In a world of increasing data breaches, startups can find the business playing field quite tough. Being a small entity can make it even harder for small organizations to adopt security and protect against data breaches. However, when it comes to startups, we can agree that data breaches are bad for business thereby making it imperative to implement appropriate security measures to reduce the risks associated with data loss and help organizations maintain their competitive advantage.

So, what is SOC 2, and why is SOC 2 compliance important?

Well, Service and Organization Controls (SOC), is one of the most prevalent compliance standards for technology organizations. SOC2 is an auditing standard maintained by American Institute of Certified Public Accountants (AICPA) to test an organization’s internal controls for information security and privacy.

While most businesses pursue SOC 2 compliance when they start seeking funding, others maybe consider a SOC attestation when trying close a business deal. Regardless of the phase you’re at as a startup, it may be helpful to do so now.

SOC 2 compliance demonstrates that an organization maintains a high level of information security and governance. While the attestation includes a high number of technical controls in place at the organization, it goes above and beyond to compel organizations to establish policies and procedures related to other areas such as Human Resources and Risk Management. The criteria for implementing these controls are based on five “trust service principles” established by the AICPA:

• Security
• Availability
• Processing integrity
• Confidentiality; and
• Privacy
  
  
  

Which report is right for my Startup: SOC 2 Type I or Type II?

There are two types SOC 2 reports; Type I and Type II:

Type I SOC 2 report is dated as of a specific date and shows an auditor’s evaluation and approval of your systems and organizations controls at that point in time. This test the design of your organization controls; however, this does not test the operating effectiveness.

Type II SOC 2 report details a period of time, normally 12 months, this report contains a description of an organization systems and test the design and operating effectiveness of internal controls over a period of time.

Attaining a SOC 2 attestation can be daunting, especially for first timers. The rigorous compliance requirement can often be misunderstood by some organizations, especially because its requirements are not a comprehensive list of do’s and don’ts like other security frameworks. However, organisations reap a lot of benefits from obtaining a SOC2 certification.

Why Should Startups Pursue SOC 2 Compliance

Some of the benefits include but are not limited to:

• Marketing Differentiator: Getting a SOC 2 report can differentiate your organization from other companies in the marketplace. This not only shows that you have a level of governance that your competitors do not but also that your customer’s data is safer given the controls your organization has in place.
• Competitive Advantage:  In 2021, theCost of Data Breach Study commissioned by the Ponemon Institute estimated the average total cost of an organizational data breach was $3.86 million. With so much at stake, more organizations are requiring their vendors to be SOC 2 compliant.
• Customer Demand:  Protecting customer data from unauthorized access and theft is a priority for your clients, so without a SOC 2 attestation, you could lose opportunities with potential customers that require this report before you can do business with them.
• Regulatory Compliance: Because several of the SOC 2’s requirements align with other frameworks including ISO 27001 and HIPAA, attaining certification can help your company’s overall compliance efforts.
• Better Services: Organizations learn how to be more secure—and efficient—by undergoing a SOC 2. Organizations can streamline their processes and controls based on your understanding of the cybersecurity risks that your customers face. This will improve your services.

Ready to get started? Insight Assurance can help prepare your organization to complete your first SOC 2 examination. For more information, check out our SOC 2 service line.