Why You Need to Get a SOC 2 Type 2 Report

The recent prevalence of high-profile cybersecurity attacks have spotlighted just how vulnerable corporate, government, and other organization’s networks are to breaches.

The financial and reputational damage caused by these attacks cannot be underestimated or taken lightly by any organization handling private data. In fact, the “2017 Cost of Data Breach Study” commissioned by the Ponemon Institute estimated the average total cost of an organizational data breach was $3.62 million.

Needless to say, IT managers and other security stakeholders have been scrambling to find ways to lock down network systems from the damage caused by malicious actors―both internal and external.

One way to assure your customers that their data is safe with your company is to obtain a Service Organization Control (SOC) 2 Type 2 report from an independent auditor.

What is a SOC 2 Type 2 Report?

A SOC 2 report essentially verifies that your organization is in compliance with requirements relevant to security, processing integrity, availability, confidentiality, and privacy. It is meant for service organizations that hold, store, or process the private data of their clients.

SOC 2 reports come in two flavors―Type 1 and Type 2. A description of the difference between the two is as follows:

SOC 2 Type 1 Report is a report on a service organization’s system and the suitability of the design of controls. The Type I report looks at a point in time or an “as of” date at the system and how the organization describes the system and controls in place around the system.

SOC 2 Type 2 Report is similar to the Type 1 report, except that the controls are described and evaluated for a minimum of six months to see if they are functioning as described by management.

Start with a Readiness Assessment

Because a SOC 2 Type 2 audit report can be expensive and potentially overwhelming, it’s a good idea to think about performing a readiness assessment to determine whether there are gaps in your organization’s control framework.

A readiness assessment can identify failed controls, which will enable you to prepare a detailed action plan to remediate gaps, gain efficiencies, and potentially reduce audit fees.

Gain a Competitive Advantage

A SOC 2 Type 2 report sends a powerful message to both your competitors and potential customers that you are applying best practices as they pertain to implementation and reporting on control systems.

Because a SOC 2 Type 2 report requires a significant investment in time and capital, you can differentiate your organization from other companies in the marketplace that have not undergone a SOC 2 audit.

By learning how to streamline your processes and controls, your organization can be positioned to offer better services because you better understand the cybersecurity risks faced by your clients.

User entities are much more likely to partner with vendors that can produce a SOC 2 report. Those that cannot are likely to be at a significant competitive disadvantage when trying to find new and maintain current clients.

Less Expensive to Get SOC 2 Than Pay Compliance Failure Fines or Cybersecurity Ransom

The cost of obtaining a SOC 2 audit depends on a number of factors, including:

• What trust service principles do you want included?
• How large is the environment?
• How many applications are ultimately in scope?
• How many employees does your organization have in place?

And because of the time required to complete a SOC 2 Type 2 audit, it typically costs an organization in the tens of thousands of dollars. But, when compared to the fines for PCI non-compliance, for example, which can range from $5,000 to $10,000 per month, a SOC 2 Type 2 audit can be small change.

Similarly, when compared to the $3.62 million average cost of a data breach, the cost of SOC 2 Type 2 compliance is a drop in the bucket and a well-spent investment in your organization’s future.

Conclusion

A SOC 2 Type 2 report contains a lot of sensitive information about an organization’s specific systems and controls and is typically not shared outside the company.

Still, the fact that your organization can produce a SOC 2 Type 2 report indirectly provides customers with the peace of mind that specific security controls are in place and compliance tests have been performed by the auditor.

More importantly, the success or failure of these controls will likely have a direct or indirect impact on the reputation, financial statements, and stability of your organization.