Third-Party Risk Assessments: How SOC 2 Reports Help
Modern companies that rely on vendors and suppliers to provide products and services must invest heavily in third-party risk management (TPRM) to ensure consistent and thorough protection of sensitive information. SOC 2 audits and the reports generated from them are an essential piece of this process. In fact, SOC 2 reports can show you maintain security, availability, privacy, and processing integrity for all data you collect and manage. In addition, these reports allow you to access all of this information about your third parties to ensure your partners have SOC 2 certifications.
Because these audits and reports are so important to TPRM, we’re covering what they are, how to use them, and the advantages you’ll gain from them.
SOC 2 Reports and TPRM
The American Institute of CPAs (AICPA) is responsible for creating audit standards for companies across the globe. The SOC 2 Trust Services Criteria is one of the most well-known of these, providing specifications for SOC 2 audits and reports.
The purpose of a report is to uncover all pertinent information related to security, availability, processing integrity, confidentiality, and privacy at the company being audited.
It is recommended companies perform audits not just on their own businesses, but on all their vendors and suppliers. This is critical to the success of a TPRM program because it gives you the power to make regulatory and organizational changes related to corporate rules and TPRM.
Steps to Reporting
The first step when it comes to using SOC 2 reports is to see which of your vendors have already completed these audits. The Vendorpedia Third-Party Risk Exchange contains details on thousands of vendors, making it easy for you to know which vendors have accessible reports.
If your vendors don’t have active SOC 2 reports available, an independent auditor can perform an assessment to produce a report. Auditors provide a full report, identifying and analyzing possible risks related to privacy, unauthorized data use, security incidents, and data breaches.
SOC 2 reports will allow you to understand if vendors will meet their contractual commitments, and if unsatisfactory, a report, or lack thereof can give you cause to terminate the relationship if there is enough of a risk to your organization.
Annual audits are essential. This is a beneficial way you can track changes, identify new vendor risks, and proactively prevent privacy and security issues with third-party vendors. To do this well, you should maintain an easily-accessible inventory of your vendors, complete with their SOC 2 reports, risks, and other details so you can pinpoint critical issues and correct course before it’s too late.
Going Beyond Your Reporting for TPRM
Reviewing SOC 2 reports can get complicated quickly. Even if you only maintain a few vendors, sifting through multiple reports and keeping your finger on the pulse of new updates can be tedious, time-consuming, and full of mistakes.
Because of this, most companies today automate the entire risk management lifecycle. They turn to TPRM software, such as Vendorpedia, to help them research vendors, maintain audit trails, and put risk management on autopilot. It can help you with the entire process, including:
- Identify if vendors have active reports
- Keep updated records of vendors, risks and contracts
- Build workflows to assess vendor security and privacy risks
- Access termination checklists and workflows
- Get assistance with evidence collection and record keeping
- Extract and report on key terms in contracts to track vendor commitments
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