SOC 1 vs. SOC 2: Which Report You Need and Why

<p>Many people  scour the internet using the search term “SOC 1 vs. SOC 2.” Broadly speaking,  the differences between these <a  href="https://securily.com/blog/the-basics-of-soc-reports">SOC  Reports</a> are as follows:</p><ul><li><strong>SOC 1 Reports</strong> are designed  for financial statement audits and focus on internal controls related to  financial reporting.</li></ul><ul><li><strong>SOC 2 Reports</strong>  are designed to evaluate a service  organization's controls over non-financial information, such as data  security, privacy, and confidentiality.</li></ul><p>However, it’s likely that if you’re searching “SOC 1 vs. SOC 2,”  you are actually looking for the difference between the _two types_ of SOC 2  Reports (i.e., “<strong>SOC 2 Type 1</strong> vs.  <strong>SOC 2 Type 2</strong>”). Because of this likelihood,  we'll focus primarily on SOC 2 reports in this article, which is the second  entry in <a href="https://securily.com/">Securily's</a>  Knowledge Base Series.</p><h2>SOC 2 Deep Dive</h2><p>SOC 2 reports assess compliance with the five Trust Services  Criteria, namely: security, availability, processing integrity,  confidentiality, and privacy. Every organization must comply with the first  criterion, security, while compliance with the remaining criteria are  dependent on how a business uses and processes data (You can learn more about  choosing an appropriate framework in our partner Vanta's <a  href="https://www.vanta.com/resources/soc-2s-trust-service-criteria">Trust  Services Criteria Guide</a>.)</p><p>There are two types of SOC 2 Reports that an organization may  need: a Type 1 Report and a Type 2 Report. Both types assess how an  organization aligns with the security controls and policies required by SOC  2, but the differences are as follows:</p><ul><li><strong>SOC 2 Type 1 Reports</strong>  measure an organization’s compliance <strong>at a single point in  time</strong>.</li></ul><ul><li><strong>SOC 2 Type 2 Reports</strong>  demonstrate <strong>ongoing compliance</strong> with SOC 2  controls; certification can only be granted after a 6-month observation  period.</li></ul><p><strong>Choosing the right report</strong> will likely  depend on the client (or partner) who has requested a report from your  organization. However, many organizations begin with a Type 1 report and then  enter the observation period for a Type 2 report. Proactive organizations do  not wait for potential business to hinge on the completion of a SOC 2 Report,  because doing so can stall sales cycles and result in lost  business.</p><h2>When should I get SOC 2 certified?</h2><p>In 2023, the average cost of a data breach in United States was  <a  href="https://www.statista.com/statistics/273575/us-average-cost-incurred-by-a-data-breach/">9.48  million dollars</a>, nearly twice the global average. Many  companies—<a  href="https://www.strongdm.com/blog/small-business-cyber-security-statistics#small-business-cybersecurity-overview">especially  SMB's</a>—are unprepared for cybersecurity attacks and find themselves  in reactive positions regarding compliance when security issues inevitably  occur. This lack of preparedness is usually attributed to a lack of resources  or ignorance regarding cybersecurity posture. (For example, as of 2022, <a  href="https://upcity.com/experts/small-business-cybersecurity-survey/">only  50% of SMB's</a> had any formal cybersecurity plan, and some small  businesses erroneously believed they were <a  href="https://digital.com/small-business-cybersecurity-statistics/">"too  small to be a target."</a>) But regardless of whether a company  has 5 employees or 500, the absence of cybersecurity measures not only makes  the company more vulnerable to attack, the would-be attackers can succeed at  a <a  href="https://www.strongdm.com/blog/small-business-cyber-security-statistics#small-business-cybersecurity-overview">much  higher speed and level of efficiency</a>.</p><p>There is no excuse for a lack of compliance, especially now that  the SEC has put forth a series of rules regarding <a  href="https://www.sec.gov/files/rules/final/2023/33-11216.pdf">cybersecurity  risk management</a> for publicly traded as well as private  organizations. Additionally, many potential customers now require SOC 2  certification from vendors because <a  href="https://www.apple.com/newsroom/pdfs/The-Continued-Threat-to-Personal-Data-Key-Factors-Behind-the-2023-Increase.pdf">98%  of businesses</a> have a vendor that has been compromised within the  last two years. Vendors should follow their own security protocols to reduce  risk and protect themselves from malicious attacks that could also harm their  clients.</p><p>It is best to get SOC 2 certified before you are faced with losing  business opportunities due to lack of certification, or worse, before your  own systems are compromised because of unprotected vulnerabilities in your  cybersecurity posture. Becoming compliant ensures that your organization has  taken the necessary precautions to protect its systems and data from  unauthorized access.</p><h2>How long does it take to get certified?</h2><p>The time required to become SOC 2 certified depends on several  factors, including:  * The quality of  controls already in place * The type of report you are seeking (i.e., Type 1  or Type 2) * Your team's expertise, availability, and resources</p><p>Organizations that take a "do-it-yourself" approach to  compliance may spend up to 12 months (or longer) preparing themselves for an  audit, likely due to a lack of time and expertise of their internal teams.  Obviously, a considerable loss of revenue can occur in that period of  time.</p><p>Securily’s expertise lies in jump-starting your compliance journey  and getting you to an audit-ready state in <strong>1-to-3  months</strong>. If you want your compliance journey simplified and  expedited, be sure to <strong><a  href="https://securily.com/disco">book a call with  us</a></strong>. ##  SOC 2  Reports: Costs and considerations</p><p>It’s important to estimate and budget for both becoming compliant  and the ongoing maintenance of your certification. Here are some costs to  consider:</p><ul><li>Compliance software</li></ul><ul><li>Security tools and services</li></ul><ul><li>Penetration tests</li></ul><ul><li>Engineers to remediate  issues</li></ul><ul><li>Administrative cost of drafting new  policies</li></ul><ul><li>Background checks for new  employees</li></ul><p>Many of the above costs can be bundled by providers (like <a  href="https://securily.com/">Securily</a>) and can save as  much as <strong>50% of your budget</strong> as compared to  utilizing multiple vendors. But regardless of the cybersecurity strategy you  choose, <strong>it is the ethical responsibility of every organization  to prioritize security</strong>. It is vital to protect your data as  well as your customer's data. Not doing so can result in significant losses  that could damage your reputation, your customers, and your business.  Achieving and maintaining SOC 2 compliance can send a clear message that  security is a pillar of your organization and that you are a trustworthy  company.</p>