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Why European Entities Are Implementing SOC 2
- Published
- Aug 14, 2024
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Why European Entities Are Implementing SOC 2
For years, the gold standard for data security compliance in the United States has been SOC 2, with the ISO 27000 series dominating Europe. However, in recent years, there has been growing demand for SOC 2 throughout Europe. Some might find themselves asking: “What is SOC 2? How can you benefit from SOC 2? When is the right time to start your SOC 2 journey?
What Is SOC 2 Compliance?
Systems and Organization Controls 2 (SOC 2) is a voluntary compliance examination created by the American Institute of Certified Public Accounts (AICPA). The examination's purpose is to increase the measure of assurance based on data management practices under the subsets of security, availability, confidentiality, processing integrity, and privacy.
SOC 2 focuses on policies, procedures, and internal controls to safeguard and effectively manage customer data. Additionally, SOC 2 allows organizations to decrease the time spent responding to burdensome customer security questionnaires. A quality SOC 2 report will often be accepted in lieu of a completed security questionnaire.
SOC 2 vs ISO 27001
SOC 2 and ISO 27001 share a common focus on data security, but the similarities end there. Here is a quick synopsis of the key differences:
- Framework: ISO 27001 compliance is measured using a combination of conceptual elements called clauses and prescriptive control requirements, known as Annex controls (so called because the controls are presented in Annex A of the ISO 27001 document). SOC 2 is measured using a set of conceptual requirements called Trust Service Criteria. An organization must then implement a series of tailored controls, unique to that individual organization, to achieve the Trust Services Criteria. As a result, ISO controls are more standardized between organizations whereas SOC 2 controls vary between organizations.
- Audit methodology: An ISO 27001 audit program consists of a certification audit (high effort) followed by two consecutive years of surveillance audits (low effort). SOC 2 generally starts with a point-in-time audit, known as a Type 1 (low effort), followed each year thereafter by a period-of-time audit (high effort) known as a Type 2.
- Deliverable: At the culmination of an ISO 27001 audit, the examiner will issue a certificate. This one-page document is essentially an indication of a “pass” grade on the examination. It doesn’t provide any detail about audit scope, test procedures, findings, etc. At the end of a SOC 2 engagement, the auditor issues a reporting package that includes the auditor’s report with an opinion over the design and operation of the controls, information about audit scope, a list of all controls included in the system, information about any significant security incidents, information about how and when vendors are used, a description of test procedures performed by the auditor and the results of those procedures, management’s responses to noted findings, etc.
Why Are European Organizations Implementing SOC 2?
Given the high stature of SOC 2 within the U.S., many European organizations are undergoing SOC 2 to establish credibility when entering the U.S. market. This is similar to U.S. entities leveraging GDPR compliance to enter European markets. Obtaining SOC 2 compliance is an indication of your organization’s data management maturity and may be used as a competitive advantage over similar organizations operating in the same industry.
Given that SOC 2 is a voluntary compliance framework, U.S. organizations may look favorably upon foreign entities possessing a SOC 2 report, because it demonstrates the priority placed on sound data management practices. In short, SOC 2 may further expand your organization’s opportunities when entering the U.S. market.
When Should You Begin Your SOC 2 Journey?
The answer is now. Many organizations start their SOC 2 journey as a requirement from existing or potential customers. However, since it often takes months or years to achieve SOC 2 Type 2 compliance standards, organizations should preemptively begin the process rather than reacting to a customer requirement or, worse, losing a potentially lucrative contract with an existing or prospective customer.
Over the years, several U.S. entities have assisted European organizations successfully adopt a SOC 2 compliance program, from audit readiness assessments all the way through recurring SOC 2 Type 2 examinations. Highly skilled U.S. business advisors and security assessors have worked with a diverse European client base, ranging from startup organizations to large multi-billion-dollar corporations, to help bridge the gap between the ISO 27000 series and the SOC 2 requirements. Together, organizations no matter the size can protect their clients’ sensitive information and increase credibility across nations all while meeting goals and objectives.
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