for a Type 2 report.
When partnering with larger businesses, which are more security-conscious than smaller businesses, service organizations should aim for SOC 2 Type 1 compliance. Larger businesses are more inclined to collaborate with service providers with a SOC 2 Type 1 report prepared by an established auditor. To put it briefly, the service provider gains a competitive advantage by adhering to this auditing approach.
Although SOC 2 Type 1 compliance has several advantages, it is insignificant in contrast to SOC 2 Type 2 compliance. Comparing SOC 2 Type 1 and SOC 2 Type 2, it can be claimed that SOC 2 Type 2 compliance offers greater assurance. A corporation must accomplish a thorough audit of its inner controls policies and procedures over a specific time by an auditor to meet this criterion.
A service company can make a strong impression on potential clients by using a SOC 2 Type 2 report to demonstrate that it follows industry best practices for data security and control systems. Service providers who comply will win more contracts from larger companies.
SOC 2 Type 2 compliance can be expensive in capital and labor, but it can set a service provider apart from rival businesses that have not succeeded in this audit type. SOC 2 Type 1 reports assess the controls of a business only once. It answers the question, “Are the security controls adequately designed?”
SOC 2 Type 2 reports evaluating such controls’ performance over an extended period, often 6–12 months. It responds to the query: Do an organization’s security controls serve their intended purpose?
Consider your objectives, budget, and time constraints when deciding between the two.
A Type 1 report can be completed more quickly, but a Type 2 report gives your customers more assurance.
We advise starting with the SOC 2 Type 2 report.
You will probably require a Type 2 report because many clients are declining Type 1 reports. You can save cash and time by conducting a single audit by heading directly for a Type 2.
A Type 2 report that spans a shorter review period can be the perfect answer if you require a SOC 2 report immediately.
SOC 2 Report: Who Needs it and Why?
A SOC 2 report comprises the following five Trust Services Principles or criteria: availability, security, privacy, confidentiality, and integrity. In contrast to PCI DSS, which has highly specific requirements, SOC 2 regulations provide the data provider more freedom to choose how it wishes to comply with the standards. SOC 2 reports are, therefore, particular to each organization. In essence, the supplier examines the specifications, chooses those that apply to their business processes, and then creates controls to meet them. The data supplier is free to add additional restrictions and ignore any not pertinent to their work.
Simply put, the SOC 2 audit is the auditor’s assessment of how well the organization’s controls adhere to the standards. Because an auditor with extensive expertise in SOC reporting is more likely to have a complete understanding of SOC procedures and the best practices to apply, the auditor’s reputation is crucial to SOC 2 reporting. A clean (passed) opinion signifies that the data provider is trustable to offer secure hosting.
- Privacy looks at data collection, usage, storage, and transmission from one user to another when used within the organization.
- Confidentiality addresses what the organization is doing to ensure data remains within the organization; that is, it isn’t disclosed to a third party.
- Security is all about what the software provider does to prevent illegal data access, theft, and disclosures.
- Processing integrity ensures the systems are accurate, valid, complete, and timely per the organization’s requirements
- Availability ensures data is visible and accessible to authorized personnel for use.
Why You Need It
It’s a market differentiator now and in the future.
How about proving your security? Passing a SOC 2 audit proves that you’ve taken precautions to avoid a data leak. Addressing security breaches builds credibility, which improves your firm’s image.
Increasing internet risks have customers and individuals hunting for safe sources. Holding a SOC 2 report means you may market your adherence to a recognized security policy.
You’ll sleep better and be able to streamline when you wake up.
Existing clients will believe in you, and prospects will look further. Wonderful! But you’ll also feel reassured. You can check the security protocols, reflect, and tell yourself you’re complying; therefore, you will always be at peace. Security will grow easier. No audit is fun or easy for the company undergoing it. This method requires work that will help you and your team better understand your systems.
While working with auditors, you’ll need to investigate the following:
- Customer service promises
- Risk profile
- Sourcing
- Any appropriate governance or regulatory supervision
- In-house controls
It’s a lot to read, but it’ll help you increase operational efficiency. With so much data, you can streamline your security operations and tailor future or increased controls to your needs.
Your compliance foundation opens up unlimited opportunities
SOC 2 is a common audit since it can function as a gateway audit. ISO 27001 is gaining popularity due to its global reach and holistic approach to organizational security compliance. SOC 2 criteria resemble ISO 27001.
A completed SOC 2 audit doesn’t automatically gain you ISO 27001 certification. However, imagine this scenario: a client requests two of your providers for the certification. One organization has never gone through a compliance procedure and is creating the framework for its information security management system, which involves a thorough understanding of its controls. The other organization has SOC 2 knowledge and a validated security foundation and can proceed quickly with ISO 27001 deployment.
Security Practices That Are Critical to Meeting SOC 2 Requirements
Create thorough audit trails
Organizations need access to extensive, contextual audit trails to pinpoint an attack’s underlying cause and develop a successful repair strategy. To respond promptly during an attack, ensure your audits are thorough and offer the essential cloud context.
Companies should gain comprehensive insights from effective audit tracks into the illegal alteration of data and settings, the breadth of an attack’s consequences, and its origination point.
Make a GRC-specific function
It can be tempting to designate one employee to take exclusive ownership of and carry out the tasks of integrating SOC 2 criteria into all security procedures and communicating with auditors. That can ensure thoroughness and good work quality. It is neither scalable nor manageable to rely just on one employee to gather copious amounts of data from across an entire company and continuously improve all SOC 2 processes.
Instead, adopt a more dispersed, corporate-wide strategy by establishing a specific GRC department within your security team. For more efficient SOC 2 processes, shorter onsite audit visits, and successful examinations, utilize engineering, administration, and system security teams to facilitate audits. Also, gather the essential data from major stakeholders in all domains.
Monitor the familiar and unfamiliar
Organizations must employ a predetermined method for monitoring abnormal system activity, permitted and illegal system configuration changes, and user access levels to achieve SOC 2 compliance. In cloud systems, monitoring not only for known hostile activities but also for the unknown is vital.
This can be accomplished by establishing a baseline of what regular activity in your cloud environment looks like to determine what aberrant activity looks like. By instituting a continuous security monitoring technique that can detect possible threats from both external and internal sources, enterprises can ensure that neither they nor their customers are ever in the dark regarding the status of their cloud infrastructure.
Create anomaly warnings
In today’s threat environment, the question of whether or not a security event will happen is now a matter of when. Companies need evidence to prove adequate alerting mechanisms every time an incident happens to verify their capacity to react quickly and take the necessary corrective action if unauthorized access to client data occurs. Create a method specific to your environment and risk profile that only raises the warnings when activity differs from the usual to counteract the issue of too many false positive alerts.
This will make it possible for you to be informed as soon as something happens and to respond quickly to stop data loss or compromise. Also, remember that SOC 2 mandates that businesses set up warnings for any actions that lead to approved data disclosure or modification, file transfer operations, and privileged filesystem, account, or login access.
Actionable forensic data
Tracking for unusual behavior and receiving instant alerts are essential. Still, organizations must also be capable of acting on pertinent information promptly to prevent a system-wide incident that reveals or threatens sensitive consumer data.
Reducing Mean Time to Detect (MTTD) and Mean Time to Remediate (MTTR) is essential for SOC 2 compliance. Utilize host-based monitoring to ensure that your info is as actionable and is in a position to assist you in making the most rapid and informed security decisions. Particularly, a company’s forensic data must give visibility into an attack’s source, course, impact on different system components, and potential next step.
These security best practices can assist businesses in achieving SOC 2 compliance, avoiding audit problems, and competing in the congested SaaS market. However, keep in mind that SOC 2 compliance requirements alter annually.
Businesses must continuously learn from their SOC 2 assessment procedures, improve them, and maintain their flexibility to adapt successfully to changes in the nature and scope of SOC 2 activities. Organizations can develop to perceive SOC 2 conformance as a net business enabler, both internally and externally, as a result of aggressively exchanging security skills and knowledge with consumers when security postures and operational procedures are continuously reinforced and refined.
The Importance of SOC 2 Compliance
An independent technical audit is used to verify whether or not a company complies with SOC 2 standards. It makes establishing and adhering to particular information security policies and procedures, in keeping with an organization’s goals, a requirement for all organizations. SOC 2 compliance might cover a term ranging from six to twelve months to ensure that an organization’s information security procedures align with the ever-evolving data protection standards in the cloud.
Being SOC 2 compliant gives your consumers and clients the peace of mind that comes from knowing that you have the infrastructure, tools, and processes to prevent unwanted access to their data from inside and outside the company.
In practical terms, complying with SOC 2 entails, your company is aware of what “normal operations” should look like. It routinely monitors for malicious or unrecognized behavior, changes to the system configuration, and monitors user access levels.
You have tools at your disposal to identify dangers and send a warning to the relevant parties, allowing them to conduct an assessment of the danger and take the right precautions to safeguard data and systems against unauthorized access or usage.
You will have access to the pertinent information on any security events that may have occurred, allowing you to comprehend the magnitude of the issue, repair systems or processes as required, and restore the integrity of data and processes.
Final Thoughts
In short, SOC 2 Type 1 and Type 2 evaluate a provider company’s controls and procedures in connection to the trust services criteria. A SOC 2 Type 2 report affirms the effectiveness of the measures over a prolonged duration, often 6 to 12 months, whereas Type 2 addresses the controls at a given point in time. The
Due to the various advantages of SOC 2 compliance, service companies should work to attain it. Being SOC 2 compliant boasts the firm’s reputation and increases client trust. Additionally, it fosters corporate vulnerability awareness and data protection.
