In a digital world where we often witness high-profile attacks, and incidents of a data breach, considering the implementation of effective security controls, policies and framework is essential. Securing sensitive data is paramount as failure to do so would expose the cloud user and customers to high-level cybersecurity threats and irrevocable financial/reputation losses. While we do believe that 100% of security can never be achieved in reality, but there are regulatory standards, frameworks, and strategies that set a benchmark of security that can minimize risks. Implementing standards guidelines and policies will not just secure business-critical data, but also ensure compliance with industry standards. SOC2 Compliance is one such standard that greatly contributes to securing the information and IT Infrastructure of your organization.
Having said that, today’s article is about SOC2 Compliance and how Cloud-based Application Service (SAAS) Providers like you can leverage on SOC2 Audits for securing information and achieving Compliance. So, let us first understand what SOC2 Compliance is and then move on to learning its significance in your Cloud Industry.
What is SOC2 Compliance?
SOC 2, which stands for Service Organization Control 2, is an auditing procedure that deals with a service organization’s controls in protecting the privacy of data. By service organization, we mean any organization that stores, processes or transmits client data. In context to the Cloud Industry, service organization includes SaaS companies and any company like you that uses the cloud to process or store your customers’ information. Developed by the AICPA, SOC 2 is an audit standard specifically designed for your organization that stores your customer data in your cloud Infrastructure. It is a management and technical audit that requires you to establish and follow strict information security policies and procedures that are established based on the 5 Trust Service Criteria namelySecurity, Availability, Processing Integrity, Confidentiality, and Privacy of customer data. SOC 2 reports ensure that information security measures are in place and in line with your industry requirements. Since most companies use Cloud to store customer data, SOC 2 compliance has become a necessity for organizations like you that provide Cloud-based Services.
SOC2 Compliance and Cloud
SOC 2 is a regulatory framework that is highly beneficial for Managed Service Providers like you. Prior to 2014 organizations were only required to comply with SOC1 Audit. However, today with the increasing use of cloud technology, it is a business mandate for every organization storing customer data on the cloud to comply with SOC2 Standards. There is an increasing demand for compliance reporting over the management and security of sensitive data which is why SOC2 Audit is now essential for all managed service providers. It is applicable for a wide range of applications, especially for cloud services providers like you.
The security and compliance frameworks are aligned with the evolving Cloud Technology which makes it a standard necessary to comply with. Moreover, Organizations that rely on your services to store, and process critical data will certainly require you to secure your cloud environment and be compliant with industry standards. So, to satisfy regulators’ and other stakeholders’ demands for the security of internal controls, SOC2 Audits should be conducted annually. It is a framework that is built on the AICPA SOC2 Trust Services Criteria for service security, availability, confidentiality, processing integrity, and privacy. Implementing these SOC2 controls can help you build a foundation for a robust Information Systems security program in your organization.
Why is SOC2 Compliance Important for Cloud Service Providers?
SOC 2 Compliance is now more of a necessity for you than a mandate by regulatory bodies. It is an audit report that most of your customers expect from you.It sets the new standard for you to handle your customers’ data. Although it is a complex process to achieve compliance, SOC 2 compliance is significant and worth the investment to protect sensitive data. Here are some reasons listed that suggest the significance of SOC2 Compliance in your Industry.
- SOC2 helps improves security for modern cloud environments and reduces instances of fraud.
- The audit helps evaluate and identify compliance violations and security vulnerabilities in your systems and network.
- The SOC2 Standard serves as a benchmark for your organizations to set a foundation of good security controls.
- Compliance to SOC2 proactively mitigate risk and reduce your attack surface.
- SOC2 requirements ensure regulation of activities in context to collection processing, transition, storing, organizing, maintaining, and disposal of your users’ data.
- Implementing necessary controls and backups prevent stalling or losing information your enterprise customer stored on your cloud.
- Compliance with SOC2demonstrates that your organization’s controls are in place and effectively protecting your customers’ data.
- The SOC2 Reporthelps prove to your customers that you take security seriously.
The beauty of SOC 2 is that those companies that engage with SaaS vendors like you, it provides evidence and assurance that you are proactively working on improving the security posture of your organization. Further, it also demonstrates that you value the privacy of customer data, and hence you are making an effort to secure data.
How can Cloud Service Providers leverage SOC2 for securing their Cloud Services and achieve Compliance?
SOC2 Attestation provides evidence to your partners and customersof your organization having in place all necessary controls based on AICPA SOC2 TSC (security, availability, confidentiality, processing integrity, and privacy) across a variety of systems on a broad level. Here is how Cloud Service Providers like you can leverage SOC2 TSC for securing critical information and achieving compliance.
The security principle refers to effectivelyprotecting systems, networks, and business-critical assets against unauthorized access. Implementing necessary access controls help prevent system/network hacks, data theft, misuse of information, and alteration or disclosure of information. Using relevant security tools like network and web application firewalls, two-factor authentication and intrusiondetection prevent chances of a security breach. It typically prevents unauthorized access, unauthorized disclosure of information, and damage that could potentially compromise the availability, integrity, confidentiality, and privacy of information and affect your customer’s ability to meet its objectives.
The availability principle refers to the accessibility of information or services as mentionedin service level agreement (SLA). The principle includesaddressing security issues related to information that may affect its availability. The principle involves monitoring network performance and availability, checking on issues of a site failure, and security incident handling. Implementation of principle involves assuring availability of systems, networks, and information for operation and use, to meet your customer’s operational and business objective. The principle would typically involve having in place data backups, business continuity plans, SLAs, and disaster recovery planning, ensuring that systems, networks, and data are available as and when they are needed.
This principle is mainly designed to address issues in the context to whether or not systems/networksdeliver the right data at the right time. The process typically involves monitoring of data processing, along with quality assurance procedures that ensure process integrity. The principle requires evaluation of systems/networks to ensure complete, valid, accurate, timely, and authorized data processing to meet your customer’s objective.
As per the principle of confidentiality, organizations are expected to secure the access and disclosure of data that is considered confidential for business and restricted to only a group or set of people. Confidential data could be anything including business plans, intellectual property, internal price lists, customer data, financial information, and other sensitive business data. So, the focus here would be the encrypting of data for protecting confidentiality during transmission. While network and application firewalls, along with access controls, are required to safeguard the information that is processed or stored on Cloud, Encryption too is essential as per the AICPA SOC2 standard requirement.
The privacy principle addresses how personal data stored and transmitted on your Cloud are secured from unauthorized disclosure. In conformity with your organization’s privacy norms and criteria outlined in the AICPA’s generally accepted privacy principles (GAPP), expects your organization to secure personal data.Personally identifiable information (PII) refers to details such as name, sexuality, age, address, social security number of an individual.Classified as sensitive data, information like this stored or transmitted or processed in your Cloud requires an extra level of protection. Hence, abiding by the set principles and Compliance standards, your organization is expected to implement or have in place security controls that protect PII from unauthorized access.
Implementing the AICPA SOC 2 set security controls,you can effectively protect your Cloud Infrastructure. The solid security framework not only helps secure network and sensitive data but also helps you in achieving compliance. Having said that, we personally suggest you leverage SOC2 Compliance regardless of your stage in the cloud adoption lifecycle. As Cloud Service Providers, you are expected to demonstrate to your stakeholders that you have put in all your efforts to secure data and ensure compliance with industry standards. Without implementing the AICPA SOC2 outlined security controls,it will be difficult for your organization to achieve compliance and secure data against cybersecurity threats.
Narendra Sahoo (PCI QSA, PCI QPA, CISSP, CISA, and CRISC) is the Founder and Director of VISTA InfoSec, a global Information Security Consulting firm, based in the US, Singapore & India. Mr. Sahoo holds more than 25 years of experience in the IT Industry, with expertise in Information Risk Consulting, Assessment, & Compliance services. VISTA InfoSec specializes in Information Security audit, consulting and certification services which include GDPR, HIPAA, CCPA, NESA, MAS-TRM, PCI DSS Compliance & Audit, PCI PIN, SOC2, PDPA, PDPB to name a few.