SOC 2 Type 2: The Golden Standard
By Carla Rodriguez | Jul. 3, 2024 | 3 min. read
What You Will Find Below:
- What Does A SOC 2 Report?
- The SOC 2 Type 2 Process
- Case study
What Does A SOC 2 Report Mean?
In our industry, we deal with a wealth of sensitive information, including personal identification details, medical records, and financial data. A breach of this information can have devastating consequences like, identity theft, financial loss, and reputational damage. A claims management company with SOC 2 Type 2 compliance demonstrates a high level of commitment to data security.
By adhering to stringent security standards, these companies ensure that all data is protected from unauthorized access, breaches, and other cyber threats. This protection is not just theoretical; the SOC 2 Type 2 report provides concrete evidence that the company’s security measures are effective over time.
- SOC 2 stands for: Systems and Organization Controls 2
- The AICPA designed SOC 2 to establish trust between service providers and their customers.
The SOC 2 Type 2 Process
The process of getting ready and completing this report can cost up to $20,000 or more depending on the size of the company.
1. Evaluate
The first step in the SOC 2 Type 2 journey is to identify the data that will be assessed and make sure all the systems are working correctly. This ensures all weaknesses are identified and deeply analyzed.
2. Implementation of Controls
No company’s safety measures are perfect before a SOC 2 audit – that’s when the organization implements any necessary controls to meet the SOC 2 criteria. This involves developing policies and procedures, training staff, and setting up technical measures such as encryption, firewalls, and access controls.
3. Internal Testing and Remediation
Before the official audit, internal testing acts as a dry run for the actual audit. It helps identify and fix issues ahead of time, reducing the risk of failure during the formal assessment.
4. Engagement with an External Auditor
Once the organization is confident in its controls, an independent auditor conducts the SOC 2 Type 2 audit. The auditor examines the controls over the defined period to ensure they are operating effectively. This involves reviewing documentation, interviewing staff, and testing the controls. It’s a lengthy process that can take up to 3 months to complete.
5. Report Generation and Review
After the audit, the auditor compiles the findings into a SOC 2 Type 2 report. This report details the effectiveness of the controls and identifies any areas for improvement. The organization reviews the report and addresses any issues highlighted by the auditor.
6. Continuous Monitoring and Improvement
SOC 2 Type 2 compliance is not a one-time effort. Organizations must continuously monitor their controls and make improvements as necessary to maintain compliance. This involves regular internal audits, updates to policies and procedures, and ongoing staff training.
Real-World Impact: A Case Study
Let’s look at a real-world example. Imagine Jane, an insurance adjuster, who recently partnered with a SOC 2 Type 2 compliant claims management company. Before this partnership, Jane spent countless hours on security questionnaires and faced constant worries about data breaches.
Jane saw a significant reduction in her workload. The compliance report replaced tedious questionnaires, and the enhanced security measures provided peace of mind. Although this report is not required it is a preferred safety feature for any carrier with claims management and medical management needs that is conscious of cyber security threats.
Now it’s time for us to brag a little, we are proud to share that we’ve successfully maintained our SOC 2 Type II compliance again this year. This significant milestone underscores our unwavering commitment to upholding the highest standards of data security and operational integrity for our clients.