What is SOC 2 Type 2 Compliance?

In this article we're diving into SOC compliances. Companies that handle the most important data are the ones that need to stay the most protected. Learn what type of compliance certifications you should look out for when choosing a service provider.

By Carla Rodriguez | Sep. 29, 2023 | 4 min. read

What is SOC Compliance? And What Does it Mean?


SOC (System and Organization Controls) is a type of certification where a service organization has completed a third-party audit that demonstrates it has certain controls in place to protect your most vulnerable, personal, financial, and healthcare data from breaches and attacks.

During a SOC 2 audit the company policies, procedures, and systems are ultra-carefully reviewed to ensure that stakeholders and clients know they take cybersecurity and privacy seriously. SOC 2 reports are relevant for a variety of organizations since they focus on all things IT security.


Who needs an SOC 2 audit?
  • Software companies
  • Financial, Banking and Crypto
  • Healthcare
  • Education or any organization that stores customer data in the cloud.


How Do You Benefit From an SOC 2 Compliance?


  • Providing an SOC 2 negates the need for pesky, time-consuming security questionnaires and helps you get to your bottom line faster. It also eliminates the risk associated with people’s sensitive information being paraded from one department to another.
  • Any company with an SOC 2 compliance saves time during the security review stage since there is stringent security in place to protect all private data. IBM released the following data breach statement: “The global average cost of a data breach in 2023 was USD 4.45 million, a 15 increase over 3 years”
  • A SOC 1 audit is preferred by institutions that handle financial data processing or storage for their clients. It provides a review from a third party that shows they have effective risk management and control frameworks in place. Payroll processing, recordkeepers and investment advisors are examples of departments that complete SOC 1 certifications.

Your claims management provider is the last place you want to fall victim to a cybersecurity breach. Making sure the company you’re working with is mitigating the exposure of your sensitive information is crucial.

There is a reported 73% of organizations encountering leaks of sensitive data and data spillage in the last 12 months. That’s exactly what a SOC 2 system compliance prevents.


What is Evaluated During a SOC 2 audit?


The AICPA-CIMA, a council comprised of the American Institute of Certified Public Accountants and Management Accountants that promotes accounting and finance through their prestigious designations and certifications, evaluates five different trust services categories (TSCs).

  1. Security: The system is protected against unauthorized access. This is a mandatory category.
  2. Availability: The system is available for operation.
  3. Processing Integrity: System processing is complete, accurate and timely.
  4. Confidentiality: Information designated as confidential is protected as agreed.
  5. Privacy: Personal information is managed following generally accepted privacy principles (GAAP).

SOC 2 Type 1 vs SOC Type 2:


Claims management and investigative companies handle everything from the person’s name, home address, weight, eye color, phone number, vehicle tag, and social security number as a bare minimum. We require extensive information on the claimant we are working with to get accurate results.

The SOC 2 Type 1 certification provides a brief overview of the performance of a service organizations systems and controls at a single point in time. This compliance certification is great if you’re short on time and in a pinch. It will prove to clients that your systems are working securely. The only con is you might need to pay for a report twice since it’s not as expansive as a type 2 report and in the long term provides less assurance.

A Type 1 report is a minimum required attestation. Meanwhile, a Type 2 report takes longer, is more detailed, scrupulous and confirms the effectiveness of security controls not just at a specific point in time but over a minimum of 6 months. They also include the auditor’s expert opinion on how the controls are running and the results of tests performed by the auditor – which is not found on Type 1 reports. The goal is for SOC 2 controls to be preventative and corrective measures. It is the most thorough, in-depth security audit a company can attain.

82% of breaches involved data stored in the cloud. Today’s issue is looking for solutions that have controls over hybrid environments and protects data as it moves across different clouds, databases, and apps.

Bottom Line


Because we handle such sensitive information, we require our systems to operate as intended. A comprehensive, result-oriented audit is the best way to show customers we are using the appropriate safeguards when transmitting, storing, maintaining, processing, and disposing of sensitive data.