SOC 2 VS SOC 3: Which Security Report Do You Need?

‍What Are SOC Reports?

SOC reports, or System and Organization Controls reports, were introduced by the American Institute of Certified Public Accountants (AICPA) 15 years ago. They were designed to validate an organization’s security, availability, processing integrity, confidentiality, and privacy controls. These reports have evolved significantly over time, adapting to new threats and compliance standards.

The Purpose of SOC Reports

At their core, SOC reports serve to:

• Validate security controls: They provide evidence that your organization’s systems and processes meet rigorous security standards.
• Build stakeholder trust: These reports reassure clients, investors, and partners that their data is safe in your hands.
• Simplify compliance: By meeting SOC standards, organizations can more easily comply with other regulations like GDPR or HIPAA.

Key Differences Between SOC 2 and SOC 3

Overview of SOC 2 Reports

SOC 2 reports are in-depth documents designed for restricted audiences. They evaluate your organization’s security controls against the Five Trust Services Criteria:

1. Security: Protects systems against unauthorized access.some text
   • Example: Implementing firewalls and multi-factor authentication.
2. Availability: Ensures systems operate as agreed.some text
   • Example: Maintaining 99.9% uptime.
3. Processing Integrity: Verifies accurate and complete data processing.some text
   • Example: Ensuring correct transaction logging.
4. Confidentiality: Safeguards sensitive information.some text
   • Example: Encrypting customer data.
5. Privacy: Manages personal data in compliance with regulations.some text
   • Example: Aligning practices with GDPR.

These reports are highly detailed, making them suitable for current clients or prospects under non-disclosure agreements (NDAs).

Overview of SOC 3 Reports

SOC 3 reports are designed for public distribution. Unlike SOC 2, they provide a summary of security measures without revealing confidential details. A typical SOC 3 report includes:

• Management assertion: A statement from your organization about the effectiveness of its controls.
• Auditor’s opinion: An independent evaluation confirming the validity of these assertions.

SOC 3 reports are excellent marketing tools. For example, SaaS companies often display them on their websites to build public trust without disclosing sensitive information.

Cost and Resource Considerations

Financial Breakdown of SOC 2 Compliance

SOC 2 compliance involves significant costs, including:

• Readiness Assessment: $15,000
• Risk Assessment: $10,000-$20,000
• Penetration Testing: $15,000
• Formal Audit: $5,000-$150,000

However, these costs are an investment in preventing costly data breaches. A single breach could cost millions, making SOC 2 compliance a proactive and cost-effective measure.

SOC 3 Compliance Costs

SOC 3 compliance costs range from $5,000 to $50,000 but require SOC 2 Type II certification first. This dependency makes SOC 3 a valuable add-on for organizations seeking to enhance public trust while leveraging their SOC 2 compliance efforts.

Maintenance Costs

Maintaining compliance is an ongoing effort. Typical annual costs include:

• Security Training.
• Cybersecurity Insurance.
• Vulnerability Assessments.

Small to midsize companies can expect annual audit expenses of $7,500 to $15,000, while larger enterprises might spend $30,000 to $100,000.

Factors to Consider When Choosing Between SOC 2 and SOC 3

Industry-Specific Requirements

Certain industries lean heavily on SOC 2 reports due to their detailed nature. For instance:

• SaaS and Managed IT Services: SOC 2 demonstrates robust data protection.
• Finance and Healthcare: These sectors require compliance with strict security standards.

SOC 3 reports are more suitable for industries focused on marketing and public relations.

Customer Expectations and Trust

Meeting customer demands is crucial. Many North American clients insist on SOC 2 reports before sharing sensitive data. 

Strategic Approaches

• SOC 2 Only: Ideal for businesses prioritizing detailed security validation.
• SOC 3 Only: Works for organizations focusing on public trust and brand image.
• Both Reports: Combining SOC 2 and SOC 3 allows you to meet client requirements while enhancing market visibility.

Full Picture: SOC 2 VS SOC 3

Conclusion: Making the Right Choice

Choosing between SOC 2 and SOC 3 depends on your business goals, industry requirements, and customer expectations. While SOC 2 offers comprehensive security validation, SOC 3 excels as a marketing tool. Many organizations benefit from using both, leveraging SOC 2 for compliance and SOC 3 for public trust.

By matching your choice with your business needs and staying updated on compliance trends, you’ll build a strong foundation for long-term success. In this article you have learnt:

• SOC 2 provides detailed security validation.
• SOC 3 is ideal for marketing and public trust.
• Combining both reports can maximize value.

FAQs

Q1. What are the key differences between SOC 2 and SOC 3 reports?‍

SOC 2 reports are detailed and restricted, while SOC 3 reports are summaries for public use.

Q2. Can a company obtain a SOC 3 report without first completing a SOC 2 examination?‍

No, SOC 3 requires SOC 2 Type II compliance.

Q3. What is the primary purpose of a SOC 3 report?‍

It’s a marketing tool to build public trust without revealing confidential details.

Q4. How do the costs of SOC 2 and SOC 3 reports compare?

SOC 2 costs range from $10,000 to $150,000, while SOC 3 costs $5,000 to $50,000.

Q5. Which industries benefit most from SOC 2 reports?

Industries like SaaS, finance, and healthcare rely heavily on SOC 2 for comprehensive security validation.