In 2022, there were over 4,100 publicly reported data breaches, exposing 22 billion records. Worldwide, companies continuously strive to protect their systems and information from outside cybersecurity threats.
Security is crucial for every organization, regardless of industry and size. It ensures protection from physical harm and cyber threats, maintains order and control, reduces liabilities, and keeps companies compliant with safety laws and regulations. But security is even more important when it comes to protecting customer data.
Enterprises, such as financial institutions, healthcare centers, and telecommunication establishments, must be cautious of their security practices since they usually partner with third-party vendors for parts of their key business operations.
Industry standards and requirements help organizations monitor and achieve client data protection. SOC 2 is a security framework that helps organizations avoid data mishandling, effectively preventing cyberattacks and safeguarding customer data.
What is SOC 2?
Systems and Organization Controls 2 (SOC 2) was created by the American Institute of Certified Public Accountants (AICPA) in 2010 to give organizations guidelines for keeping their cloud-based customer data safe. It was developed to provide auditors with direction for assessing how well a company’s security policies operate.
Besides being a security framework, SOC 2 is an audit framework determining if the organization complies with particular regulations. Outside auditors are the ones who grant SOC 2 certification, evaluating if a company adheres to at least one of the five trust principles: security, availability, processing integrity, confidentiality, and privacy.
1. Security
The security principle requires systems and data be guarded against unauthorized access. SOC 2 compliance includes limiting logical and physical access, implementing outbound and incoming regulations, improving operations management, determining and enhancing risk mitigation strategies, imposing multi-factor authentication, and boosting firewalls.
2. Availability
Availability covers withstanding high workloads and having a data breach response or contingencies to recover from faulty situations. Customers and employees must be able to rely on your systems to perform their functions at all times.
As part of this principle, you must recognize environmental threats, such as bad weather, power outages, and fire, to prepare your overall operations ahead of time.
3. Processing integrity
Another criterion in network and security compliance is processing integrity. It ensures systems operate as they should, including performance monitoring and quality assurance. Keeping detailed logs of system input operations will also help fulfill this principle’s requirements. Moreover, processing integrity checks off bugs, errors, delays, and other vulnerabilities.
4. Confidentiality
The confidentiality principle obliges organizations to observe strict protocols when handling personal data like clients’ usernames and passwords, business plans, and credit card details. There should be restrictions to accessing, storing, and using confidential information, which must also be encrypted. SOC 2 compliance also includes executing strategies to delete data no longer in use.
5. Privacy
Any personally identifiable information (PII) must be collected, stored, processed, and disclosed following the organization’s data usage and privacy policy and the guidelines outlined by the AICPA in the Generally Accepted Privacy Principles (GAPP).
PII includes unique particulars like name, contact details, and Social Security number. Companies are required to ensure there’s no unauthorized access to such information, and they should also check that their third-party sources are trustworthy and lawful in this regard.
Why is SOC 2 Compliance Important?
Although SOC 2 compliance isn’t mandated by law, and there are other agreements like the California Consumer Privacy Act (CCPA) and General Data Protection Regulation (GDPR) that organizations can abide by, many companies are still choosing to conform with SOC 2 regulations.
Since SOC 2 are frequently a requirement in provider contracts, software-as-a-system (SaaS) and business-to-business vendors should consider becoming certified. The educational, financial, and healthcare sectors often need SOC 2 compliance, and an organization that complies with these guidelines benefits from this security framework’s various advantages.
1. It helps build customer trust
When you have a highly secure system, customers will trust you more. Being SOC 2 compliant prevents data breaches and other cyberattacks that can wreak havoc on your company’s client relationship management.
While your security observance establishes trust, it encourages loyalty among customers. At the same time, this builds up brand reputation and attracts more customers, benefiting startups particularly.
2. It’s cost-effective
Audit costs are high, but they’re much lower compared to data breach costs. In the United States, a data breach cost an average of $9.05 million in 2021, but expect this number to be higher today. Other factors affected by data breaches include lost business costs, detection and escalation, post-breach response, and a damaged reputation.
Audit work under the SOC compliance framework covers type 1 and 2 reports. Type 1 evaluates the structure of security processes at a single point in time, while type 2 examines the effectiveness of such controls for months. The latter costs more since it requires a longer assessment.
Additionally, it’s easier to accomplish other security certifications when you’re SOC 2 compliant. For instance, obtaining a SOC 2 report speeds up and lowers the cost of the International Organization for Standardization (ISO) 27001 certification, which focuses on information security management systems (ISMS).
3. It’s regulatory compliance
Since SOC 2 compliance synchronizes with other structures like ISO 27001 certification and the Health Insurance Portability and Accountability Act (HIPAA), your company can observe more regulatory standards and gain other certifications seamlessly.
4. It enhances your services
Other business operations also improve when you have a secured system in place. SOC 2 compliance isn’t limited to data security tips and measures but also helps streamline other processes and controls. As a result, your company becomes more efficient and productive while boosting customer satisfaction.
5. It gives you a competitive edge
Many companies these days are selective with their service providers since working with another party poses some security risks. But if you’re SOC 2 compliant, it gives business partners, clients, and prospects the assurance that a safety seal offers.
A SOC 2 certification proves you have first-class security and are safer to work with, making you more competent than other companies in your industry that may not possess this certification.
SOC 2 Compliance for Better Business
There’s much thought and effort in maintaining top-notch security for your enterprise, and there’s a greater risk when working with third-party vendors. Data breaches and cyber threats ruin different aspects of a company, from its bottom line to its reputation. But security frameworks and regulations, such as SOC 2, help ensure safer transactions and processes.
If you’re on the lookout for a service provider, make sure to look for those that are SOC 2 compliant. Beyond security and safety, you gain efficiency, better operations, and the five key trust principles that play a significant role in any enterprise.
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