Achieve SOC 2 Compliance: A Roadmap to Secure and Trusted Business Operations
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Cyber threats challenge the safety and security of organizations worldwide. Attackers often focus on the supply chain, as it provides an attack point that can ultimately compromise multiple companies. A report from the World Economic Forum found that 90% of companies are concerned about the cyber resilience of third parties. Organizations can help mitigate risk across the supply chain using a risk management framework. An example of a framework that suppliers use to create a robust security posture is SOC 2.
What is SOC 2 Compliance?
SOC 2 (System and Organization Controls Type 2) is a trust and security framework developed by the American Institute of Certified Public Accountants (AICPA). The framework comprises a series of guidelines under five pillars known as the Trust Services Criteria (TSC). If an organization implements the advisories under each pillar, it can go through an audit process by an accredited third party. SOC 2 certification covers two types of SOC reports - Type I and Type II. If a SOC 2 audit is successful, the organization will be awarded SOC 2 certification.
The SOC 2 certification covers non-financial reporting controls relating to Security, Availability, Processing Integrity, Confidentiality, and Privacy.
SOC 2 Trust Services Criteria (TSC)
SOC 2 uses five pillars known as the Trust Services Criteria. Each TSC covers a different aspect of risk management that extends out to the supply chain:
TSC 1: Security
Security, also known as the Common Criteria, consists of criteria covering: "Control Environment", "Risk Assessment", "System Operations", and "Risk Mitigation". Each control has a series of requirements to meet compliance. For example, "Risk Mitigation" specifies, "The entity identifies, selects, and develops risk mitigation activities for risks arising from potential business disruptions".Activities would include policies and procedures development, communications, etc., that are used to mitigate and recover from security incidents.
TSC 2: Availability
An organization must meet specific criteria to ensure that its service or product is available as per its SLA (Service Level Agreement). This is the minimum agreed-upon performance level of both parties. The Availability criteria focus on security failures that could impact a system's performance and availability.
TSC 3: Confidentiality
The criteria of this TSC are to ensure that any confidential data in the system is robustly protected.
TSC 4: Processing Integrity
Processing Integrity covers the processing of data, not the data itself. The requirements specify, "System processing is complete, valid, accurate, timely, and authorized to meet the entity's objectives".
TSC 5: Privacy
Privacy is increasingly important in regulations worldwide. The SOC 2 is no different. This TSC states the Privacy requirements cover "…the system's collection, use, retention, disclosure, and disposal of personal information in conformity with the commitments in the entity's privacy notice and with criteria outlined in generally accepted privacy principles (GAPP) issued by the AICPA and Canadian Institute of Chartered Accountants…".
Why is SOC 2 Important to Your Organization?
SOC 2 offers advisories and a framework that, if followed, will help to deter cyberattacks. Research from Thales shows that 65% of organizations are concerned about cloud-based data security. This makes sense, as 47% of data stored in the cloud is sensitive. Despite this, cloud data encryption rates are low, with less than 10% of enterprises encrypting 80% or more of their cloud data.
According to studies into the main threats to cloud-based data, cloud breaches are caused by human error, misconfigurations, insecure APIs, and stolen credentials. A lack of security in these areas is why 81% of companies have suffered a cloud-based data breach, and 45% have four or more cloud breaches. Worryingly, 30% of breaches are linked to a third party.
Following SOC 2 guidelines allows an organization to protect cloud-based data. SOC 2 certification allows a company to demonstrate to customers its commitment to protecting their data.
Steps to Obtain SOC 2 Certification
SOC 2 certification proves your company's adherence to one or more of the five Trust Services Criteria (TSCs) under SOC 2
SOC 2 certification is a process. To prepare for the audit that determines certification, your company should follow some basic steps:
- Choose your Trust Service Criteria: Spend some time going through the guidelines and the requirements under each of the five Trust Service Criteria. Your company should then choose which of the five TSCs you want to certify against, with "Security" being mandatory and common, sharing several requirements with the other four TSCs.
- Carry out a gap analysis: Map your security and technical controls to those required by the TSCs you have chosen to certify against.
- Implement the required controls: Implement the required controls and test them to ensure they will meet the criterion.
- Choose an accredited auditor: Choose a third-party accredited and certified auditor to carry out the audit
- Prepare for the audit: You will be required to submit evidence that you comply with the required controls, procedures, and policies of your chosen TSCs. Audits often take 4 to 6 weeks.
If the audit is successful, your company will receive a qualified SOC 2 attestation report (SOC 2 certificate). If unsuccessful, your company will be given a chance to rectify the issues and undergo another audit.
What is a SOC 2 Audit?
You may come across several types of SOC audits. All must be performed by a licensed CPA agency accredited by the American Institute of Certified Public Accountants (AICPA). The types of SOC audits are as follows:
SOC 1 Audit
SOC 1 audits focus on an organization's ICFR (internal control over financial reporting) processes. They are conducted against the assurance standards ISAE (International Standard for Assurance Engagements) 3402 or SSAE (Statement on Standards for Attestation Engagements) 18.
SOC 2 Audit
SOC 2 audits assess service organizations' security, availability, processing integrity, confidentiality, and privacy controls against the AICPA's (American Institute of Certified Public Accountants) TSC (Trust Services Criteria).
SOC 3 Audit
An SOC 3 audit is a condensed version of the SOC 2 audit used for more general purposes.
Type I and Type II Audits
Type I audits are carried out on a specified date, whereas Type II audits look at controls over a defined period of several months.
Best Practices to Achieve SOC 2 Compliance
To meet one or more of the five Trust Service Criteria, a company must implement certain measures. The following are recommended to achieve compliance during a SOC2 audit:
- Identity management is core to cloud security: Cloud breaches often begin with compromised login credentials. Robust identity management measures that mitigate the impact of a cloud breach include Privileged Access Management (PAM) tools that enforce the minimum number of standing privileges. One Identity provides PAM and other identity management tools.
Augment authentication security using multi-factor authentication (MFA).
Intrusion Detection Systems (IDS)
Monitor for signals of intrusion by malicious entities using IDS tools. IDS provides visibility and control across cloud infrastructures and networks.
Advanced Anti-Virus
Next-generation antivirus (NGAV) software uses AI to help identify emerging threats.
Web application firewalls (WAF):
Dark Web Monitoring
Dark web monitoring tools like Sentinex help identify stolen data for sale on dark web marketplaces. These tools also help identify potential threats against a company to forewarn them of an impending attack. As part of a comprehensive security strategy, dark web monitoring can help to achieve SOC 2 compliance.
Encryption
Data must be encrypted during transfer and storage to protect from interception attacks like Man-in-the-Middle (MitM) and SQL Injection.
Backup and Restore
Ransomware is a threat to cloud-based data. Anti-ransomware backup and restore processes and tools should be part of your SOC 2 security strategy.
Business Continuity and Incident Response Plans
SOC 2 compliance is about processes as well as security controls. SOC 2 emphasizes risk management and incident response through the Principles and the Common Criteria (CC) for TSC Security. Third-party incident response is a consideration in the planning.
Process Monitoring
SOC 2 is an ongoing exercise, with companies recertifying every 12 months. By monitoring processes, you can identify gaps as they emerge and ensure controls are put in place.
Privacy Impact Assessment (PIA)
While a PIA is not mandatory to receive a SOC 2 report, it is useful to identify any privacy gaps when conducting a TSC Privacy audit.
FAQs
What are the main differences between SOC 1 and SOC 2?
SOC 2 is not an upgrade of SOC 1. SOC 1 focuses on the Integrity of customer financial controls and the accuracy of financial data. SOC 2 focuses on internal controls to protect data using the five Trust Services Criteria.
When Do You Need a SOC 2 Report?
If your business stores customer data in the cloud, consider a SOC 2 report to prove that you take security seriously. Service providers storing customer data in the cloud should produce a SOC 2 report demonstrating secure data security processes. Similarly, technology and cloud computing companies should consider showing this level of commitment to data security. In terms of which Trust Service Criteria to audit, a typical SaaS vendor would certify against TSCs, Security, Availability, and Confidentiality.
Is SOC 2 mandatory?
No, SOC 2 is optional. However, clients may insist on a company demonstrating SOC 2 certification to prove the security and reliability of their service.
Which companies are covered by SOC 2?
SOC 2 is a type of audit used by companies that store customer information to prove they conform to best practices for data security, Integrity, and confidentiality. Examples of organizations that fall under SOC 2 include the following:
- Business intelligence and analytics companies
- Software as a service (SaaS) organizations
- Financial services, e.g., banking and insurance