Why SOC 2 compliance is important for protecting sensitive data and building customer trust
SOC 2 (Systems and Organisations Controls 2) is a comprehensive reporting framework used for the assessment and subsequent testing of controls relating to the Trust Services Criteria (TSC) of security. It’s basically a set of compliance requirements outlining what companies should adhere to when using cloud-based storage of customer data.
Let’s take a closer look at how SOC works.
Understanding SOC 2
SOC 2 works as both an audit procedure and criteria. It’s fundamentally utilised by technology-based companies and third-party service providers that store customer data in the cloud.
For example, both SOC 1 (Systems and Organisations Controls 1) and SOC 2 are part of the SOC framework of the American Institute of CPAs (AICPA). SOC 1 was mainly used prior to the adoption of the cloud, and once systems became cloud-based companies switched over to SOC 2.
SOC 1 vs. SOC 2 vs. SOC 3
What’s the difference between SOC 1 and SOC 2? SOC 1 focuses on ICFR (internal controls over financial reporting) while SOC 2 focuses on the handling of data outlined by the five trust principles.
SOC 1 and SOC 2 both have two different types of reports:
- Type I reports describe the existence of controls and the audit findings at a single point in time.
- Type II reports cover those mentioned in type I but also describe the controls’ effectiveness over time.
SOC 2 reports contain a lot of sensitive information. The SOC 3 (Systems and Organisations Controls 3) report was therefore produced so that the public can understand it. It’s a watered-down version of SOC 2 but still provides a general overview.
SOC 2 benefits
Companies around the world are now turning to the cloud to store data which opens up a whole new host of problems for cybersecurity teams. But it also makes SOC 2 compliance a compulsory need for many organisations and their service providers. Not only will your organisation have to meet the five trust principles and become certified but will also have to ensure a safe and secure system throughout your organisation and connected supply chain. SOC 2 is also a good standard to be part of as it shows customers that you value them and are protecting their data.
The SOC 2 flow
Any organisation that wishes to become SOC compliant must now fulfil the SOC 2 requirements. The first step is to write security procedures and policies and this documentation should be adopted by everyone working in the company and associated with it. The next step is to follow the five trust principles.
The five trust principles of SOC 2
At the heart of SOC 2 compliance checklist are the five trust principles:
- Security: Your company’s system must be protected against data breaches and any unauthorised access. Security controls like the following act as security firewalls and should be implemented: MFA (multi-factor authentication) or 2FA (two-factor authentication), and intrusion detection.
- Availability: Your system should always be available for use by the customer. There must be a process put in place to monitor whether the system meets the minimum acceptable performance, disaster recovery and security incident handling measures.
- Processing integrity: You must ensure that the data is always accurate and delivered on time. This trust principle also covers quality assurance and process monitoring.
- Confidentiality: Confidential and sensitive data should be handled appropriately. This can be handled by limiting access controls only to specific persons, encryption, and firewalls.
- Privacy: Data must be processed according to your own company’s data policies and taking into account the AICPA’s Generally Accepted Privacy Principles (GAPP). Use encryption, 2FA, and defined access controls.
Unlike in other compliance regulations, organisations are under no obligation to cover the five trust principles listed above.
A SOC 2 audit
With procedures and policies in place, the organisation can be audited to the SOC 2 guidelines. Only certified, third-party auditors can conduct SOC 2 audits. This auditor will verify whether the company complies with SOC 2 principles and is following its own procedures and policies. An SOC 2 audit is normally conducted once a year and the company must pass each one in order to maintain compliance.
SOC 2 compliance
SOC 2 compliance checklist can be focused on the following areas:
- Alarms: Set up alarms and notifications to alert internal security teams that a cybersecurity incident has occurred.
- Monitoring: Maintain a baseline to avoid triggering false-positive alerts. Use a procedure which continuously monitors for any unusual activity. RiskXchange is the only platform that provides a complete 360-degree view of any company attack surface, including that of your vendors. It will continuously monitor your complete attack surface, highlight any risk, and enable you to fix any issues before the attacker discovers them.
- Response: Ensure your response time is immediate and incorporate corrective measures as soon as possible. Maintain and document all audit trails for incident and investigation response.
All companies who are certified in SOC 2 compliance must ensure that they follow their own procedures and policies as well as practise the compliance principles.
Get in touch with RiskXchange to find out more about systems compliance.