SOC 2 Compliance: Definition, Basics, Benefits, Types & Next Steps
Demonstrating SOC 2 compliance allows organizations to bolster their overall cybersecurity posture and provide assurance to stakeholders, customers,…
No matter what industry your organization operates in or where its business is conducted, it will almost certainly fall under some form of regulatory oversight, and it can only expect to face stricter and more complex enforcement in the future. That’s just a simple fact of running a business.
Staying informed regarding the current regulatory environment that applies to your business and any upcoming changes requires having effective and efficient processes in place to ensure compliance and manage the risks associated with non-compliance. This integrated system is known as compliance management system, or CMS.
Setting up a compliance management system is critical for every organization, but it’s easier said than done. In this article, we’ll take a look at the best way to stand up a proper compliance management system, and what to look for when searching for the right compliance management solution to get the job done.
A compliance management system consists of all of the processes, policies, internal controls, people, and technology that your organization uses to track compliance with all of the laws, regulations, and standards — both internal and external — that apply to it, conduct regular compliance audits, and address any gaps or problems that could lead to non-compliance. The best-designed compliance management systems are integrated into your other business processes, not held aside as a separate process.
Compliance management systems provide a uniform, standard way to obtain visibility into your organization’s compliance situation at all times. This can help you avoid penalties and fines, prevent risk events, and build trust with your consumers, investors, and other stakeholders.
Without an effective compliance management system, your organization is essentially flying blind when it comes to compliance and compliance risk management.
Absent these systems, your organization has limited visibility into whether its products and services are meeting the standards leadership has set for them internally or contractual commitments made with partners. Determining whether you’re in violation of legal or regulatory requirements is likely a manual and ad-hoc process that is difficult to manage.
Under any of these scenarios, your organization could face major penalties and fines, lost business, reputational damage, or worse.
Here are some of the benefits of having a compliance management system in place:
Every regulatory, legal, or contractual requirement your organization must comply with presents a risk of non-compliance, which could lead to a range of negative outcomes and consequences. Having a system for tracking and managing compliance risk and requirements makes it much less likely that your organization will drop the ball somewhere and expose itself to compliance risk.
Taking a disorganized or ad hoc approach to compliance management doesn’t just vastly increase your risk exposure — it can also become a massive waste of time and resources. Every minute and every hour your staff has to spend manually tracking down compliance data or controls evidence consumes
Being able to unequivocally prove to customers, clients, investors, and other stakeholders that your organization cares about compliance and is doing everything in its power to ensure its meeting all the compliance requirements that apply to it can go a long way in building a positive view of your brand across the market.
Avoiding or mitigating compliance risks, as detailed above, can also help make sure those risks don’t cause big problems for your company, some of which could lead to negative headlines that may tarnish — or even destroy — your brand reputation.
To avoid negative outcomes, your organization needs to put a compliance management system in place.
The first step in building a compliance management system is to obtain a complete understanding of all of the compliance requirements your organization must adhere to — and there are typically a lot of them. Creating an inventory of all of your business’s different compliance requirements will pave the way for integrating compliance management into each of your business processes and functions.
Though there are some regulations that apply to most businesses, like Europe’s General Data Privacy Regulation (GDPR), national labor laws, environmental regulations, anti-discrimination laws, and laws governing intellectual property rights. Others are industry-specific. These include laws like the Health Insurance Portability and Accountability Act (HIPAA) for the U.S. healthcare industry, Payment Card Industry (PCI) DSS, the Dodd-Frank Wall Street Reform Act, Sarbanes-Oxley (SOX) Act, and Basel III for the financial sector, and regulations from the International Atomic Energy Agency or the U.S. Nuclear Regulatory Commission for the nuclear power industry.
Additionally, many organizations choose to comply with a variety of standards frameworks, like the NIST cybersecurity framework, SOC 2, ISO 27001, and FedRAMP.
Be sure to speak with stakeholders in each department across your organization to get the full picture on which of these regulations and standards apply to your company, whether required by legislation or customer commitments.
Governing bodies and accrediting organizations aren’t the only ones placing compliance requirements on your organization. Every organization sets internal standards, policies, and requirements around things like product quality, employee safety, financial oversight, and cybersecurity management.
Now that you’ve identified all of your organization’s compliance requirements, you can begin assessing the risks associated with them. Understanding the ways that compliance could lapse or go wrong will inform the rest of the process for building your compliance management system.
Using methods like qualitative risk assessment and risk quantification, gauge the true business impact that each compliance requirement could have on your organization if it were to fall into noncompliance and generate a risk event like negative audit findings, a lawsuit, or a fine. Then, rank your compliance risks according to severity.
With your ranked list in hand, you can now group your compliance requirements and their associated risks by department, team, or function and assign responsibility for ensuring compliance is maintained to the appropriate individuals in each of those areas.
Working with those key compliance and risk owners, you can now develop policies and procedures and implement internal controls for monitoring and maintaining compliance. The accountability and reporting structure, all the way up to the C-suite and the board, should also now be clear, so you can develop a regular cadence of auditing and reporting compliance.
Modern governance, risk management, and compliance software can help you improve the efficiency and effectiveness of your compliance management system by automating key parts of the process, like audit management, controls testing, reporting, and risk assessment. Using this type of technology can help eliminate the human error and manual workflows characteristic of legacy methods like spreadsheets and email.
The platform you choose should be intuitive enough that everyone in your organization can quickly and easily learn to use it, and flexible enough to change as your compliance management system grows and evolves.
Since compliance requirements and the regulatory environment are changing and growing more complex each day, you can’t simply stand up a compliance management system and leave it to its own devices. You need to ensure you implement a process for monitoring its performance on an ongoing basis and making improvements or modifications where necessary.
Using your GRC software to conduct regular controls testing, develop and track key risk indicators, or KRIs, tied to your various compliance risks, and establishing a regular auditing cycle can provide sufficient warning when things begin to go off the rails, so you can mount a timely response.
No organization’s compliance management system will look exactly the same as another, but there are some components that are common across most compliance programs. These components form the basic principles and best practices that lead to compliance management system success, and should be implemented by every organization:
“Tone at the top” is an important concept in compliance management and corporate ethics, and it’s been enshrined in laws like Sarbanes-Oxley and Dodd-Frank as well as frameworks like COSO. It’s the idea that ensuring effective compliance and ethical behavior across the organization starts with its senior leadership — specifically, its board of directors.
In other words, these leaders need to “walk the talk” when it comes to compliance, which includes hiring competent talent, conducting regular oversight activities, engaging in business continuity planning, carrying out regular risk assessments, and setting the corporate vision for compliance, among other tasks. Boards of directors and senior leaders should:
Effective compliance management systems rely on well-designed compliance programs. These programs are built to help your organization plan, manage, and monitor all corporate and regulatory compliance activities across your entire organization in a systematic, efficient manner.
To that end, robust compliance programs strive for the following:
Ideally, the details of your compliance program and its goals should be formalized in a written document to ensure its continuity as staff and leadership changes over time.
Modern compliance management software can help you build and effectively manage your compliance program. This technology is designed to centralize, automate, and streamline compliance operations and avoid human error and other issues with traditional or manual methods of compliance management, like spreadsheets or email. Many of these solutions are also easily scaled up to grow alongside your organization and your compliance needs.
Compliance audits are independent reviews, conducted either internally or through external auditors, designed to measure adherence to compliance requirements, standards, and internal policies and procedures. The reports generated by these audits can be used by leadership to identify controls or compliance gaps to be addressed, demonstrate your compliance status to regulatory and accrediting bodies, and improve transparency across your organization.
Conducting regular compliance audits to verify the compliance status of an organization is a hallmark component of any compliance management system.
Regulators never seem to sit still. Just as we think we’ve caught up to the latest new laws and regulations, more are announced or put under consideration somewhere in the world. That means compliance teams need to stay vigilant at all times, and remain ready to change or adapt their compliance management systems and programs to meet new demands.
Designing flexibility into your compliance management program can go a long way here, and using a modern GRC platform with those capabilities to power it is a must.
It only takes one careless mistake or one overworked team to miss a compliance deadline or fail to follow policies and procedures to the letter. These oversights can add up over time and put your organization in a precarious compliance position.
Make sure training for all employees is baked into your compliance management system and is conducted on a regular basis that makes sense for your organization. Compliance is a team sport.
Modern GRC software is a critical tool for effectively implementing and leveraging a compliance management system. The platform you choose should, at a minimum, have the following features and capabilities:
One of the most important attributes a GRC and compliance management platform can have is the ability to centralize all of the information your compliance management system feeds into it and relies on in one central location. Having a single source of truth for all of your compliance data, controls testing information, evidence, policies, procedures, and assessments allows you to gain a holistic view of compliance status across your organization at any time.
This eagle-eye view of compliance makes it much easier to keep track of the many moving parts that compliance management systems are composed of and prevent missed deadlines, human error, and other compliance risks from affecting your organization’s operations or resulting in non-compliance.
Understanding the adverse impact that allowing compliance to lapse could have on your business requires conducting robust risk assessments on a regular basis. Avoiding those outcomes requires effective mitigation of those risks.
Leveraging the connected view provided by your GRC platform’s centralized repository will allow you to keep tabs on every compliance risk your organization faces and ensure the proper mitigants and controls are in place at all times or identify which need to be developed and implemented next.
Similarly, risk quantification is a superior method for increasing the accuracy of your risk assessments and prioritization. This technique allows you to tie each of your compliance risks to its true financial business impact, allowing you to better allocate resources to addressing your biggest risks first.
The more time you spend chasing down the evidence you need to conduct compliance audits, the less time you’ll have to dedicate towards more strategic work like improving internal controls, business continuity planning, and staying up to speed on emerging regulatory changes. Automating evidence collection eliminates that manual work and improves the accuracy of your data. Your GRC software should support this functionality.
As noted above, effective compliance management systems depend on the board of directors and senior leadership’s active involvement. Make sure the GRC solution you select has robust, comprehensive reporting and dashboarding capabilities to provide at-a-glance views of your compliance status at any time.
Effective compliance management typically involves numerous internal systems and technologies, and the GRC platform you choose should be able to support integrations with most, if not all of these systems.
Software that’s hard to use is unlikely to get used. That’s a simple truth. Pick a GRC solution with an intuitive, seamless, and easy-to-use interface. Systems like LogicGate Risk Cloud offer no-code, drag-and-drop interfaces that are ideal for non-technical users or teams, and they can be customized to suit the specific needs of your organization’s end users.
The software itself isn’t the only consideration when selecting the right compliance management software. You’ll want to choose one made by an organization that also offers expert support and technical services, advice, and guidance. These experts know their product and the industry, and they can help ensure your implementation is a success and keep you up to speed on emerging regulations, standards, and laws — and help you adapt software to ensure compliance.
So, what’s the current market for top performing compliance management software look like? Here’s a few of our top picks.
LogicGate Risk Cloud is a complete platform designed to help organizations build and manage holistic GRC programs. The flexible, no-code platform covers a wide range of compliance use cases, supporting automated evidence collection for 20 cybersecurity and privacy frameworks and integrations with 30+ business systems.
Risk Cloud offers an open API and continuous controls monitoring capabilities, and it’s built on a graph database that allows it to handle massive amounts of data and easily change and scale as your compliance program evolves. Due to its broad range of GRC use cases, Risk Cloud makes it easy to embed your compliance management system into your other risk management and business processes for a truly integrated program.
LogicGate’s technical, professional, and implementation support services are also considered top-tier across the industry.
Because of its sheer breadth and depth of compliance management capabilities, flexibility, ease-of-use, and reputation for being a good partner, LogicGate and its Risk Cloud platform are our top picks for a compliance management solution.
Drata is a point solution aimed specifically at automating compliance journeys, from start to audit-ready.
Drata is an excellent solution for teams that want to quickly achieve compliance and become certified, but it lacks the holistic scope and configurability of a GRC platform like Risk Cloud, which limits its utility in meeting GRC needs beyond compliance.
The platform includes numerous out-of-the-box compliance and internal audit templates that can ease and accelerate the certification process for frameworks like SOC2 and ISO 27001. It supports 85+ evidence collection integrations and 17+ frameworks, including a library with 500+ controls for customization and flexibility.
Drata also has strong in-platform auditing resources and a robust auditor network.
Hyperproof is similar to Drata, but has more limited configurability and customization in reporting, workflows, and features. It supports 55+ integrations and 70+ frameworks, but has no out-of-the-box policy management solution.
Like Drata, Vanta is also a niche point solution, but for vendor risk management. Vanta offers similar compliance and internal audit templates for speedy certification and boasts support for 250+ integrations and 20+ frameworks including custom frameworks and controls.
Auditboard’s platform has a specific focus on internal audit management, but, like Risk Cloud, it also covers a broader range of GRC use cases. It’s considered second to none when it comes to SOX compliance management and internal audit, and their technical controls can be mapped to any compliance framework.
Auditboard partners with Unified Compliance Framework (UCF) to help customers automatically map new requirements to existing controls to reduce manual effort.
OneTrust specializes in privacy management, and does it very well. It offers a compliance solution designed to build and scale compliance programs and automate certification.
OneTrust also has customizable templates to create detailed response plans to meet regulatory compliance requirements, and supports inviting external auditors into the platform to more easily share audit artifacts, remediate issues, and provide real time audit-status.
It supports 75+ integrations for evidence collection and 650+ controls across all the major frameworks.
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