business Data Breaches on the Rise: Why SOC Reports Are Essential for Protecting Sensitive Data September 03, 2024 Data breaches continue to be on the rise in 2024, making it more important than ever to make sure your sensitive data is protected. Does your service provider have a SOC report in place? If not, they should! Read about the importance of SOC reports here. Did you know that in 2023 there were over 3,000 reported data breaches in the U.S.? This is up 78% from 2022 and 72% from 2021. In light of these glaring statistics, how can you ensure that your sensitive data is protected? Making sure your providers have SOC reports is a crucial element. Let’s explore. SOC Reports—important background information In simple terms, a SOC report is a document that shows how well a company handles and protects sensitive information. Through an independent audit, an auditor will analyze company data to see if they follow strict rules to keep client data safe and private. Businesses will use SOC reports to decide if the provider can be trusted with their information. Read more about SOC audits here: KLR Blog: What is a SOC Audit? How do SOC reports indicate a commitment to data protection? During the audit, auditors take a detailed look at a company’s processes and systems to make sure they meet specific standards for data protection, security and risk management. These standards are known as the Trust Services Criteria (“TSC”) and encompass controls in the areas of Security, Availability, Processing Integrity, Confidentiality and Privacy. As part of this, the auditors will look at whether (including but not limited to) a provider is using the above control families as a point of reference for: Data handling and classification: Data classification is the process of organizing data by relevant categories so that it can be used and protected more efficiently. Some organizations also need to classify data to comply with regulatory requirements. Well managed data classification programs enable organizations to apply the appropriate level of security to all data, therefore lowering the company’s overall risk. Incident response plan- It is crucial to have an incident, or emergency, response plan in place in the unfortunate event that your information is compromised. These plans handle incidents right after they happen, making sure the breach is stopped before it wreaks more havoc on the business’ system. Responding to a cyber breach needs to be fast, and having an incident response plan in place (that everyone is well-read on) ensures that your organization will have the knowledge and resources to make sense of the situation at hand, activate emergency response measures, and get the business back up and running. Privacy practices- The SOC auditor will also assess privacy practices based upon the TSC Privacy criteria if engaged to do so. This criteria assesses how the provider complies with privacy practices and is similar to privacy laws and regulations such as the General Data Protection Regulation (“GDPR”) and California Consumer Privacy Act (“CCPA”). Security controls- When evaluating security controls, SOC auditors are looking for data encryption, network security (firewalls, intrusion detection systems, etc.) physical security and system monitoring. Benefits of seeking providers with SOC reports A SOC report indicates that a provider prioritizes the above processes and systems to protect data. In addition the report indicates: The provider follows industry best practices to protect sensitive infoAn unbiased assessment of the provider’s security controlsThe provider’s adherence to privacy regulations. As you can see, requesting a SOC report before partnering with a service provider is a critical step to ensure your data is in good hands.
