For the financial services industry, making a mistake is not an option and compliance gaps can have legal consequences. SOC 2 reports are sometimes not just a nice-to have but a must have. Contact us to learn how we can provide your organization with a SOC 2 report.
Published: October 02, 2023
Updated: October 02, 2023
For asset managers and fintechs, a SOC 2 report can provide an objective stamp of approval that their controls and business processes are operating as designed. Completing a SOC 2 report can provide your organization with a competitive advantage as many companies prefer service providers that are SOC 2 audited.
1. It improves brand reputation
Brand reputation is critical to not only maintaining your existing business, but also growing your business. Having a positive brand reputation increases confidence in your products or services, which can lead to increased sales and profit.
Your brand reputation is how clients, stakeholders, and the public perceive your brand. That perception is based on their experience with your business. It may be through a product or service, an interaction with a customer service representative, online reviews, or word of mouth.
Building and maintaining the brand reputation is important for many reasons. It can help with the following:
Clients with a positive perception of your brand will continue to do their business with your organization. It’s much less expensive to keep an existing client than it is to attract new ones.
Clients that are satisfied will advocate for you. It may be through word of mouth at industry conferences or online reviews. In essence, they will act as unpaid brand ambassadors.
Client loyalty and brand advocates will help lead to higher sales. Having a strong reputation also allows your business to charge more without losing customers because they value your brand.
Brands with a good reputation attract some of the best employees. They want to work for your organization and are more likely to stay longer.
Having a good reputation gives your business an edge over your competitors because of improved client loyalty and higher sales growth. Publicly traded companies with a good reputation can also trade at a higher valuation than those with a bad reputation.
2. It builds trust with clients
In today’s global economy, companies absolutely need to trust their counterparties to conduct business. This is even more critical when operating across a broad range of jurisdictions and in varied domestic and international regulatory environments, as well as in an increasingly virtual environment.
SOC 2 reports can provide objective verification that your organization complies with a wide variety of regulations. SOC 2 reports have become a must-have in many vendor-management and RFP processes, opening the door to more business opportunities without the need to start from scratch for each inquiry or request.
When it comes to building trust, SOC 2 reports play a critical role ultimately reducing compliance efforts each year and leading to fewer onsite vendor or partner audits.
Having a third party examine organizational controls can determine whether your organization’s systems are designed, implemented, and operating as expected, as well as how they can be improved.
A SOC 2 report can indicate where and when there are breakdowns in controls that could possibly lead to a business disruption, allowing your organization to proactively mitigate these risks.
In addition to highlighting shortcomings, SOC 2 reports can also focus on strengths in your organization’s processes and controls and offer guidance on how to improve areas that require more attention.
3. It promotes consistency and efficiency of financial and IT processes while reducing compliance efforts
SOC 1 reports are focused on internal controls over financial reporting. On the other hand, SOC 2 reports are focused on controls over the security, availability, and processing integrity of a system, or the privacy or confidentiality of information processed by the system.
A SOC 2+ report can also be expanded to include additional subject matter specific to your needs instead of completing two separate audit reports. For example, it may include reporting on your organization’s compliance with a statement of privacy practices in addition to reporting on controls relevant to the privacy of the system.
This approach can reduce compliance efforts and costs by streamlining compliance controls testing and combining assurance reporting in one report.
Also, having one external provider perform an audit instead of multiple providers can be more efficient and less costly. It will also save your organization and your people from audit fatigue.
4. It helps your organization respond effectively to security and data privacy threats
Improved efficiencies can also help your organization respond to threats more quickly and effectively. No matter how well you are prepared, incidents are likely going to occur, so the speed at which you can respond and mitigate the damage is essential.
SOC 2 reports that identify risks and put response measures/plans in place before an incident occurs allow organizations to be more proactive rather than just reactive. This preparation can be crucial in facilitating a nimble response, particularly when time is of the essence.
Data privacy poses several challenges and has already drawn significant political and regulatory attention. Unlike a tangible item, data is not contained within a certain territory or nation. As a result, the same piece of data may be regulated differently in Canada, the United States, Europe, or Asia.
Multinational organizations operating across jurisdictions need to make sure they comply with all the relevant data privacy frameworks. Data privacy laws also continue to evolve so it’s imperative to stay on top of new developments and regulatory trends.
Ensuring that your organization or third-party vendor is compliant with various relevant jurisdictions requires a comprehensive data governance framework and experts with a breadth of knowledge of global regulations as well as in-depth industry acumen.
The SOC 2 frameworks can be used to benchmark the current state of an organization’s cybersecurity or privacy program. A SOC readiness assessment can help organizations identify deficient or insufficient controls, policies and procedures, and quantify cybersecurity and privacy risks against a standard set of criteria.
This gap analysis can be used to develop remediation strategies. An independent examination can be used to provide an unbiased, third-party assessment of the design and operating effectiveness of cybersecurity and privacy controls.
SOC 2 reports can cover cloud-based environments, SaaS, infrastructure, software, and financial systems—addressing factors such as security (including cybersecurity), privacy, confidentiality, availability, and processing integrity. From data centres to fintech, SOC has become a necessary step of accountability for a wide variety of organizations. SOC reports are also in full compliance with CPA Canada’s CSAE 3416 standard, the AICPA SSAE 18 standard, and ISAE standards.
Cybersecurity and artificial intelligence
Technological innovations require organizations to navigate new and unfamiliar areas, many of which have the potential to both create opportunities and expose vulnerabilities.
In an increasingly digital world, protecting against cyber attacks and leveraging the power of artificial intelligence are two evolving areas that require special attention. Advances in technology allow attackers to use new tools and techniques to steal valuable data and even hold entire organizations hostage via ransomware.
While there is no way to fully prevent cyber attacks, SOC 2 reports help your organization validate that it has processes and controls in place to stay a step ahead of threats, or at least have built-in procedures to respond quickly and efficiently once they occur.
The continued growth of artificial intelligence and machine learning can unlock opportunities for businesses seeking to automate tasks and gain more insight into their customers, among many other applications. But even though leveraging big data can help your organization expand into new areas, it can also lead to unexpected risks.