Understanding SOC2 Type II and Why It Matters

I wanted to provide a high-level overview of SOC2 Type II, a standard I've had some familiarity with over the last few years but I'm certainly no expert so please feel free to add your thoughts in the comments.

As companies expand their digital presence and collect more customer data, ensuring security and privacy has become paramount. This is where SOC2 Type II can help. SOC2 Type II is a procedural standard used to audit against and can provide an attestation that verifies a service organisation’s security, availability, processing integrity, confidentiality, and privacy controls.

Receiving a SOC2 Type II attestation can demonstrate to customers that a company takes security and compliance seriously. But what exactly does it entail, and what are the benefits?

What is SOC2 Type II?

SOC2 stands for System and Organisation Controls 2, a compliance standard developed by the American Institute of CPAs (AICPA). There are two types of SOC2 certifications:

SOC2 Type I - Validates that a service organisation has necessary policies and procedures to meet the SOC2 standards around security, availability, processing integrity, confidentiality, and privacy.

SOC2 Type II - Goes a step further to ensure the organisation’s controls around these Trust Services Principles have operated effectively over an extended period.

The SOC2 Type II audit is an in-depth, independent evaluation of a service company’s actual internal controls usually over 12 months.

An accredited external auditor performs tests to verify that the company’s systems and processes sufficiently protect customer data per their contractual promises.

Benefits of SOC2 Type II

Earning a SOC2 Type II certification assures potential and existing customers that your organisation:

• Takes security and compliance seriously, going beyond policy to implementation
• Has robust controls and safeguards in place to protect customer data
• Will be transparent about your operations and risk management procedures
• Can be trusted with sensitive customer information
• Has minimised compliance and operational risk related to data security and privacy

Additionally, achieving this standard shows that your systems and networks have stood up to prolonged independent scrutiny. Maintaining SOC2 compliance keeps your cybersecurity policies and system configurations updated with current industry best practices.

Having detailed independent testing and validation for an entire year reduces the likelihood of any holes or gaps in your controls that could lead to breaches or outages down the road.

Many organisations will only engage vendors that can demonstrate stringent security practices. SOC2 Type II certification can open new business opportunities with higher assurance requirements. It also builds a positive brand reputation as clients increasingly demand enhanced data protection.

On the customer side, partnering with SOC2 Type II compliant vendors can help reduce your supply chain cyber risk, vendor management burden, and chance of a breach through a third-party weak link.

Achieving this standard signals that your organisation securely manages confidential data to the highest industry standards over the long term. In a climate where data privacy regulations and penalties are expanding, that badge of trust and verification is proving more pivotal than ever.

Navigating the SOC2 Type II Audit Process

While attaining SOC2 compliance brings significant advantages, undergoing the full Type II audit is not for the faint of heart. It requires substantial effort and executive buy-in across multiple departments.

What can organisations expect during the 12-month SOC2 Type II review?

Scoping and Planning

First, leadership must define the scope - which systems, applications, data centres, processes, and policies will be included. Omitted elements cannot claim SOC2 compliance. With scopes set, auditors then plan their approach based on risk and prioritisation.

Due Diligence of Controls

Core SOC2 control areas include environmental safeguards like generator backups and fire suppression, logical access, user provisioning/de-provisioning, multi-factor authentication, encryption, storage redundancy, data disposal procedures, and change management. Auditors dive deep into specifics through interviews, observations, documentation reviews and sampling.

Ongoing Testing

During the year, auditors will verify that all defined security controls and procedures work as intended through periodic observation and examination. Examples include surprise inspections of data centres, monitoring internal platform activity for unusual access, sampling terminated employee accounts to confirm revocation and more. Providing the evidence can be quite time-consuming often requiring many hundreds of pieces of evidence.

Issue Remediation

When the auditors inevitably find policy gaps or controls not operating effectively enough, your team must bridge those shortcomings decisively. Quick remediation turnaround is vital to staying on track for final certification.

Final Verification

As the 12-month mark approaches, independent testing will intensify before auditors finalise their reports and findings. This will determine if your organisation merits official SOC2 Type II designation.

Achieving SOC2 compliance at any level is significant, particularly at the Type II level. It leaves no stone unturned in its rigorous evaluation. It could soon become an essential standard for organisations that rely upon customer trust and handle sensitive data.

Going Beyond SOC2 Type II

Earning SOC2 Type II status confirms that an organisation has thoroughly vetted security policies, procedures, and controls. But in today’s rapidly evolving cyber risk landscape, truly robust data and privacy programs cannot remain stagnant.

To stay ahead of threats and reassure customers, companies should view SOC2 as a baseline to keep innovating stronger protections over time.

What should you do after achieving the SOC2 high watermark?

Frequently Review and Refresh

While SOC2 Type II means your controls held up for 12 months, that says little about their sustainability moving forward. Set calendar reminders to revisit policies, conduct audits, update systems, and narrow any weak points found. Build this review rhythm into the company culture.

Adopt Emerging Technologies

SOC2 testing methods often rely upon sampling and observation. Machine learning algorithms that analyze system logs and user behaviour can provide far greater visibility between auditor visits. Consider how AI might bolster and augment your controls.

Conduct Ongoing Pen-Testing

Even with SOC2 Type II certification, the most dangerous vulnerabilities likely remain undiscovered. Schedule recurring simulated cyber-attacks to probe for soft spots proactively instead of waiting passively for the auditors’ next cycle.

Align with Related Frameworks

Control standards like ISO 27001 and NIST CSF provide complementary guidance on infosec governance, risk assessment and mitigation. Blend these frameworks for defense-in-depth.

Achieve Industry Cloud Compliance

As cloud adoption accelerates, ensure any cloud vendors also carry advanced attestations like FedRAMP, HIPAA compliance, PCI DSS Level 1 and SOC reports themselves.

Cyber Resilience Planning

If the incident response is not covered within scope, develop and test cyber crisis scenarios for outages, data theft and destructive attacks beyond daily risks. SOC2 Type II confirms security foundations - resilience prepares for the unprecedented.

To truly future-proof trust and transparency with customers, consider going above and beyond by pairing SOC2 with other standards for certification.

SOC2 + CSA STAR Certification

The Cloud Security Alliance STAR certification adds rigorous criteria around cloud infrastructure and service architecture. Combined SOC2 + STAR attestations provide 360 views into security and operations.

SOC2 + ISO Certificates

ISO 27001 and other ISO standards evaluate additional facets like business continuity planning, disaster recovery and aspects beyond IT. Joint ISO + SOC2 certifications showcase end-to-end organisational resilience.

SOC2 Extension Assessments

Standard SOC2 criteria centres heavily around cyber risks and the SOC2 Trust Principles. Develop supplemental assessments customised to your unique industry threats; a healthcare provider might address medical device security, for example.

Legal Attestations

Maintain up-to-date third-party legal opinions validating privacy policy and data handling alignment with evolving international regulations like GDPR, CCPA and upcoming federal laws.

While SOC2 Type II compliance brings security advantages, consider adding additional trust seals, legal validations and innovative auditing for customers who demand water-tight assurances and corporate responsibility around their data.

As threats, technologies and global data regulations advance, merely maintaining the status quo could gradually erode client confidence and social license over the long term.

Instead, view SOC2 as a launch pad to build upon with value-added certifications, forward-leaning cyber resilience practices and dedicated legal interpretations that stay ahead of the curve.

Final Thoughts

Attaining a SOC2 Type II attestation demonstrates an extensive, prolonged commitment to security and compliance. It signals potential customers that your organisation manages data seriously and can be trusted to steward sensitive information and demonstrates consistency of security and privacy processes and controls, something most other certifications and standards do not do. This in itself should be celebrated.

However, like other certifications and standards, in an ever-evolving era of cyber threats and regulations, SOC2 should be viewed as a step on your journey rather than an endpoint. To reassure customers and stand out from competitors, companies can build upon their SOC2 compliance as stated above.

Forward-thinking organisations will come to expect these extra validations before partnering with vendors.

Top cyber performers will augment even robust controls like SOC2 Type II with legal opinions evaluating evolving privacy regulations, demonstrations of resilience practices and additional auditing tailored to sector-specific risks.

By taking this beyond-compliance approach, companies can evolve SOC2 from a static milestone into a launchpad that constantly adapts cementing customer trust and leadership reputation and demonstrating that yes indeed, our organisation does take our security and yours seriously.