What are SOC 2 compliance requirements, and do you really need SOC 2?
If you’ve been tasked with helping your organization become SOC 2 compliant, here’s everything you need to know about the process—what it is, why you need it, and how to prepare for an audit.
What is SOC 2? A Beginner’s Guide To SOC 2 Compliance Requirements
SOC 2 is a security compliance standard for service organizations. The purpose of SOC 2 compliance is to obtain proof that a company is storing and processing customer data in a secure manner. Also known as Service Organization Control Type 2, SOC 2 was developed by the American Institute of Certified Public Accountants (AICPA).
To achieve SOC 2 compliance, a company needs to undergo an audit to prove that it upholds high standards of data security based on five trust service principles: security, privacy, availability, confidentiality, and processing integrity.
Once completed, they receive a SOC 2 report. From there, audits should be conducted annually to assess ongoing adherence to SOC 2 compliance requirements and ensure compliance is maintained.
What is a SOC 2 Report?
A System and Organization Controls Report (aka SOC 2 report) is an attestation that your organization has the right security policies and procedures in place to manage and protect customer data properly.
A SOC 2 report indicates whether or not your organization’s security controls will operate as intended to mitigate risk and if they meet the specific Trust Services Criteria (TSC) identified by the scope of the audit.
There are two types of SOC 2 reports (SOC 2 Type 1 vs Type 2):
- Type 1: This report attests that an organization’s systems are properly designed at a specific point in time. The report describes the controls in use by an organization and confirms that the controls are properly designed and enforced.
- Type 2: This report includes everything that’s part of a Type 1 report, along with the attestation that the controls are operationally effective over a set period of time (usually 6-12 months).
Why Is Fulfilling SOC 2 Compliance Requirements Important?
Meeting SOC 2 compliance requirements is a business-enabler. It tells other companies that your organization maintains a high level of information security standards, which can help to win new business. Maintaining SOC 2 compliance also gives an organization the internal controls and procedures it needs to better protect customer data and prevent data breaches.
After all, clients and customers want to know that their information is safe and secure. SOC 2 is the security framework companies use to demonstrate their ability to protect customer data and tell the world that their security standards can be trusted.
Is SOC 2 Mandatory?
No, SOC 2 is not a requirement. SOC 2 is a voluntary compliance standard. However, many companies and customers consider SOC 2 compliance a prerequisite for the service providers and business partners they choose to work with. If this applies to your industry, you may lose business to your SOC 2-compliant competitors if you choose to forgo SOC 2 compliance.
Is SOC 2 a Certification?
No, SOC 2 is not a certification. It is an attestation that an organization meets industry-accepted security standards set out in the SOC 2 Trust Services Criteria.
How Much Does It Cost To Meet SOC 2 Compliance Requirements?
SOC 2 costs anywhere from $10,000 to $50,000. However, consider these figures a ballpark guide at best. The cost of fulfilling SOC 2 compliance requirements depends on the complexity of the project and a long list of other variables, including:
- The size of your company
- The nature of your services
- The complexity of the project
- The amount of resources you need
- The SOC 2 Trust Service Criteria you include in the audit
- …and more.
How Long Does SOC 2 Take?
Meeting all SOC 2 compliance requirements to obtain your report can take a mid-sized company anywhere from 3-12 months to complete. During this period, an organization will typically spend more time preparing for an audit than it will undergoing the actual SOC 2 audit phase. “How long does SOC 2 take” is a common question, but the answer varies:
Unfortunately, the time it takes to complete every item on an organization’s SOC 2 checklist is difficult to project. Each company’s journey is different, and timelines are impacted by many variables.
With the support of a Rhymetec’s vCISO service, organizations can typically achieve SOC 2 compliance in half the time it would take them to navigate the process alone.
What Are The SOC 2 Trust Service Criteria?
When an organization goes through a SOC 2 audit, it is assessed on its adherence to five Trust Service Criteria: Security, Availability, Processing Integrity, Confidentiality, and Privacy.
Security
Information and systems are protected against unauthorized access, unauthorized disclosure of information and damage to systems that could compromise the availability, integrity, confidentiality, and privacy of information or systems and affect the entity’s ability to meet its objectives.
Availability
Information and systems are available for operation and use to meet the entity’s objectives.
Processing integrity
System processing is complete, valid, accurate, timely and authorized to meet the entity’s objectives.
Confidentiality
Information designated as confidential is protected to meet the entity’s objectives.
Privacy
Personal information is collected, used, retained, disclosed and disposed of to meet the entity’s objectives.
Every organization needs to include Security in its SOC 2 report. From there, organizations can determine which of the other SOC 2 Trust Service Criteria it needs to include in its SOC 2 report.
Do You Need a SOC 2 Report?
Generally speaking, any organization providing a service for outsourcing the collection, processing, transmission, storing, organizing, maintenance, or disposal of customer information will benefit from a SOC 2 report.
But unless one of your existing or potential customers has proactively asked you to provide a SOC 2 report, you might be wondering if spending the time to meet SOC 2 compliance requirements is actually worthwhile.
If SOC 2 could help your organization win new business, then it’s usually a smart move to get a SOC 2 report before you need it—because the SOC 2 audit process can take months to complete.
For example, companies (usually service providers) that offer a B2B service or product and B2C organizations that handle sensitive customer information almost always need a SOC 2 report to work with other organizations.
What Are The Benefits of Meeting SOC 2 Compliance Requirements?
In addition to ensuring that your organization can effectively manage and protect customer data, a SOC 2 report can help in several ways.
Speed up the sales cycle
By eliminating security and compliance as a sales objection, SOC 2 can make it easier to quickly win new business and win the trust of larger, even enterprise companies.
Rhymetec can help you prepare a compliance package to support sales discussions.
Build customer confidence
Providing evidence your organization has met SOC 2 compliance requirements serves as a third-party seal of approval that your organization’s security controls are in place and effective. A SOC 2 report can help with customer retention and assure legal and risk departments that your service is secure.
Satisfy SOC 2 requests
Existing and potential partners may make a SOC 2 request from time to time. Having a valid SOC 2 report can help your team address these requests as soon as they are received.
Satisfy regulatory needs
Although SOC 2 itself is not a regulatory requirement, it does overlap with several regulation-based frameworks such as PCI DSS and HITRUST. Meeting SOC 2 compliance requirements can expedite enterprise compliance efforts as a whole.
Improve cybersecurity and compliance companywide
Undergoing the SOC 2 compliance process can create a framework for improving security practices and managing security risks across the company, which can help your organization avoid any surprises later on.
Create a framework for managing security risks across the company
SOC 2 can also build a strong security culture in your company’s operations. With defined cybersecurity, privacy, and compliance responsibilities and practices in place, security and compliance can become important, clearly defined processes for your entire team.
Gain a competitive advantage
Having SOC 2 compliance can also help you win deals against non-SOC 2 audited competition.
Accelerate investor, partner, and customer due diligence
Investors and other stakeholders often conduct due diligence before making business decisions. Having a SOC 2 audit report readily available can streamline the due diligence process, making it easier for stakeholders to assess the organization’s security and compliance posture.
Increase staff productivity by reducing time spent on vendor questionnaires
SOC 2 reports are a valuable tool for organizations to demonstrate their commitment to security and compliance while reducing the administrative burden of responding to numerous security questionnaires. They provide a credible, standardized, and comprehensive assessment that can satisfy the security assurance needs of customers, partners, and stakeholders.
Fast Forward Your SOC 2 Journey
Our cybersecurity experts have helped hundreds of CTOs and decision-makers at SaaS companies work through the complex range of SOC 2 compliance requirements. When our clients first work with us, most of them tell a similar story: SOC 2 is a confusing, time-consuming process.
A Rhymetec vCISO can deliver the expertise, guidance, and support your team needs to prepare for and complete a SOC 2 audit, which means your team can stay focused on other important parts of your business.
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