Summary: SOC 2 is an auditing procedure that ensures your service providers securely manage your data.
SOC 2 (System and Organization Controls 2) is a framework for managing customer data based on five trust service principles: security, availability, processing integrity, confidentiality, and privacy. SOC 2 compliance is critical for service providers who handle sensitive customer data, and stands alongside other compliance standards like ISO27001 and the GDPR as a key part of company data protection and information security.
Overview of SOC 2 Trust Service Principles
When it comes to managing and protecting customer data, SOC 2 divides its framework into five areas. Together, these create a solid foundation on which to build best practices. The best way to fully understand the principles of SOC 2, however, is to define the meaning of each and demonstrate why it is a crucial element of the overall goal.
1. Security
Anybody responsible for data is responsible for its security. This means protecting all information, whether malicious or negligent, from unauthorized access and misuse. In a digital age, this can involve a range of mechanisms, from firewalls and multi-factor authentication to encryption and intrusion detection systems. Security involves defending data and the places it is stored from threats that occur in both the online and physical realms. Controls must be put in place to prevent unsanctioned parties from accessing systems in which they might be able to read, alter, steal, or pass on data that does not belong to them.
2. Availability
In parallel with making sure data cannot be accessed by those without permission, data managers also have a duty to ensure it can be accessed by those who do. This means creating and maintaining systems and processes which allow authorized parties timely access to the right data, and only the right data. Downtime, whether planned or unexpected, should be minimized while potential issues should be anticipated and, where possible, prevented. Maintenance scheduling, redundancy measures, and disaster recovery plans are all key elements of managing data availability.
3. Processing Integrity
In addition to user-based threats, another aspect that can compromise the safety and integrity of data exists within the systems that hold it. Processing data can be a complex operation and may develop faults if errors or discrepancies form and are not properly handled. Data managers must work to ensure all processing is performed accurately, completely, and in a timely manner. If issues arise that prevent or weaken the ability to do this, they must be rectified and controlled immediately to maintain data integrity and avoid compromising its reliability.
4. Confidentiality
While maintaining the security of all data is important, this becomes even more vital with confidential data such as trade secrets, intellectual property, or financial information. When an organization holds comprehensive data it must put controls in place to ensure only the information that is needed, and permitted, can be accessed by the appropriate individuals. Techniques for doing this include encryption, data masking, and tiered access controls. Maintaining confidentiality is not only important for creating trust but, in many cases, is also legally required.
5. Privacy
Hand in hand with confidentiality is privacy. Under most legal frameworks, individuals have a legal right that their data is protected against any use to which they have not actively agreed. Compliance with these regulations is, in most cases, strictly enforced. Failure to implement controls that ensure the proper handling of personal data can result in severe punishments for the person(s) responsible. These controls should include managing data consent, minimizing storage of surplus or sensitive data, and demonstrating full transparency in what and how data is collected.
Importance of SOC 2 Compliance
In the modern world, achieving SOC 2 compliance in data management is not a “nice to have,” it’s an essential. Maintaining SOC 2 principles and demonstrating they are in place is fundamental for any business wishing to build customer trust, meet regulatory requirements, and stand out in the marketplace.
Every time a new data breach is revealed, individuals and groups become increasingly concerned with the security of the information which is held about them by various parties from governments and health services to retailers and leisure providers. Being SOC 2 compliant is a way of reducing the risk to data and demonstrating to customers and service users that their information is safe and correctly used. Failing to assure individuals of this will affect trust, diminish relationships, and erode loyalty.
Beyond the trust of customers and service users, data management is subject to strict regulatory frameworks, which must be complied with at all times. Specific rules and requirements differ depending on territory, sector, and the nature of the data that is held. Any data-holding organization can expect its processes to be routinely audited and any complaints or breaches to be thoroughly investigated, often resulting in severe consequences for those who cannot demonstrate they have upheld full compliance in their data operations.
Increasingly, demonstrating SOC 2 compliance to customers and regulators is the minimum requirement for any data managing entity. Moreover, it is often one of the prime indicators for how that entity will be judged against its competitors. If your level of data practice falls short of others in your industry, then you are likely to lose market share to those who are shown to excel. If your practices are superior, then you have a powerful marketing angle with which to attract new customers and encourage existing ones to remain loyal.
Challenges in Achieving SOC 2 Compliance
Achieving and maintaining SOC 2 compliance is essential for any business, but it is not always easy. As data becomes an increasingly integral part of modern business operations, and grows to involve far larger amounts of progressively complex information, the task of managing it correctly becomes more and more testing.
One of the first challenges in achieving SOC 2 compliance is finding ways to align any existing practices with the SOC 2 framework. This applies to organizations that initially created their data security systems in the pre-digital age and those whose needs had evolved to outgrow the simpler processes, which may have sufficed when the business was smaller or the SOC 2 requirements needed to be in place. Building data management systems from scratch is one challenge, but adapting those that already exist can prove even more taxing, often needing a great deal of time, a rigorous review of current practices, and the involvement of people and departments from every level of the business.
Once SOC 2-compliant systems and practices have been established, the next challenge organizations face is maintaining them. Controls only work so long as the integrity of the systems and technology used to implement them is upheld. Designing SOC 2-compliant data management is only the first part of the task. Monitoring, auditing, training, and repairing must all be continually undertaken, while data-holding entities must also be proactive about identifying new threats and updating obsolete technology. What might be considered an impervious and efficient system one year may be outdated and insufficient by the next. SOC 2 compliance is never a “one hit” task and must be addressed throughout the lifetime of any data management requirements.
Another key challenge for SOC 2 compliance is finding the necessary resources to achieve and maintain it. This is something that will be particularly felt by smaller organizations that are constantly forced to stretch limited resources across the growing and increasingly diverse demands of the business. Data management and security are essential, but in most cases, they do not generate revenue directly. Therefore, any resource dedicated to it is not being used in more profitable areas of the business. Managing the affordability and efficiency of maintaining SOC 2 compliance can be a balancing act many organizations struggle with.
Steps to SOC 2 Certification
The simplest way to demonstrate SOC 2 compliance is to apply for and receive certification from an independent body such as the American Institute of Certified Public Accountants (AICPA) in the US or the Independent Certified Public Accountants (CPAs) in the UK. This is a multi-step process, the key elements of which are:
1. Readiness Assessment
Before an organization applies to have its SOC 2 processes judged for certification, it must first look internally to determine its current readiness and what areas need to be addressed. This involves a thorough review of the organization’s current practices, and how rigorously they are adhered to in order to identify issues and weaknesses. This assessment should evaluate and compare all policies, processes, and systems against the SOC 2 framework to allow for a comprehensive plan for achieving full compliance to be formed.
2. Implementing Controls
Once a readiness assessment has been completed and the organization has a clear understanding of what needs to be done to bring itself in line with the SOC 2 framework, the challenge of implementing the necessary new controls and processes begins. This step could require a wide range of actions, from creating and training new policies to purchasing and installing new technology. All five pillars of SOC 2 must be addressed to ensure that security, availability, processing integrity, confidentiality, and privacy all meet the required standards for certification. Depending on the results of the organization’s readiness assessment, this has the potential to be a complex, time-consuming, and resource-heavy undertaking.
3. External Audit
Finally, once the to-do list generated by the readiness assessment has been fully actioned in the implementation stage, an organization can apply to the appropriate external service for an independent audit. This will prompt an examination similar to the original internal assessment, but this time, it will be carried out by the certifying body. If the organization has addressed all its data management gaps and brought itself into full SOC 2 compliance, it is likely to pass. If it has failed to achieve this, it is likely to fail and be returned to the first step. It should be understood that this external audit has no motivation to award certification where it is not earned and will leave no stone unturned by carrying out interviews with personnel, undertaking full testing of controls and systems, and performing detailed reviews of any documentation and policies in place.
SOC 2 Final Observations
In today’s data-driven world, SOC 2 compliance is an essential requirement for any business that handles even the smallest amount of data during its operations. While achieving and maintaining the expectations of SOC 2 can be challenging and place a significant demand on resources, it is critical for both legal compliance and building trust with customers or service users. The five principles of SOC 2 have been established to create a framework for the safe, secure, and reliable storage and use of data, including confidential and personal information. Becoming SOC 2 certified is an increasingly vital step for any business that wishes to stand tall in the marketplace and future-proof itself against the evolving threats of the data landscape.
Authors:
Marcel is an experienced journalist and Public Relations expert with an honours degree in Journalism and bylines with a range of major brands.