SOC 2: Overview, definition and example
What is SOC 2?
SOC 2 (System and Organization Controls 2) is a set of standards used to measure how well a company handles sensitive data, particularly related to security, availability, processing integrity, confidentiality, and privacy. It is often used by companies that provide cloud-based services, ensuring their customers that their data is being managed securely and in compliance with high standards.
Why is SOC 2 important?
SOC 2 is important because it helps businesses demonstrate their commitment to protecting client data, especially in industries where data security is critical, such as finance and healthcare. Achieving SOC 2 compliance gives customers confidence that their data is secure and managed according to rigorous standards. It also helps companies avoid potential risks and penalties by meeting industry requirements.
Understanding SOC 2 through an example
For example, imagine a software-as-a-service (SaaS) company that offers a platform for managing client data. To ensure its customers that their data is secure, the company undergoes a SOC 2 audit. The audit evaluates the company's security protocols, including how it stores data, protects against unauthorized access, and manages its network infrastructure. If the company passes the audit, it can share the SOC 2 report with customers to demonstrate its security practices.
Another example could be a cloud hosting provider that processes sensitive customer information. If it wants to attract businesses that need to store financial or health-related data, it must comply with SOC 2 to prove its commitment to security and privacy.
Example of a SOC 2 compliance clause
"The Service Provider agrees to maintain SOC 2 compliance for the duration of this agreement and to provide the Client with a copy of the SOC 2 report upon request."
Conclusion
SOC 2 is a key standard for businesses that manage sensitive data, helping them establish trust with their customers by demonstrating a commitment to security and privacy. By obtaining SOC 2 compliance, companies can safeguard data and meet industry requirements, all while protecting themselves from potential risks.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.