What is SOC 2 Compliance and its Principle?

All organizations, small or large-scale alike, share a similar concern regarding information security. Even those enterprises that outsource key business operations to third-party vendors (e.g., SaaS, cloud-computing providers) are not untouched by this critical aspect. 

 

This becomes highly relevant in a scenario as mishandled data by application and network security providers leaves enterprises vulnerable to attacks, including data theft, extortion and malware installation.

 

 

What is SOC 2?

 

SOC 2 is an auditing procedure developed by the American Institute of CPAs (AICPA), that ensures the secure management of data by service providers. This protects the interests of organizations as well as the privacy of their clients. 

 

SOC 2 compliance is a must-have requirement for businesses when considering a SaaS provider, especially when they are concerned about data security. The criteria for managing customer data is defined by SOC 2 as being grounded on five essential “trust service principles”.

 

These are security, availability, processing integrity, confidentiality and privacy. 

 

According to Logicgate, SOC 2 compliance is an integral component of the American Institute of CPAs’ Service Organization Control reporting platform. It basically outlines five trust service principles of security, availability, processing integrity, confidentiality, and privacy of customer data as a framework for safeguarding data.

 

It was primarily aimed to ensure the safety and privacy of customers’ data. We need to keep in mind that rather than acting as a prescriptive list of controls, tools, or processes, SOC 2  cites the criteria required to maintain robust information security. This empowers organizations to adopt the relevant practices and processes in order to fulfil their objectives and operations.

 

Also Read | Compliance Testing

 

SOC 2 Certification Criteria Explained 

 

SOC 2 reports are seen to be unique to each organization unlike PCI DSS, which has very rigid requirements. Aligned with specific business practices, each company designs its own controls to comply with one or more of the trust principles.

 

These internal reports provide all stakeholders (including regulators, business partners, suppliers, etc.) with critical information about how the service provider manages data. (Source)

 

 

Who Does SOC 2 Apply To?

 

SOC 2 is applicable to any technology service provider or SaaS company that handles or stores customer data. 

 

Third-party vendors, other partners, or support organizations that are involved with those organizations should also maintain SOC 2 compliance for optimizing the integrity of their data systems and safeguards.

 

Types of SOC Reports

 

There are two types of SOC reports that can be seen : 

 

• Type I is concerned with the vendor’s systems and whether their design is suitable to meet relevant trust principles.

• Type II outlines the operational effectiveness of those systems.

 

SOC 2 certification is issued by outside auditors. They consider the extent to which a vendor complies with one or more of the five trust principles on the basis of the existing systems and processes.

 

Also Read | 7 Best Data Security Practices

 

 

Five Trust Principles 

 

Trust principles can be summarized as follows:

 

1. Security

 

This principle involves the protection of system resources against unauthorized access. 
 

Access controls help to avoid mishandling of vital information such as potential system abuse, theft or unauthorized removal of data, misuse of the software, and improper alteration or disclosure of information.

 

IT security tools such as network and web application firewalls (WAFs), two-factor authentication and intrusion detection help prevent undesirable security breaches that can lead to unauthorized access of systems and data.

 

2. Availability

 

The availability principle pertains to the accessibility of the system, products or services as stipulated by a contract or service level agreement (SLA). The minimum acceptable performance level for system availability is mutually agreed to by both parties.

 

This principle does not refer to system functionality and usability but involves security-related criteria that may have an impact on availability. The critical aspects of this principle include monitoring network performance and availability, site failover as well as security incident handling. 

 

3. Processing integrity

 

This principle refers to whether or not a system achieves its purpose. This means delivering the right data at the right price at the right time. Data processing must be complete, valid, accurate, timely and authorized.

 

This needs to be kept in mind that processing integrity does not necessarily imply data integrity. Detecting errors prior to being fed into the system, is not usually the responsibility of the processing entity. 
 

In order to ensure processing integrity, monitoring of data processing, along with quality assurance procedures are a must.

 

4. Confidentiality

 

We can consider data to be confidential in case its access and disclosure is restricted to a specified set of persons or organizations. 

 

This includes data intended only for company personnel, along with business plans, intellectual property, internal price lists and other types of sensitive financial information. Encryption is vital in order to protect confidentiality during transmission. 

 

For safeguarding the information that is processed or stored on computer systems, network and application firewalls, accompanied by rigorous access controls can prove to be highly reliable.

 

5. Privacy

 

The privacy principle refers to the system’s collection, use, retention, disclosure and disposal of personal information in compliance with an organization’s privacy notice, along with adhering to the criteria set forth in the AICPA’s generally accepted privacy principles (GAPP).

 

Personal identifiable information (PII) includes details that can help distinguish an individual (including name, address, Social Security number). 
 

Some personal data related to health, race, gender and religion are also considered sensitive and it is better to provide an extra level of protection. Therefore it becomes really pertinent to put controls in place to protect all PII from unauthorized access.

 

Also Read | Dark Data - Meaning, Present Trends and Risks

 

 

Significance of SOC 2 Compliance

 

Let's read on to find out the top benefits of SOC 2 Compliance.

 

SOC 2 compliance is usually determined by a technical audit from an outside party, mandating that organizations establish and adhere to specified information security policies and procedures, aligned well with their objectives. 

 

SOC 2 compliance generally covers a six to the twelve-month timeframe. This is done to ensure that a company’s information security measures are well-structured along the lines of the ever-evolving requirements of data protection in the cloud.

 

Adhering to SOC 2 compliance assures all the customers and clients that a company possesses the required infrastructure, tools, and processes to protect their information from unauthorized access both from within and outside the firm. 

 

To tell a long story short, we can say that SOC 2 compliance means that a company very well knows what normal operations are. They are regularly monitoring malicious or unrecognized activity, document system configuration changes, and monitor user access levels. (Source)

 

They possess the necessary tools and technologies to recognize threats and alert the appropriate parties so they can evaluate the threat and take necessary action to protect data and systems from unauthorized access or use. 

 

This also ensures that the company has the relevant information on any security incidents so that they can timely understand the scope of the problem, remediate systems or processes as necessary, along with working to restore data and process integrity in place. 

 

Also Read | Compliance testing

 

 

Ending Note 

 

We can conclude that all organizations strive to maintain reliability, safety and trust for their clients and partners. Keeping the data of clients and stakeholders safe and secure is an aspect that concerns all companies. 

 

SOC 2 is a framework applicable to all technology service or SaaS companies that store customer data in the cloud. This works by ensuring that organizational controls and practices safeguard the privacy and security of customer and client data.

SOC 2 acts as a boon by helping implement well-defined policies, procedures, and practices. It helps develop the bond of trust with customers and end-users regarding the secure nature and operation of your cloud infrastructure. Its uniqueness lies in the fact that other compliance mandates (including SOC 1) require organizations to pass the audit test. 

 

On the other hand, SOC 2 requires long-term, ongoing internal practices. This means working towards optimizing the security of customer information which impacts the overall success of any organization.