SOC2 - The Compliance Guide to the US Standard
June 9, 2023
What is SOC2?
SOC2 is an information security standard that plays an important role, especially in the US. Many emerging SaaS (software-as-a-service) companies are getting certified by SOC2 to show investors and potential customers that they keep data safe.
It's not just since the home office craze that cloud solutions for data have been of interest to diverse businesses. If a large amount of sensitive company data is to be uploaded to a cloud, then a company naturally wonders whether the cloud on offer is safe from security breaches and the data thus safe from data theft, data deletion or virus attack. In order to make security clear and to guarantee it, there is the information security standard SOC2, among others.
- is a voluntary compliance standard for organizations.- stands for "Service Organization Controls 2" and secures a system from outside access and modification.
- is a best practice for information security.
- in particular, is an information security management system (ISMS) standard widely used and valued in North America.
-was introduced by the AICPA, the American Institute of Certified Public Accountants.
-includes auditing of the operational ISMS.
-Compliance with SOC2 involves the implementation of a set of security procedures and policies.
The concept behind SOC2
SOC2 is not a standard for IT security, but for information security.
IT security and information security are often used synonymously. Strictly speaking, however, IT security is only one aspect of information security.
While IT security refers to the protection of technical systems, information security is generally about the protection of information. The protection goals of information security are to ensure the confidentiality, integrity and availability of information. SOC2 was defined by theAmerican Institute of Certified Public Accountants (AICPA) and establishes criteria for service providers to manage data securely and protect the related interests and privacy of their customers.
"If you know all the risks, the risks don't get smaller, but the risk of falling victim to them decreases." – Georg Wilhelm Exler
What is the goal of SOC2 certification?
In order for a SaaS company to gain more business, it often needs security certification because it signals to customers that their data is handled with utmost care and trust.
SOC2 certification can be attested by having an external auditor conduct an audit (examination). This auditor produces a report detailing the security measures a company is taking.
This SOC2 report is designed to reassure your potential customers and business partners that you have the appropriate procedural protocols or measures in place to protect their data when they interact with it. The SOC2 standard certifies information security.
SOC2 - 3 reasons why companies choose SOC2
SOC2 is a globally recognized standard for an ISMS and the basis for other ISMS standards such as TISAX®. This standard is also referred to as the US standard because it is most commonly used in North America.
1. strengthens information security
2. increases confidence in information security.
3. promotes transparency in enterprises.
Similarities and differences between SOC2 and ISO27001
Both standards involve technology, processes, and policies to protect information, and for both, certification is done externally so that an objective party can assess whether the standard has been achieved. Both require a company to demonstrate what regulations and measures it has in place regarding information security and whether it is following those regulations as well as executing those measures (such as employee training).
ISO27001 focuses specifically on establishing and maintaining an ISMS. To meet ISO27001 requirements, companies must conduct a risk assessment, define and implement security controls, and regularly review their effectiveness. SOC2, on the other hand, is designed to be somewhat more flexible. It includes five trust services criteria: Security, Availability, Processing Integrity, Confidentiality, and Privacy. But only the first criterion is mandatory. Security describes that a system is protected from the outside. Availability states that systems must be accessible for security checks, for example.
Integrity of processing states that system processing must function without errors. Confidentiality describes that data must be protected in compliance with the law and in accordance with the company's own policies. Data protection means that not only sensitive data must be protected, but that personal data should also be explicitly protected - companies must process it in compliance with data protection regulations.
With SOC2, as mentioned, only the first criterion called security, i.e. the protection of a system from the outside, needs to be taken into account. SOC2 is thus easier, faster and less expensive to implement and maintain, but it is also less consistent, since, for example, personal data does not have to be processed in a data protection-compliant manner. ISO27001 prescribes specific measures for certification, whereas SOC2 gives organizations more freedom in what measures they choose to address security risks. ISO27001 is therefore more uniform and consistent.
It protects companies more strongly against information security threats because concrete, prescribed measures must be adhered to. Operators of critical infrastructures (CRITIS), have been required since January 31, 2018, according to the German Federal Office for Information Security, to certify the ISMS they operate according to DIN ISO/IEC 27001 to demonstrate that the requirements for maintaining information security are met.ISO27001 is a globally used standard. SOC2, on the other hand, is used primarily by U.S. companies - especially those offering software-as-a-service and cloud services. ISO27001, on the other hand, fits any company because it is a cross-industry standard that is not only suitable for software-as-a-service and cloud services and is used globally.
SOC2 or ISO27001 - at a glance
1. The US SOC2 standard is a good choice for SaaS companies and cloud services, and when a company wants to acquire US/North American customers.
2. If this is not the case, the ISO27001 standard is a good choice.
3. ISO27001 is the more rigorous security management standard because there is a concrete, predefined set of actions to be taken in the event of security deficiencies - SOC2 does not prescribe defined actions.
When can a SOC2 certification be crucial?
SaaS companies and cloud services must demonstrate to their customers that their data is secure. With a SOC2 certificate, they can do that. This is because SOC2 strengthens information security, increases trust in it and data protection, and promotes transparency within the company.
The SOC2 standard is particularly common in North America. If a company wants to attract customers from this space and is a SaaS company or offers cloud services, then it should aim for the SOC2 standard to gain trust from customers faster and thus be able to close deals faster.
For example, the Google cloud platform is regularly audited by an independent company to certify individual products to the SOC2 standard. Any company that has achieved the SOC2 standard typically publicizes this to signal confidence in data security and thus attract new customers.
The following points can be achieved through SOC2 certification:
- Identify risks.
- Protect data.
- Reduce liability risks.
- Create peace of mind among employees.
- Increase confidence in the company and its governance, risk & compliance management (GRC).
- Increase competitiveness.
The SOC2 certification process
For ISO27001 and SOC2, the certification process is basically similar. One has to go through three steps.
First, an analysis must be started internally to examine in which areas of the company one already follows compliance rules that are important for certification and where one still needs to make improvements. Numerous areas in a company must be examined, such as its organization and administration, its system operations, risk management and the type, implementation and monitoring of controls, both technical and physical, communication and change management, i.e. the analysis before and implementation of necessary changes.
The second step is to determine which security measures are appropriate for the company. These security measures must then be established. This includes documentation measures and a method for monitoring and improving the security measures. This may include a security officer. Employee training to raise awareness and make the rules known also plays a role.
Analyzing existing areas, as well as implementing security measures that were not already in place, takes a lot of time and expertise. For example, in system operations, deviations from normal processes must be identified and prevented immediately. In ISO27001, concrete rules are established, such as employee training, whereas in SOC2, security measures are more flexible and can be chosen by the company itself.
The specification of proven methods is probably more likely to lead to success, i.e. the guarantee of information security, than the free choice of methods to combat security vulnerabilities.The third step is concrete examination. Companies often examine themselves for the first time before they approach certification, in order to first eliminate internal blunders and further errors.
The certification itself is then carried out by an external auditor to guarantee objectivity, whether for ISO27001 or SOC2. Without an automation platform from secjur, for example, a SOC2 certification takes about two to three months and an ISO27001 certification three to six months. With the help of the Digital Compliance Office (DCO) and secjur's automation platform, this process can be accelerated. The bottom line is that sales can potentially be closed more quickly, as successful certification has a positive impact on the company's image and customers' confidence in data security.
Checklist: Is SOC2 relevant to my business?
If you're wondering if SOC 2 is relevant to your business, there are a few questions you should ask yourself before deciding whether or not to adopt SOC2. Here's a quick (non-exhaustive) checklist to help you decide:
- Target U.S. customers: If your company wants to target US customers, SOC 2 is of particular interest. SOC 2 reports are widely used in the U.S. and can serve as a trust signal to reassure potential customers that their data is safe.
- Operating in the SaaS space: SOC 2 is also particularly relevant for companies operating in the software-as-a-service (SaaS) space. Because SaaS companies often have access to sensitive customer data, it is critical for them to implement robust security controls and ensure the confidentiality, integrity and availability of that data.
- Provide cloud services: SOC 2 is also relevant for organizations that offer cloud services. Since the cloud plays a central role in the storage and processing of data, these companies need to ensure that they have adequate security measures in place to protect their customers' data. By meeting SOC 2 requirements, you can demonstrate that you have implemented the necessary security controls and that your customer data is secure.
However, it's important to note that SOC 2 may not be relevant to every business. For example, if your company doesn't have U.S. customers, doesn't operate in the SaaS space, or doesn't offer cloud services, there may be other auditing standards or compliance requirements that better fit your specific business needs. Here, ISO27001 certification plays a particularly important role, as it represents a quasi-universal ISMS standard for a large number of companies.
Get to SOC2 in record time - with an ISMS with SECJUR
The Digital Compliance Office allows you to build an automated ISMS and get to SOC 2 certification much faster. The benefits for companies:
- A clear compliance pipeline instead of Excel chaos.
- Simple automation solutions instead of a huge internal effort
- Facilitation in building an ISMS to SOC2.
- A faster implementation and achievement of SOC2 certification.
- With SECJUR, you can build an ISMS to SOC2 in an automated and effective way, saving you significant time on the road to certification.
Signaling reliance with a SOC2 certification
Organizations with which the SOC2 standard fits can potentially close sales faster with SOC2 certification, as the certification carries with it a great deal of gravitas. SOC2 strengthens information security, increases confidence in information security and privacy, and promotes transparency in the enterprise.
Many SaaS companies gain a good reputation as a result. Companies that want to improve their image in this regard and attract US customers, operate in the SaaS sector or offer cloud services and are therefore interested in SOC2 certification will particularly benefit from SECJUR's accelerated ISMS setup, which can take them directly to SOC2 certification.
SECJUR stands for a world where companies are always compliant, but never have to think about compliance. With the Digital Compliance Office, companies automate time-consuming work steps and achieve compliance standards such as GDPR, ISO 27001 or TISAX® up to 50% faster.
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