What is SOC 2 and why is it important?

What is SOC 2 and why is it important?

A security standard to prove companies deal with customers' data securely.


SOC 2 is a way to show that a company keeps data safe and secure. It stands for Service Organization Control 2. SOC 2 was created by the American Institute of CPAs.

These days, more and more companies work with other companies' data. They need to prove they handle that data properly. That's where SOC 2 comes in. It allows companies to be checked by an independent auditor who ensures the right security practices are in place.

The Five SOC 2 Principles

SOC 2 has five main principles that companies must follow. All companies must meet the security principle. The other four are optional, depending on the services the company provides.

1. Security

This principle ensures the company has proper security controls, such as secure passwords, firewalls, data encryption, etc. The goal is to protect against unauthorized access, misuse, or data leaks.

2. Availability

The availability principle makes sure systems are ready to use when needed. This means having backup sites, plans for recovering from disasters, and monitoring to avoid outages.

3. Processing Integrity

This principle focuses on ensuring data is processed completely, correctly, on time, and only by those who are supposed to. It involves checking data when entered, keeping an eye on processes, and ensuring data is consistent across different systems.

4. Confidentiality

The confidentiality principle keeps private information safe. It ensures that only approved people and processes can access this data. Methods to protect data include limiting access, encrypting, and hiding parts of the data.

5. Privacy

For the privacy principle, we must handle personal private data correctly. This means collecting, using, keeping, sharing, and getting rid of it in ways that follow all privacy laws and rules.

Example where another principle is required

Imagine a company named DataFlow that offers real-time services for processing and analyzing data. DataFlow's clients depend on it to quickly handle, analyze, and provide insights from huge amounts of data. This information is crucial for the client's businesses and decision-making.

For DataFlow, keeping their services up and running is critical. If their systems fail or are unavailable, it could seriously affect their clients' businesses, causing them to lose money, miss out on opportunities, or harm their reputation.

This means DataFlow needs to follow the principle of "availability". They must show they have plans in place to keep their services highly available and reduce any downtime.

This includes having strategies for how quickly they can recover from a failure (RTO) and how much data they can afford to lose (RPO).

Types of SOC 2 Reports

There are two types of SOC 2 reports that auditors can provide:

Type 1 - This report checks if the company's systems and security controls are well-designed at a point in time.

Type 2 - This report looks at how well the security controls worked over time, typically a year.

Most companies get a Type 2 report to show they're fully compliant.

Benefits of Being SOC 2 Compliant

There are many benefits for companies that achieve SOC 2 certification:

  • Finds ways to make security better.

  • Fulfills customer needs for security checks.

  • Makes customers trust that their data is safe.

  • Shows the company is serious about protecting data.

  • Gives an edge over competitors, especially for cloud services.

Who Needs SOC 2?

Any service provider that stores, processes or transmits customer data should consider SOC 2 certification.

This includes:

  • Payroll processors

  • Email marketing services

  • Managed service providers

  • Cloud providers (SaaS, PaaS, IaaS)

  • Data centers and colocation services