How SOC 2 Helps With Ensuring your Vendors are Secure

April 29, 2022

SOC 2 compliance is an excellent way to keep tabs on your third-party vendors. Setting up a vendor management policy is an important aspect of developing a holistic compliance risk management plan as your company strives to make sure that sensitive data and information is secure. Any organization working with sensitive data or customers' personally identifiable information (PII) should develop a policy to review all IT vendors — every third-party who has access to your organization’s or your customers’ confidential data — and set security requirements for those vendors. 

In this blog, we will explore vendor management using the SOC 2 compliance framework, steps you should take to review your vendor list, vendor compliance mistakes you should avoid, and what you should do if a critical vendor doesn’t have a SOC 2 report.

Read on to find out how SOC 2 can help you with vendor due diligence and management. 

Why Do You Need a Vendor Management Policy?

Creating a vendor management policy will assist your organization in meeting regulatory and standards requirements, such as those of SOC 2, ISO 27001 and HIPAA. Regulators have strengthened security and data management standards in many sectors to guarantee that companies are properly managing supply chain risks as more businesses outsource services to third parties and as data breaches have become all too common. A vendor management policy is fundamental to managing supplier risk and staying compliant.

Examining your security posture comprehensively helps you in determining the effectiveness of your external vendor security, and the risk associated with vendors’ access to your data and that of your customers. As your company begins working with an ever larger network of vendors and partners, third party security becomes just as critical as your own.

Who Should You Create your Vendor Management Policy?

If you’re a large company, you can begin by forming a team of members from across your organization. You'll want to make sure your vendor management team is made up of people from all departments who can offer different viewpoints to the table. Your decision-makers, as well as members of your IT security department, your procurement team, your business unit (s), and a corporate attorney should all be there. Your vendor management team will be in charge of compiling a list of all your third-party IT service suppliers and partners, as well as crafting the vendor management policy.

If you’re a small to medium company, you can skip much of the above and just use an off-the-shelf vendor management policy and customize it as necessary. If you’re using a compliance automation platform such as Akitra’s, a vendor management policy will be part of the complete set of policies provided.

What is the Relevance of Reviewing Your Vendor List?

Identifying which Vendors Pose a Risk:

After your team has put together this master list of IT vendors, it should be checked to see which vendors have access to your key networked systems and to sensitive and important data. Vendors in these categories are the most likely to be risky, so your company should focus on examining the security practices these companies use to handle sensitive data and information, as well as putting in place controls to monitor their security and reduce the risk associated with your partnership.

‍Policing Current Vendors and Selecting the Right Ones for the Future

Setting up a vendor management program to examine and monitor your current vendors is critical to keeping your company environment secure. You'll also want to think about future vendor and partner relationships, and use the knowledge you obtained from evaluating current vendors to make judgments regarding future collaborations. By including vendor evaluations in your vendor management strategy, your firm will be able to better understand the risks associated with using a vendor's product or service. 

How Does Vendor Management Help with Vendor Due Diligence and SOC 2 Compliance?

Ideally, your third party vendors will have gone through their own SOC 2 audit and will be able to provide you with that audit. If they are not SOC 2 certified, then at a minimum you should have your key IT vendors answer a comprehensive security questionnaire and provide you with a risk assessment.

Additionally, your vendor management policy should specify the following measures that your vendors must put in place:

Risk assessment: Your third-party vendors need to conduct a risk assessment to identify potential data security risks. This assessment can increase your confidence that your vendors are actively identifying potential hazards, from software bugs to phishing vulnerabilities.

SLA: Generally, you will have an SLA in place with your IT vendors, which define incident response times and other aspects of service levels.

Controls for cybersecurity: Controls must be put in place to mitigate risks after they have been identified. The effectiveness of your vendors’ controls may be verified by an audit. An audit can give you peace of mind that your vendors are following best practices to protect your data, from the boardroom to day-to-day operations.

Information Security Policy: Part of your contractual agreements with your IT vendors should specify that these vendors will comply with your organization’s Information Security Policy, specifying such requirements as incident reporting and use of multi-factor authentication.

Communication and IT processes: Firewalls, intrusion detection and other security systems are only part of the picture when it comes to data protection. Robust security processes and open lines of communication are also needed to make sure that software is patched and updated on a regular basis, that new risks are recognized, that security incidents are documented and reported, and that employees are regularly given security awareness training. 

One SOC 2 Mistake You Must Avoid …

When your vendors have their own SOC 2 report, they are pleased to provide it. The issue arises when your vendor only has a SOC 2 report from their cloud platform services provider – AWS, Azure, GCP… –  rather than having their own.

An AWS SOC 2 report, for example, can't tell you much about the SaaS provider with whom you're signing a contract. The report solely covers the data center itself, which is helpful but far from sufficient. You must also do a deeper due diligence assessment of your vendors in order to understand:

  • Risk assessment and management: Risk governance and oversight are included in this. Even if a corporation has the most secure data center in the world, data might still be exposed if the firm does not manage risks internally.
  • Who has access to your personal information: Access to your data should be restricted to those who have a legitimate need for it. When an employee leaves, access should be restricted.
  • How is third-party risk managed: If your vendor outsources to other third-party vendors and shares your data with them, you'll want to know how well that fourth party is managed. You're looking for proof of good vendor management.
  • How your data is used by the critical vendor: You must understand how your data will be accessed, processed, stored and deleted.
  • Response and notification to security incidents: What will the seller do if something goes wrong somewhere along the line? How and when will they tell you about it? This should be covered in your SLA with your vendor.

SOC 2 Compliance and Vendor Management with Akitra!

Establishing trust is a crucial competitive differentiator when courting new SaaS business in today's era of data breaches and compromised privacy. Customers and partners want assurances that the organizations with whom they do business are doing everything possible to prevent disclosing sensitive data and putting them at risk. Compliance certification fills that need.

Akitra offers an AI-powered Compliance Automation platform for SaaS companies. Using automated evidence collection and continuous monitoring, together with a full suite of policies and controls as a compliance foundation, our service helps customers become certified for SOC 1, SOC 2, ISO 27001, HIPPA, GDPR and NIST 800-53. Our compliance and security experts will also provide you with the customized guidance you need to confidently navigate the end-to-end compliance process. The benefits of our solution include enormous savings in time, human resources and money – including discounted audit fees with our audit firm partners. You'll achieve compliance certification, and stay continuously compliant into the future as you grow.

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