SOC 2 Compliance Basics for Security Teams

Most companies look at security compliance like Mount Everest. Reaching the top feels like a near-impossible ascent, even if you think you know what you’re getting into. The right tools, ample training time, and determination will help any climber. In the same way, proper preparation makes achieving security compliance more realistic than you might think. Especially when it comes to SOC 2 compliance.

System and Organization Controls (SOC) compliance and certifications is a voluntary set of standards specifying how a company should store and manage consumer data. This set of services is divided into three sets (SOC 1, 2, and 3) and tells organizations how to assess and address information-related risks outside their internal teams.

Each set of standards has unique expectations and niches, making it easy for you to find the certification standard that best fits your organization’s needs. For example, SOC 1 is primarily used by controllers and auditors with a focus on financial reporting controls. SOC 3 reports provide an easy-to-read overview of six trust services criteria (TSCs) and are mainly used for marketing or more general purposes.

SOC 2 has an entirely different focus: security. SOC 2 compliance helps your company stand out and tell its customers that you’re serious about information security. Learn the specifics of SOC 2 compliance, how it affects your company, and how you can work toward SOC 2 certification.

What is SOC 2?

The Second Standard Occupational Classification, or SOC 2, is a voluntary compliance standard for service organizations developed by the American Institute of CPAs (AICPA) that specifies how organizations should manage customer data. It explains how trust services criteria (TSCs) help companies’ systems and processes best protect their customers’ data and privacy. A SOC 2 report tells readers how a company is governed and how it manages its vendors and systems. The report details risk management and GRC processes, and also covers how regulatory oversight affects working policies and operations.

What are the two types of SOC 2 Reports?

There are two types of SOC 2 reports, each serving a different service organization niche.

• Type 1 SOC 2 reports are ideal for product- or service-focused companies whose work affects (or could affect) how their clients report financial information.
• Type 2 better suits service-based businesses that hold or store information not directly related to finances.

What are the five different Trust Services Criteria for SOC 2 compliance?

SOC 2 also has five different TSCs or benchmarks. These benchmarks are evaluated to determine whether or not a company is worthy of certification. Here’s a quick breakdown of the five TSCs and how to determine whether or not you should include them in your SOC 2 compliance audit.

• Security – This control refers to how information is protected while in your company’s possession. Its primary goals are to mitigate risk by protecting operations against potential breaches from unauthorized users, the misuse of information, or system damage. This is the only one of the five TSCs every company seeking SOC 2 status must include in a compliance audit. The others are optional, depending on your industry and service.
• Availability – Availability is the overarching umbrella for the controls that keep operations running smoothly, so your company can pass the criteria for performance and service agreements. System monitoring, data backups, and incident response plans fall under this umbrella. You might include this TSC if many of your customers worry about production, downtime, or service-level agreements.
• Process integrity – Process integrity focuses on the integrity of your internal systems and data, including how predictably information is processed and how errors or bugs are found and squashed. Most companies that include this control have customers who use systems for critical operations, like data or financial processing.
• Confidentiality – This control governs how a company protects confidential information according to the laws and regulations and at the company level. The information could be personal or company-related, like intellectual property. You should include this control if your company stores confidential information or if your customers use NDAs or follow other data protection guidelines.
• Privacy – Like confidentiality, this control strives to protect personally identifiable information (PII). It differs by focusing primarily on protecting information obtained from customers, like addresses or credit card information. It also verifies who has access to this information and controls how it can be used with and without the customer’s consent. Include privacy if you or your clients store any type of PII from customers.

Why is SOC 2 compliance important for your company and customers?

SOC 2 compliance is often considered the minimum requirement for any software provider that cares about the integrity and protection of customer data. Some companies view a lack of SOC 2 compliance as a significant red flag that might cause them to take their business elsewhere.

According to Eva Pittas, co-founder and COO of heylaika.com, compliance isn’t just good for customers but for your business, too. 

Continuous monitoring reduces overall business risk by helping maintain a strong security posture and meet contractual obligations. By improving security and record-keeping while minimizing downtime, continuous monitoring provides evidence that your business is a reliable and trustworthy partner.

What are the internal and external benefits of SOC 2 compliance?

SOC 2 benefits can be divided into two categories: internal benefits that improve your company’s operations and external benefits that help customers.

SOC 2 simplifies partnerships with enterprise-level companies

Though SOC 2 compliance offers many internal benefits, the primary one is that it opens the door for your company to work with larger companies with bigger security asks.  Mandatory for many enterprise-level companies, SOC 2 compliance and certification automatically reduces friction, showcasing trustworthiness and reliability to these large-scale partners.

SOC 2 also keeps regulators, business partners, and suppliers on the same page by serving as the baseline standard for enterprise reporting. Without this unity, it’s much harder to determine needs and expectations, take action, implement internal change, build a consistent brand, and even make aligned decisions.

Finally, SOC 2 certification reveals gaps in your current security operations or process. Addressing these pain points before entering a third-party audit cuts friction and speeds your time to certification by proactively addressing them.

SOC 2 gives your customers peace of mind

SOC 2 compliance reduces internal and external friction by providing natural de-risking and thoroughly auditing compliance and operations. Compliance lets your partners save resources and minimizes breaches that would cause downtime and require incident response efforts.

4 Stages of a SOC 2 Compliance Certification

Following four distinct stages—prep, pre-auditing, the audit process, and ongoing maintenance—ensures that you’re prepared to pass and keep the SOC 2 certification process since you’re intentionally examining every part of the process. While this article provides a quick overview of the steps and why they matter, check out this checklist for a deep dive into the SOC 2 certification process.

1. Prep

How you prepare for the SOC 2 certification process will either set you up for success or failure. Three crucial things happen during prep: you’ll pick your ideal SOC 2 reporting style (1 or 2), applicable trust services criteria, and the necessary resources to complete a successful audit. Doing these things first establishes a strong foundation that you’ll need to support the rest of your audit. Without them, it’s much harder to find and mitigate gaps or errors in your audit efforts before they become significant.

2. Pre-audit compliance work

A SOC 2 audit determines whether or not your security efforts are compliant with the latest standards. However, doing the work to improve compliance before you reach that step ensures that you pass the audit easily when you actually reach it.

• Acknowledge which TSCs you meet and which you don’t (and understand those missing the bar and why).
• Use internal audit technology to clarify and diagnose compliance needs, so you can more easily address them with better security measures.
• Know your audit and partnership needs, so you can choose the best third-party auditor and referential risk management framework.

3. Complete the SOC 2 audit process

There’s no way to earn the SOC 2 certification without passing a compliance audit. Setting safeguards during auditing ensures that you’re equipped to pass the audit even with adequate prep work and the right third-party auditor to help. Generally, these steps include completing a preemptory readiness test and being dedicated to complying with in-audit requests from your third-party auditor to ensure a smooth process.

4. Stay compliant (and update as needed)

Lastly, after completing (and, hopefully, passing) a SOC 2 compliance audit, you should monitor evolving SOC 2 requirements to ensure that your efforts are compliant with new and changing regulations. At a minimum, this means re-examining SOC 2 standards on a quarterly basis to make sure your operations are up to date and conducting an annual recertification audit. If you have an ongoing relationship with your auditor, consider using their expertise to help your internal staff with this review.

Want to dive deeper? Find out How to Conduct a SOC 2 Compliance Audit including a checklist to better prepare your security team.

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If you need external support to work toward SOC 2 compliance, Resolver’s IT Compliance Software accelerates the end-to-end process of certification against required frameworks. Dramatically reduce certification efforts with the ability to test once and apply to multiple frameworks. Request your free demo today.