⬤ SOC 2

SOC 2 Compliance Requirements: Your Guide to Building Trust and Security

May 08 • 7 min read

SOC 2 Compliance Requirements: Your Guide to Building Trust and Security

⬤ SOC 2

May 08 • 7 min read

Business leaders are under constant pressure to prove to their stakeholders that they can safeguard sensitive data. For service providers, especially those handling customer information, SOC 2 compliance has become a gold standard for demonstrating robust security practices.

A recent article by Forbes highlighted how Fortune 500 clients or enterprise clients are demanding SOC 2 - it’s the basic eligibility criteria if you want to work with them. So, for businesses dreaming of featuring such clientele on their website, gaining trust in the market, and becoming a reliable brand - SOC 2 is imperative.

But what exactly does SOC 2 require, and how can your business achieve it? Let’s break down the essentials in this comprehensive guide.

What is SOC 2, and Why Does It Matter?

SOC 2 (Service Organization Control 2) is an auditing framework developed by the American Institute of Certified Public Accountants (AICPA). It’s designed for technology and cloud-based companies that store customer data, ensuring they follow strict information security policies and procedures.

SOC 2 isn’t a one-size-fits-all checklist. Instead, the AICPA gives you a flexible set of criteria that organizations must interpret and implement based on their unique operations. (only security is mandatory)
The goal is to build customer trust by demonstrating you can securely manage data to protect the interests and privacy of your clients.

The Anatomy of a SOC 2 Report

A SOC 2 report is issued after a rigorous audit by a certified third-party (usually a CPA or an AICPA-accredited firm). The audit evaluates your organization’s controls, policies, and procedures against the SOC 2 criteria. There are two main types of SOC 2 reports:

Type I: Assesses the design of controls at a specific point in time.
Type II: Evaluates the effectiveness of controls over a period (typically 3-12 months).

The Trust Services Criteria: The Heart of SOC 2

SOC 2 compliance is based on five Trust Services Criteria (TSC). These are the pillars that guide your security efforts:

Security (Mandatory for All SOC 2 Reports)

Availability

Processing Integrity

Confidentiality

Privacy

Objective

Protect systems and data from unauthorized access, disclosure, or damage.

Ensure systems are operational and available for use as agreed.

Guarantee that systems process data accurately, completely, and in a timely manner.

Protect confidential information throughout its lifecycle.

Collect, use, retain, and dispose of personal information in accordance with privacy principles.

Examples of Controls

Firewalls, two-factor authentication, security awareness training, and hiring policies for security roles.

Disaster recovery plans, data backups, capacity planning, and environmental risk assessments.

Error detection and correction mechanisms, input/output validation, and defined processing activities.

Data encryption, access controls, retention and destruction policies for confidential data.

Consent management, transparent privacy policies, lawful data collection practices, and data minimization.

Note: Only the Security criterion is mandatory. The others are included based on your services and client requirements.

No Rigid Checklist: The SOC 2 Approach

Unlike certifications like ISO 27001, SOC 2 doesn’t prescribe a fixed set of controls. Instead, it provides “points of focus”-guidelines and examples to help you design controls that fit your business context.

For instance, to fulfill the Logical and Physical Access Controls criterion, one company might implement multi-factor authentication and onboarding processes, while another might focus on physical security at data centers and quarterly access reviews.
The controls you choose must address the intent of the relevant Trust Services Criteria, but how you achieve that is up to you.

Preparing for SOC 2: The Readiness Assessment

Before the official audit, most organizations conduct a SOC 2 readiness assessment, or a “practice run” to identify gaps and weaknesses.

Who conducts it? Typically, an auditor qualified to perform SOC 2 audits.
What is the outcome? A detailed report highlighting areas that need improvement before the formal audit.
What are the benefits? It increases your chances of passing the audit and achieving compliance on the first try.

Why SOC 2 Compliance is Worth the Effort

Builds Customer Trust: Demonstrates your commitment to data security and privacy.
Opens New Markets: Many enterprise clients require SOC 2 reports before signing contracts.
Reduces Risk: Helps identify and mitigate security vulnerabilities before they become incidents.
Competitive Advantage: Sets you apart from competitors who lack robust security credentials.