Global Compliance and the Rise of SOC 2 for European Organizations
My organization is based in Europe—do we need a SOC 2 report? At BARR Advisory, we hear this question often, and it’s important to know what compliance framework is best for you depending on the location and needs of your customers.
If your organization is located in Europe, you may think an internationally accepted framework is the best route to take when it comes to achieving compliance. But if you have customers and stakeholders in North America, your compliance needs may shift. As the cybersecurity threat landscape continues to evolve, so do the opportunities and requirements for organizations looking to mature their security posture.
Let’s take a look at why a SOC 2 report might benefit your European-based organization.
ISO 27001 vs. SOC 2
The ISO 27000 series is a family of information security management standards that can be combined to provide a globally recognized framework for best-practice information security management.
ISO 27001 focuses on an organization’s information security management system (ISMS) and is an internationally accepted standard for helping your organization manage the security of your services, data, intellectual property, or any information entrusted to you by a third party.
Because it’s internationally accepted, many European organizations choose ISO 27001 for their compliance framework. ISO 27001 audits result in an internal report and public-facing certification, suitable for three years with surveillance audits.
The SOC 2 examination reports on one or any combination of the U.S-based AICPA’s trust services criteria—including security, availability, processing integrity, confidentiality, and privacy. It demonstrates an organization’s commitment to consumer requirements and cybersecurity best practices.
SOC 2 Type I reports test your design on a specific date and include an opinion over the suitability of the design of controls at the service organization. They often serve as a starting point for type 2 reviews. SOC 2 Type 2 reports include an opinion over the suitability of the design and operating effectiveness of the controls throughout a specified period of time. This type of report is often issued annually.
SOC 2 reports are popular with many North American organizations and meet the needs of a broad range of users that require detailed information and assurance about the controls at a service organization. The report can play an important role in the oversight of an organization, vendor management programs, and internal corporate governance and risk management processes.
The Rise in SOC 2 Reports for European-Based Organizations
ISO 27001 has primarily served as the most suitable framework for European-based organizations, and the popularity of SOC 2 in the U.S. has grown significantly. However, over the years, we’ve seen a trend of European organizations embracing SOC 2 in addition to their ISO 27001 certification.
With the rise in cyber attacks, many organizations are now interested in reviewing SOC 2 reports from the international businesses they work with. The demand for SOC 2 reports outside of the U.S. helps determine if international organizations have the necessary controls in place to protect the data of all stakeholders involved.
Additionally, a SOC 2 report can provide more in-depth insight into an organization’s security posture compared to the ISO 27001 pass/fail approach to certification. The SOC 2 assessment results in an extensive attestation report and provides an organization’s partners and clients with a high level of assurance about their security posture. While an ISO 27001 assessment covers a significant amount of controls, the audit results in a one-page certification letter.
In addition to meeting the needs of a North American customer base, the thoroughness of a SOC 2 report is one of the main reasons why European-based organizations are shifting to adhere to both standards.
Benefits to SOC 2 for European-Based Organizations
Now that we know why the popularity of SOC 2 is growing for European-based organizations, let’s take a look at how the standard can set your organization up for success—both now and in the future.
Differentiate your organization from the rest.
Achieving a SOC 2 report can give your business a competitive edge over other organizations. Not only can a SOC 2 report help you scale your business, but it can also build trust with customers and retain clients who are looking to partner with an organization that demonstrates a high level of security maturity.
Expand your business.
While not required, it’s strongly encouraged to obtain a SOC 2 report when doing business with North American enterprises. In the same way GDPR compliance has become vital for American companies looking to do business in Europe, SOC 2 is now a unique selling point for European companies that want to expand into the North American market.
Prepare for the future.
As globalization increases, SOC 2 is likely to continue becoming more prevalent in Europe. More and more industries are starting to support SOC 2, which means European organizations that want to sell into the North American market are being asked for a SOC 2 report early in the sales process. In fact, over the past few years, even some UK government agencies have implemented SOC 2 as a requirement for their vendors. The assessment is also gaining traction in other parts of the world, like Australia and China, as security and compliance standards are now considered a cost of doing business.
Contact us to speak with a SOC 2 specialist for more information on BARR’s SOC 2 reporting services and if your organization will benefit from the popular standard.