SOC 2 Type 2 Certification: What is it and why should your business be compliant with it? Keep reading this article to find out!
Nowadays, our society relies so much on data, and businesses need to be extra careful about how they protect their own and their customers’ information. There are a lot of ways data can be at risk and exposed, like when a business outsources certain functions to a 3rd-party service organization.
This leaves all businesses vulnerable to data theft, ransomware, malware, and leaks. Often, large enterprise organizations are more at risk. It’s easier for any security cracks to go unnoticed in larger companies than in smaller businesses, and it’s much more challenging to encourage accountability when data breaches happen.
What’s the solution? If being security-conscious is a priority for your business, consider using SOC 2 compliance as a minimum requirement, especially in situations in which you’ll be working with a new app or vendor, but also when you’re reviewing your current tech stack.
The Service Organization Control (SOC) 2 certification is a widely-accepted, efficient security framework for a variety of companies, from Software as a Service to healthcare and financial industries, meeting standards set forth by the American Institute of Certified Public Accountants (AICPA) and a variety of other institutions.
The SOC 2 certification demonstrates that your system processing customer and client data is able to protect the privacy and security of this information and is based on the five trust service criteria (TSC), security, availability, processing integrity, confidentiality, and privacy.
A SOC 2 certification is awarded to your company once an external auditor completes a comprehensive assessment of how you comply with the above-mentioned TSCs. After completing the assessment, your organization will receive one of the two types of compliance reports, Type 1 or Type 2, that is meant to outline how your internal controls address risk management and security matters in relation to the aforementioned principles (TSC).
The main difference is that a SOC 2 Type 1 certification means that the external auditor has assessed the organization’s scope and design of internal control processes in relation to relevant TSCs.
However, this report only evaluates controls at a certain point in time, theoretically, without monitoring performance over a period of time. During this phase, a company’s controls design is closely examined and implemented without assessing efficiency long-term.
On the other hand, a SOC 2 Type 2 certification can only be achieved after the external auditor examines the operating effectiveness of these controls over a specified period of time, around 6 to 12 months, and it’s proven to work in “real-world” scenarios.
It’s like taking your car to a driving test before making a long-term investment. You might think that the car works exactly as the dealer says, but you need to hit the breaks yourself to make sure it’s completely functional.
It’d be a waste of resources if the car looks great on paper but it’s exposing you to dangerous situations with consequences that are often irreversible and unrepairable.
A SOC 2 certification is awarded once an external auditor has deemed a service provider compliant with one or more of the relevant five Trusted Service Criteria (TSC), more specifically:
The principle of security refers to an organization’s system resources and how they are protected from unauthorized access, internal and external, including the removal, alteration, or disclosure of information alongside theft, abuse, and misuse, whether these are done intentionally or by accident. Businesses can prevent these situations using effective security tools such as two-factor authentication, network, and app firewalls, and intrusion detection for security breaches.
The principle of availability refers to the controls that demonstrate how a system maintains operational uptime and performance to meet the business objectives and service level agreements (SLA) determined by both the provider and customer. To do so, companies need to consider performance monitoring, disaster recovery, and other methods of handling security incidents.
The principle of processing integrity implies that a system works correctly and as intended. This means that the system delivers the requested data at the requested time, accurately, in a timely manner, and through valid and authorized methods. It’s important to make sure that there are no errors before the data is put into the system since processing integrity is not synonymous with data integrity and is not responsible for errors prior to the input process. To prevent this, it’s advised to have quality assurance procedures in place.
The confidentiality principle implies the consideration that an organization should protect confidential data such as internal pricing structures, intellectual property, and other types of sensitive information by limiting access and disclosure opportunities. This can be acheived through the use of encryption when transmitting and storing data, making it strictly available to authorized users only.
The privacy principle explains how the system collects, uses, retains, discloses, and disposes of sensitive information in accordance with the company’s privacy notice both also with generally accepted privacy principles (GAPP). This includes personally identifiable information (PII) that can be used to identify an individual, such as names, addresses, or social security numbers, but also financial and medical records. A system can achieve this by enabling access controls, 2-factor authentication, and encryption.
As part of a risk management and security program, it’s essential to evaluate both physical and hardware components to make sure all equipment, operating software, and cloud computing vendors meet your organization’s internal control policies.
Especially for SaaS (Software as a Service) organizations, it’s imperative to keep customer data safe and your processes compliant with one or more of the trust services principles of SOC 2.
SOC 2 compliance is one of the most accessible and accepted auditing standards for data security controls and risk management, which also means that many organizations require their partners and solutions to be compliant with this type of audit process.
As a matter of fact, if you want to work as a service provider in a highly regulated field or for clients representing publicly traded companies, your business needs to be SOC 2 compliant.
A SOC 2 compliant report is like an open door for you to get customers and partners, ensuring them that your organization meets the security requirements for protecting data. Moreover, this report makes prospects feel more confident that you can be trusted with their data and won’t introduce any vulnerabilities to their systems.
As data privacy becomes indispensable and more regulations are introduced, your company needs to keep up with security compliance standards for a variety of reasons, including the following:
Compliance with SOC 2 helps enhance a company’s reputation and trustworthiness, bringing in more deals.
Companies can lose out on business if they’re not compliant, and gain a competitive edge if they actually are.
Becoming SOC 2 compliant is ultimately more cost-efficient than dealing with massive data breaches.
Below is a non-exhaustive list of the industries that are most likely to require a SOC 2 compliance certificate:
HR (Human Resources)
Data analysis and management
Financial services, accounting, banking, cryptocurrency
CRM (Customer Relationship Management)
Cloud computing, technology, and SaaS
Healthcare, insurance, and medical claims
Although being SOC 2 compliant isn’t a settled requirement for SaaS providers, it provides the guidance needed to keep tabs on information security at all levels within your company.
WeSupply is compliant with SOC 2 Type 2 “Security and Availability” principles of Trust Services Criteria for Security, Availability, Processing Integrity, Confidentiality, and Privacy as of July 2022.
As our daily activities include handling sensitive information, meeting the most stringent standards of security, integrity, and privacy is a priority for our organization, and we encourage everyone to rigorously monitor and address their own security concerns.
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