What is SOC 2 Type 2 Compliance & Why is it Important for Organizations?

Written By: Anthony Reyes
Published: January 4, 2023
Various icons for different industries surrounding the word "compliance"

Security, privacy, and availability are essential components of an IT system. In order to ensure that organizations are operating securely and efficiently, having a compliance system in place is key. SOC 2 Type 2 compliance is an auditing process that assesses these components and provides third party organizations with assurance that the attested entity’s systems are secure; SOC 2 is an auditing framework designed for service organizations. It is primarily intended for companies that host customer data in the cloud, such as a Software-as-a-Service (SaaS), Infrastructure-as-a-Service (IaaS), or Platform-as-a-Service (PaaS) provider. SOC 2 also applies to any organization that processes large amounts of sensitive data, such as payment processors, system integrators, and healthcare providers.

What is SOC 2 Type 2 Compliance?

SOC 2 Type 2 compliance is a service organization control audit conducted by the American Institute of Certified Public Accountants (AICPA) or regulated internationally by the International Audits and Standards Board (IAASB) and performed by the International Federation of Accountants (IFAC). It evaluates the security, privacy, availability, processing integrity, Confidentiality and/or Privacy of a company’s IT systems. The audit requires businesses to demonstrate their commitment to data protection by providing evidence that they have secure systems in place to protect customer information. The goal of the audit is to provide customers with assurance that their data will be protected at all times. In the United States SOC 2 Type 2 is rapidly becoming a required compliance standard for many high profile and high value clients.

Benefits of Obtaining SOC 2 Type2 Compliance

Obtaining SOC2 Type 2 attestation can be a confusing and expensive process but it should be viewed as an investment as the benefits can far outweigh the costs.

Improved Security

Having an audit conducted on your IT systems can help improve your overall security posture by identifying vulnerabilities and areas for improvement. This will help ensure that your data remains safe from malicious actors or accidental breaches. Additionally, this improved cybersecurity and data security posture can help protect you from costly fines or penalties associated with data breaches or other security incidents.

Increased Trust

Obtaining SOC2 type 2 certification demonstrates to customers that your organization takes its commitment to data protection seriously and has implemented robust processes for managing customer information securely. This helps build trust with customers and encourages them to do business with your organization over competitors who may not have obtained similar certifications. SOC 2 certification can make the difference when selecting vendors.

Improved Efficiency

By taking steps towards becoming compliant with SOC2 type2 standards, organizations can benefit from increased operational efficiency as well as peace of mind knowing they are meeting industry best practices for protecting customer data. Additionally, obtaining this certification can open up opportunities for doing business with larger companies who require third-party verification of their suppliers’ security practices before entering into contracts with them. It is often a contractual requirement for larger enterprises and can be mandatory to even be considered for government contracts.

Faster Sales Cycles

By providing prospective customers with an independent assessment of your organization’s security practices, you may be able to shorten sales cycles and close new deals more quickly.

Improved Communication Between Business Stakeholders

Going through the process of achieving SOC 2 Type 2 compliance can help foster better communication between business stakeholders as issues are identified and addressed during evaluation

Lower Cyber Insurance Premiums

With an SOC 2 Type 2 report, businesses can save up to 25% on their cyber insurance premiums. This is because an SOC 2 report provides independent assurance that your organization has implemented adequate security controls and are following best practices when it comes to protecting sensitive data. A compliant organization is seen as a lower risk and insurers are more likely to provide competitive premiums. Partnering with an MSSP like Ikigai One can provide additional savings- if you want to save money on your cyber insurance you should read our article on How An MSSP Like Ikigai One Can Save Your Business Money on Cyber Insurance including Ransomware Insurance.

Conclusion

The importance of implementing a comprehensive compliance program cannot be understated in the current digital landscape; it’s essential for organizations looking to remain competitive in 2023 and beyond. Achieving SOC2 Type 2 certification demonstrates a commitment to ensuring customer data remains secure and helps build consumer trust in your brand which can result in more business opportunities down the line. With the right plan in place and the right resources enlisted, achieving compliance should be within reach of any organization willing to put in the work required — making it well worth considering if you’re looking for ways to differentiate yourself from the competition while also boosting operational efficiency across all aspects of your IT operations at once! If your organization requires guidance and assistance creating an enterprise level compliance program Ikigai One has compliance experts in Maryland, New Jersey, Texas, Virginia, and Washington DC ready to help your business start its journey of compliance.

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