What is SOC 2 Compliance and Why Does It Matter for Your Organization?

There’s no surprise that data is one of the most valuable assets for an organization today. With rising cyberattacks and growing customer expectations, organizations like yours are under pressure to show how they protect sensitive information.  

Many compliance frameworks, such as GDPR, HIPAA, and ISO 27001, already exist. Yet SOC 2 compliance has emerged as a widely recognized standard of trust, especially for technology and service providers. 

This article explains what SOC 2 compliance is, why it is important, and how it benefits your organization. 

Understanding SOC 2 

SOC 2 (System and Organization Controls 2) is a framework created by the American Institute of Certified Public Accountants (AICPA). It is designed to evaluate how organizations manage and safeguard customer information, with a focus on operational security and integrity. 

Unlike prescriptive frameworks, SOC 2 is flexible. You can customize the controls according to your organization’s systems, risks, and industry requirements. This makes SOC 2 relevant for businesses of all sizes, from SaaS providers to financial services organizations. 

The Five Trust Services Criteria 

Every SOC 2 audit measures a company against five guiding principles known as the Trust Services Criteria: 

• Security: To safeguard against unauthorized system or data access (mandatory for all SOC 2 audits). 

• Availability: To ensure systems are dependable and accessible when necessary. 

• Processing Integrity: To make sure that systems process information in a consistent and accurate manner. 

• Confidentiality: To restrict and safeguard sensitive business information. 

• Privacy: To ensure that personal data is collected, used, and shared responsibly. 

These principles form the foundation of SOC 2 and act as important factors in establishing a culture of trust and accountability. 

Types of SOC Reports 

Here are the differences between different types of SOC reports: 

• SOC 1 focuses on financial reporting. 

• SOC 2 addresses data security and operational controls. 

• SOC 3 Provides a high-level summary of SOC 2 results, intended for broad, public use. 

SOC 2 reports can be classified into two types as stated here: 

• Type I: A Type I SOC 2 reviews whether controls are properly designed at a specific point in time. 

• Type II: A Type II SOC 2 report evaluates if those controls operate properly over an extended period (typically 3–12 months). 

Companies in regulated sectors such as banking, healthcare, and financial services require SOC 2 Type II, as this report establishes the sustained reliability of a company’s security controls. 

Why SOC 2 Compliance is Important 

With many compliance frameworks in place, SOC 2 stands out due to the following reasons: 

• Builds customer trust: A study by Drata shows that 87% of customers avoid working with companies they perceive as weak in security. 

• Supports business growth: Secureframe reports that more than 50% of enterprises require a SOC 2 Type II report from vendors before engaging with them. 

• Improves resilience: The SOC 2 compliance process helps highlight security gaps, allowing organizations to strengthen controls. 

• Reduces risk exposure: SOC 2 compliance helps avoid both financial and reputational damage by minimizing data breaches. 

In short, SOC 2 goes beyond being a regulatory exercise. It shows that your organization values trust, security, and credibility as much as business performance. 

SOC 2 and Identity & Access Management 

SOC 2 is closely aligned with Identity and Access Management (IAM). Strong IAM policies directly support SOC 2’s Security and Confidentiality principles, making them a foundation of compliance efforts. 

Steps to Achieve SOC 2 Compliance 

Follow these steps to achieve SOC 2 compliance in your organization in a structured manner: 

1. Define objectives for compliance (customer requirement, market entry, or risk reduction). 

2. Choose if you want Type I or Type II SOC 2 report. 

3. Identify which systems, processes, and data will be included in the audit. 

4. Conduct a readiness or gap assessment to compare current practices against SOC 2 standards. 

5. Implement all necessary policies, controls, and technologies. 

6. Perform a readiness review, then undergo the formal audit. 

7. Maintain compliance through ongoing monitoring and improvement. 

Conclusion 

SOC 2 compliance is more than a certification. It establishes that your organization is committed to security, reliability, and transparency. 

At FourD, we help your organization strengthen its security while also positioning itself for enterprise opportunities. Please reach out to us to learn more about SOC 2 compliance.