Businesses nowadays handle huge volumes of data. A lot of this data is customer information. From credit card details to addresses and phone numbers, businesses use and store a lot of customer information. It is no surprise then that businesses and users are equally worried about the safety of their data.
Why is it important to store data securely? What happens if data is leaked? Improperly stored data could leave an organization vulnerable to cyberattacks. Such attacks not only have financial repercussions but can also harm a company’s reputation.
SOC 2 ensures that your service providers manage and store your data securely. It ensures that organizational practices and controls are effectively implemented to ensure the security and privacy of customer data.
What does SOC mean in compliance?
Financial and accounting firms must meet compliance requirements. SOC or Service Organization Control is a compliance framework. There are three SOC compliance frameworks- SOC 1, SOC 2, and SOC 3. Among these, SOC 1 and SOC 2 are the most commonly used.
These frameworks have been developed by the American Institute of CPAs (AICPA).
What is SOC 2 compliance?
SOC 2 compliance is a crucial part of the AICPA’s reporting platform. It is primarily designed for service providers that store customer data in the cloud. Any company that uses cloud storage for storing customer information must be SOC 2 compliant.
Before 2014, cloud service providers only had to meet SOC 1 requirements to be compliant. However, it is now mandatory for them to meet SOC 2 compliance requirements to minimize risks to customer information in the cloud.
What are the SOC 2 compliance requirements?
The essential SOC 2 compliance requirements consist of five Trust Services Categories. These are:
“Security” is about protecting your systems and information from unlawful access. You may prevent unauthorized access through security measures, such as two-factor authentication, firewalls, and more.
The “availability” criterion looks at whether the information, software, or infrastructure has the necessary controls for operations, monitoring, and maintenance. It also assesses whether your company maintains acceptable network performance levels to mitigate potential external threats.
“Processing integrity” ensures that systems perform as intended and have no errors, delays, or unauthorized manipulation. The data processing operation works as it should and is accurate, complete, and authorized.
“Confidentiality” refers to a company’s ability to safeguard data and restrict its use to authorized personnel. It may include customer data, confidential company information, intellectual property, and so on.
Privacy refers to a company’s ability to protect personally identifiable information from unauthorized access. A customer’s name, address, social security number, ethnicity, and more are personally identifiable information.
The baseline for SOC 2 compliance is security and focuses on protecting data and assets against unauthorized use. The SOC 2 compliance checklist should answer the following questions:
– How do you manage and restrict physical and logical access to prevent unauthorized access?
– How can you manage your system operations to detect any deviations from the standard procedures?
– How can you ensure a change management process that prevents unauthorized changes?
– How do you develop risk mitigation activities when there is a business disruption?
Who needs SOC 2 compliance?
Most companies store customer data on the cloud for easy access and convenience. Any company that stores data in the cloud must be SOC 2 compliant. If you are a B2B or SaaS company, you should consider getting SOC 2 Certified if you aren’t already.
Why is SOC 2 compliance important?
Being SOC 2 compliant indicates that as an organization, you maintain a high level of information security. It shows that you ensure that your organization handles sensitive information properly.
When your organization is compliant with SOC 2 requirements, you can prevent data breaches and defend yourself better against cyberattacks. It also gives you a competitive advantage since customers prefer to work with organizations that have robust security practices.
Who performs SOC audits?
SOC audits can only be performed by accounting firms or independent CPAs. AICPA has established certain standards that regulate the work of SOC auditors. Several other guidelines regarding planning, execution, and audit oversight must also be followed.
If your organization has a successful SOC audit, you can add the AICPA logo to your website.
What does SOC 2 compliance cost?
There are several factors, such as the number of employees, time frame, scope, and auditors, that could impact SOC 2 compliance cost. SOC 2 costs could range anywhere from $20,000 to $80,000 or more.
You may also need to factor in additional costs, such as a readiness assessment, any technical work, and legal fees. Lost productivity and staff training are also factors you must consider to estimate the entire cost of becoming SOC 2 compliant.