The business profiles and mitigation priorities of service companies today are incredibly diverse. Furthermore, with breaches occurring left and right customers are increasingly expecting proof that their data is being properly secured. One way companies can meet this expectation is by attaining Service Organizational Control (SOC) 2 compliance. SOC 2 compliance was designed to validate that service providers are handling customer data in a confidential manner and with the utmost care. Ultimately, this provides organizations that seek to become SOC 2 compliant with a competitive advantage against industry competitors.
What is SOC 2?
The SOC 2 framework is an element of the American Institute of Certified Public Accountants (AICPA) Service Organization Control reporting platform. AICPA develops standards for audits and private companies by providing relevant knowledge and resources for protecting the public interest. The goal of SOC 2 compliance is to ensure service providers are managing customer data by applying five trust service principles.
The 5 trust service criteria principles include:
Notably, the security principle is the only required principle that must be fulfilled in order to become SOC 2 compliant. This principle emphasizes that front and back end security is considered when implementing controls to protect customer data. The other four serve as trust factors for secure data processing and storage.
The front-end entails keeping a client’s data secure from cyber threat actors as well as confirming clients can only access the data relevant to them. This is commonly applied through addressing how clients interact with web applications, website content like images or documents, and other embedded front-end applications. Vendors must also eliminate the risk of accidentally exposing other clients’ data simply because of inadequate front-end protections. This can be completed by forcing multi-factor authentication and strong passwords proper application coding techniques, and data storage that maintains data integrity and restricts access to only the specific customer's data.
The backend of SOC 2 security highlights how the actual data stored by the vendor and accesses is confidential. It is worth noting that cybercriminals favor targeting the back end because this is where all the communication of critical data happens. In response to this, becoming SOC 2 compliant encourages organizations to validate their internal security. This is commonly demonstrated with data classification and encryption, web application architecture and network firewalls. Additionally, utilizing a form of threat detection to detect rapidly changing adversary techniques also promotes SOC 2 compliance. Utilizing these defense strategies can help organizations mitigate threats before client data is exposed, thus, justifying the business case to become SOC 2 compliant.
The SOC 2 examination can play an important role in organizational as well as regulatory oversight because it examines the security of a service provider's systems and the security of the information processed by these systems. When auditors look for SOC 2 compliance, they focus on what controls an organization has taken to mitigate their front and backend weaknesses. They also observe how organizations are continually tightening their security. This means operational tasks like ensuring systems are inherently protected from unauthorized access and have the controls in place to alert an organization of suspicious activities is critical.
Why SOC 2?
SOC 2 is a technical audit that requires organizations to create and follow information security policies in an effort to prove due diligence in data handling. Aligning with SOC 2 is attractive for organizations because it allows each organization to design their own controls based off their needs and specific business. This means there is no IT capital or resources wasted to meet redundant or inapplicable requirements. Instead, there is a basic structure for security procedures that an organization can customize to their business processes.
Additionally, the criteria outlined within AICPA specifies organizations focus on security practices such as access control, change management, and risk mitigation. These security principles are particularly convenient as most organizations already incorporate some level of these widely recognized security principles. Take access control for instance. Verifying entities are restricted in logical and physical access to a service provider’s data can be accomplished through fine tuning an existing Identity and Access Management access control system. Additionally, proof of a detailed change management policy or procedure can earn more validation that a service provider is protecting customer data. These controls validations come at little or no cost for a service provider but immensely benefit their business.
SOC 2 audits can also shed light on the design sustainability of existing controls and their efficiency. Does the alerting system in place prove the organization is knowledgeable on what constitutes a legitimate threat for their business profile and correspondingly what is the response plan should something materialize?
The Benefits of SOC 2 Compliance
SOC 2 reports are intended to meet the vast range of client expectations and provide assurance that an organization has the necessary controls to protect the security of their users’ data and the systems they reside on. The reports also detail a company’s control effectiveness and performance during live testing. A SOC 2 report also details how an organization conducts risk assessments and the details of all of the company’s operations – from employees to data processing to infrastructure.
Moreover, becoming SOC 2 compliant provides a great deal of advantages that are mutually beneficial for customers and service providers. For one, SOC 2 compliance demonstrates that a third-party auditor has verified the organization implements best practices in regard to data security controls and processes. This means there is increased data protection on their systems and thus, improved customer trust. Additionally, SOC 2 compliance improves an organization's reputation by demonstrating its commitment to safeguarding customer data.
In short, a SOC 2 compliance formalizes that client data is secure. Going forward, having SOC 2 reports on file can help organizations establish a proven record of security efforts that can increase customer trust as well as establish a safety net in legal cases.
To learn more about how your business can leverage SOC 2 compliance as a competitive advantage, contact Silent Sector today.