As a business owner, you are always looking for ways to set yourself apart from the competition. It may be that your exceptional service, incredible products, or perhaps low prices that give you that competitive edge. Just as important as all these things are to the success of your business, so is establishing a deep level of trust with your customers. One good way to establish this trust is to become SOC 2 Compliant.
There are five trust service principles which include:
- Security
- Availability
- Processing integrity
- Confidentiality
- Privacy
SOC 2 Compliance
Becoming SOC 2 Compliant is unique to each business; in order to be best prepared for an external audit by a CPA from the American Institute of Certified Public Accountants, this guide will go into detail explaining each SOC 2 trust service principle.
The only trust service principle required to be SOC 2 compliant is the trust service principle of security. Refer to our article on SOC 2 Compliance Requirements for more information. Nevertheless, depending on the type of business you run, the other trust service principles can establish your professional authority with whatever service you provide.
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What is SOC 2
Service Organizational Control (SOC) reports serve to prove to your clients that you handle customer data properly; that data will be transmitted, stored, maintained, processed, and disposed of according to the SOC guidelines established by the American Institute for CPAs (AICPA). There are two types of reports to consider when choosing to become SOC compliant.
SOC 1
The first report examines the methods and controls used for maintaining one trust service principle.
SOC 2
The second report examines these same methods and controls over an extended period of time.
Which Report do I Choose?
Depending on the needs of your organization, you may just need to show in the audit that the controls you currently have in place are sufficient and you expect to maintain these controls. If your business is a high-profile company, handles large amounts of data, or sensitive data, you may want to consider a SOC 2 report to test the effectiveness of your controls over a longer period of time. Doing so gives you deeper insight into the evolving nature of your controls. By monitoring your data management you can adjust security measures accordingly allowing for greater data protection.
Also Read : SOC 2 TYPE 1 VS. TYPE 2: What’s the Difference?
Five Trust Service Principles
To reiterate, the only required SOC 2 trust service principle for which you must meet the necessary qualifications in order to become SOC 2 compliant is the security trust service principle. If you choose to audit and certify other trust service principles, do so at your discretion according to the needs of your company.
Security
On May 20th, millions of Instagram users, including influencers, celebrities, and brand affiliates fell victim to a data breach exposing personal information. According to TechCrunch reporter Zach Whittaker, “The database, hosted by Amazon Web Services, was left exposed and without a password allowing anyone to look inside…[the database] contained their private contact information, such as the Instagram account owner’s email address and phone number.” Instagram Data Breach
Already on the defense, Facebook now faces another salvo of outraged customers who are concerned about the security of their data. Many are looking to join other social networking apps or websites to avoid having their data exposed. It is a great benefit to guarantee that your client’s data is thoroughly protected by having the necessary security protocols in place.
Good security is two-fold: you must consider both front and back end controls to protect customer data. If you owned a house, you would make sure that you locked both the front and back door.
Download Our SOC 2 Compliance Checklist
Front End
Front end security can be broken down into two separate areas: keeping your client’s data secure and making sure your client can only access data pertinent to them.
Front end security is like the front of your home. The mail carrier can perform certain tasks like dropping off mail or packages much like a client can perform cursory tasks. Neighbors can admire your home’s neat garden, picture-perfect painted shutters, and fun lawn ornaments just like visitors can see your website design and layout. Perhaps they go further and ring your doorbell inquiring how you are and sharing some of their data with you.
You as the homeowner develops a strong relationship with a few of them and they enter your home but are only given access to a few areas. You wouldn’t want just anyone seeing your messy bedroom or office. You set boundaries of where your friends and visitors, can go to make sure that any private information that doesn’t concern them remains that way.
This front end describes how your customer interacts with applications such as transactions, passwords, the content of your website, images, or links. Products, carts, checkouts, and other embedded applications must be secure on the front end.
Naturally, you want to make sure that your customer can only see or interact with what is in their cart. If you fail to properly manage front-end development this may lead to the client accidentally exposing other client’s data or using it for their interests.
Although, a home is hardly protected if you only choose to lock the front door. Working on strong front-end security without protecting the backend would leave your company completely exposed to hackers. This is why developing strong backend security is also crucial.
Back End
The data itself is stored on the server and ultimately accessed through the backend. Data aggregated by an information security center found that nearly 60% of hackers are seeking economic gain by selling private data. Cyber Attacks Statistics The primary method of attacks occur in the backend of data storage; this same data report indicates that 72% of hackers are attempting to access data at this point.
The backend is where all the communication of important data not relevant to your customer happens. This area must be secure and running properly to ensure that the front end is running properly for all your clients. Therefore, a data breach in the backend is disastrous.
The thief, not wanting to raise any suspicions from the neighbors, sneaks around the back of your lovely home assuming he can gain access there. But you’re a smart homeowner who knows to lock and secure all entry points. Developing strong backend security is crucial to protecting the important data contained within the walls of your home.
Due to the ubiquitous nature of the internet, security attacks are bound to happen. What matters most is that you can show to auditors the attacks were mitigated through prompt response and a tightening of security.
Our article on How to Improve Your Cybersecurity will give you a detailed approach to best cybersecurity practices.
Best practice entails that if a breach happens, you must be able to show how you handled the situation and what controls you put in place to prevent against future breaches.
Should you decide to become SOC 2 certified, be sure to focus on this SOC 2 trust service principle and note the following criteria as detailed by the AICPA in the AICPA Trust Services Criteria Report:
- Logical and physical access controls. The criteria relevant to how an entity restricts logical and physical access, provides and removes that access, and prevents unauthorized access
- System operations. The criteria relevant to how an entity manages the operation of the system or systems and detects and mitigates processing deviations, including logical and physical security deviations
- Change management. The criteria relevant to how an entity identifies the need for changes, makes the changes using a controlled change management process, and prevents unauthorized changes from being made
- Risk mitigation. The criteria relevant to how the entity identifies, selects and develops risk mitigation activities arising from potential business disruptions and the use of vendors and business partners
Availability
As a business owner, you determine the types of service you will provide to each client and the necessary performance level needed to meet the needs of the client. According to K.T. Kearney, “Particular aspects of the service – quality, availability, responsibilities – are agreed between the service provider and the service user” Service Level Agreement for Cloud Computing
Guarantee that your client understands exactly what they are getting by using your service, at what level your service operates, and that it meets your objectives as a service provider.
Processing Integrity
Another important SOC 2 trust principle is processing integrity which is an internal quality assurance of your business objectives. For example, this may include safeguards for transactions or maintenance of data controls.
The AICPA says processing integrity refers to when, “system processing is complete, valid, accurate, timely, and authorized to meet the entity’s objectives.” Trust Services and Information Integrity
Let’s say that you sell a product on your website such as custom cuckoo clocks. You source the best clocks from Swiss clockmakers, so your product tends to be more expensive and has longer shipping times. From the time your customer clicks, “place order” to the time it arrives at their door, processing integrity proves to the client that their transaction is complete, valid, accurate, and with detailed time updates.
Inability to accurately process orders could lead to other potential problems such as delays in shipments or quantities of your product. Keeping your Custom Cuckoo Clocks business running requires comprehensive processing integrity.
The trust service principles of security and processing integrity go hand in hand in that by implementing procedures to prevent, detect, or correct system errors is a crucial aspect of processing integrity which in turn would mean fewer security anomalies or attacks.
Confidentiality
You wouldn’t let just anybody into your home. As protector of your house and business, you maintain a strict level of confidentiality in terms of who can access data. And of course, when your neighbor, Bob, tells you that his wife is cheating on him, he expects that only the correct parties will be informed.
Confidentiality is both how data is shared with others and who has access to this data. Procedures such as encrypted messaging, clear system boundaries, or firewalls can all keep data confidential.
The AICPA in their report on trust service principles states, “confidentiality addresses the entity’s ability to protect information designated as confidential from its collection or creation through its final disposition and removal from the entity’s control in accordance with management’s objectives.” AICPA Trust Services Criteria Report
You should periodically check that the client’s data is kept in confidence. Monitoring behavior around sensitive data can prevent this data from being released to wrong parties—both internal and external.
Privacy
In the same AICPA report on trust service principles, they describe privacy as, “personal information is collected, used, retained, disclosed, and disposed to meet the entity’s objectives. Although confidentiality applies to various types of sensitive information, privacy applies only to personal information.
Privacy has long been an important component in establishing trust with clients. It not only marks a limit of the government’s reach into personal matters but also that of you, the business owner and service provider. Privacy allows clients to successfully conduct their own business or maintain information knowing that your service meets the necessary criteria.
The AICPA lays out the necessary criteria to maintain privacy which include:
- Notice and communication of objectives: You inform your clients about updates to privacy including how their data is stored and disposed of.
- Choice and consent: Your clients are given the choice as to how their data is collected, how long it is stored, and when and how that data is destroyed. Open communication with your clients is important in providing freedom of choice.
- Collection: You only collect the data needed to perform the objectives of your company.
- Use, retention, and disposal: You ensure that you limit who gets to use and retain private data. Should the data ever need to be destroyed, you also are clear on who does so and that it is destroyed.
- Access: You provide a way in which your client can access and change their private data as corrections or updates arise.
- Disclosure and notification: Should a breach of private data occurs, you must notify your client and inform them of subsequent procedures to manage the data breach.
- Quality: You keep your client’s data up-to-date and complete.
- Monitoring and enforcement: You make sure that you address any concerns surrounding private data raised by either litigators or clients. You also monitor this data to prevent dangerous security attacks.
Becoming SOC 2 Compliant
Abide by these SOC 2 trust principles to prepare your business for an audit. Remember, you only need to meet the requirements as described in the security section of this article. Any additional trust service principles are supplementary benefits to your company that can improve the level of trust between you and clients. Certain larger clients expect that you will have the necessary certifications in place before conducting business with you.
Also Read: A Detailed SOC 2 Compliance Checklist
Further Information
For more information on trust service principles and the necessary criteria to follow, please refer to the full, extremely detailed (a whopping 342 pages of criteria and terminology) report released by the AICPA which you can find at AICPA Trust Service Criteria Report.
The better solution is to give RSI Security a call or send us an email with your questions and one of our qualified experts will help you implement the best security practices.
