SOC 2 for Startups – A Complete Guide

This SOC 2 guide helps you understand the significance of SOC 2 Compliance for your Startup. It also explains the process for getting a SOC 2 Report. SOC 2 for Startups is no more a nice to have but a necessity amidst the growing Data Security concerns. Data Breaches and declining Digital Trust are major issues for companies across the globe. For tech Startups and SaaS companies, preventing Data Breaches is a much more serious and fundamental concern. Occupying the lower rung has its disadvantages and making up for additional costs by charging more is not an option. That’s where SOC 2 for startups becomes crucial.

What is SOC 2 Compliance?

SOC 2 Compliance is a term used from the perspective of software vendors, tech companies, SaaS Startups and their customers. If an organization complies with the SOC 2 requirements, it is believed to observe high standards of information security. Therefore, it is safe to do business with the complying organization.

In this sense, it’s a desired status that shows greater trust and higher confidence of prospective enterprise-level clients in the scenario of B2B dealings. SOC 2 compliance can also come as a customer request before signing a business contract. However, such a request is not feasible since SOC 2 reporting can take months.

To achieve an SOC 2 Compliant status, Startups need to undergo an auditing process, resulting in an attestation report. The SOC 2 report evaluates the organization’s own claims regarding its quality of security controls.

Understanding the SOC 2 Framework

In order to attain SOC 2 for a startup, you will need a thorough understanding of the framework before beginning the SOC 2 process.

Trust Service Categories (TSCs) are the main component of SOC 2 framework and sit at the top of the hierarchy. You will need to define, set up, and implement Information Security Controls depending on the TSCs you choose.

AICPA outlines its approach for companies to begin the SOC 2 process through a few points. These points help companies implement controls based on TSCs. Information Security Information Security is the central concern of SOC 2. It relates to protecting the data of clients and customers from unauthorized access and use.

Information Security: It is the central concern of SOC 2. It relates to protecting the data of clients and customers from unauthorized access and use.

Secure Logical and Physical Access: It is about restricting access to data, devices, and networks. They help in identifying authorized personnel to manage access while also laying out the roles, responsibilities, and privileges.

Continuous System Operations: relates to the strength and efficiency of the infrastructure to detect and tackle deviations and disruptions in operations. It also focuses on the time required for mitigating the process deviations to avoid information security breaches.

Change Management: It refers to the secure handling of infrastructure, software, processes, or data after the updates. Preventing unauthorized changes during the updates is a central concern here.

Risk Mitigation: It is meant to encourage the identification, tracking, and monitoring of risks to businesses and services. These risks may relate to information security, location, or growth.

What is SOC 2 for Startups?

Service Organization Controls 2 or SOC 2 is an all-encompassing compliance, auditing, and reporting framework governed by the American Institute of Certified Public Accountants (AICPA). The responsibility of updating and maintaining SOC 2 lies with the Certified Public Accountants (CPAs).

Process for SOC 2 for Startups

Step 1: Assembling the SOC 2 Team and Starting a Culture- The first step towards compliance involves assigning personnel the responsibility of sailing through the process. Your SOC 2 team should include:

A Technical Lead to communicate with the auditor. This person will act as a bridge between the SOC 2 team and the auditor. A CTO or a VP of Engineering can be ideal for this role.

A Business Process Lead to managing the compliance and auditing tasks. This person will define the workflow, delegate responsibilities, and establish deadlines. A COO or HR Manager is ideal for this role.

An Information Security Lead, who will be responsible for Security Process Documentation. You may appoint a Director of Security for this purpose or assign this role to a Senior Engineer.

Step 2: Setting up the Information Security Architecture- The InfoSec architecture will comprise systems, policies, and controls, beside the SOC 2 team. You may need to designate a person in each team to ensure adherence to data security rules. Here’s a list of ‘Policies’ that will help you set up an InfoSec System for the categories and controls of your SOC 2 report.

1-Data Classification and Handling

2-Risk Management

3-Business Continuity and Disaster Recovery

4-SDLC Policies

5-Incident Response

6-Vendor Management

Step 3: Implementing SOC 2 Requirements - Test the effectiveness of your data security policies, methods, and procedures by putting them into action. Do a gap analysis first. In the selection of Categories and Controls you have chosen, look for gaps. After deciding on SOC 2's ultimate scope, confirm that the necessary policies are in place. Assign someone within the company to examine the policies. updates the rules and regulations. Don't be afraid to hire an outside reviewer! You can upgrade the security control design within your organisation once the gaps have been filled. To comply with the data security regulations, you might need to make a few minor alterations to the way your organisation operates. It is frequently necessary to upgrade hardware, software, and networks to implement SOC 2 requirements.

Step 4: Evidence Collection and Documentation- Collect evidence showing that all the security controls within the organization are working as intended. The collected evidence has to be documented.

Some essential documentation includes:

Management Assertions explain how the startup’s system fulfills the service commitments and meets the TSCs selected for the audit.

System Descriptions show the components of the infrastructure that fall in the scope of the SOC 2 audit. Flowcharts and diagrams make up the Systems Descriptions.

Control Matrix provides the details of the Controls, Criteria, and Categories.

Step 5: Readiness Assessment and Remediation- Readiness Assessment is a rehearsal of the actual auditing performed by internal or external auditors. It aims to point out the gaps in security controls before the final audit. You may choose to create a report from the mock audit, or simply concentrate on finding the deficiencies and remedial actions.

Step 6: Preparing for final SOC 2 Audit- Choose an auditing firm or a certified auditor to conduct the compliance audit for your company. Keep all the documentation ready for the auditor. Prepare your staff for the interviews that will include questions regarding business operations, security controls, and SLAs. After receiving the Attestation Report, prepare for continuous monitoring and attaining the next SOC 2 report.

Following these six steps, you will be able to sail through your first SOC 2 process.

Source: https://www.agicent.com/blog/soc2-for-startups-guide/