SOC 2 compliance is an effective way to monitor your third-party vendors. Setting up a vendor management policy is a crucial aspect of developing a comprehensive compliance risk management plan, as your company strives to ensure that sensitive data and information remain 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. SOC 2 compliance also reinforces your organization’s broader information security policy.
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. These steps also contribute to a stronger IT vendor security posture.
Read on to find out how SOC 2 can help you with vendor due diligence and management, and how compliance automation tools can simplify this process.
Why Do You Need a Vendor Management Policy?
Creating a vendor management policy will help your organization meet regulatory and standard requirements, such as those of SOC 2, ISO 27001, and HIPAA. Regulators have strengthened security and data management standards in many sectors to ensure that companies properly manage supply chain risks, as more businesses outsource services to third parties and data breaches have become increasingly common. A vendor management policy is essential for managing supplier risk, maintaining SOC 2 compliance, and ensuring adherence to your information security policy.
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 ensure that your vendor management team comprises individuals from all departments who can bring diverse viewpoints to the table. Your decision-makers, as well as members of your IT security department, procurement team, business unit(s), and a corporate attorney, should all be present. Your vendor management team will be responsible for compiling a list of all your third-party IT service suppliers and partners, as well as developing the vendor management policy to ensure it supports SOC 2 compliance and IT vendor security standards.
If you’re a small to medium company, you can skip much of the above and 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 guidelines provided. These tools often include features to manage IT vendor security and track SOC 2 compliance status.
What is the Relevance of Reviewing Your Vendor List?
Identifying Which Vendors Pose a Risk:
After your team has compiled this master list of IT vendors, it should be reviewed to determine which vendors have access to your key networked systems and sensitive, 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 implementing controls to monitor their security and reduce the risk associated with your partnership. This review process is essential for SOC 2 compliance and is often supported by compliance automation platforms.
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 crucial for maintaining a secure company environment. 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 incorporating vendor evaluations into your vendor management strategy, your firm will be better equipped to understand the risks associated with using a vendor’s product or service. It also supports your broader information security policy and strengthens SaaS compliance.
How Does Vendor Management Help with Vendor Due Diligence and SOC 2 Compliance?
Ideally, your third-party vendors will have undergone their own SOC 2 audit and will be able to provide you with a copy of the audit report. 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. This step is crucial for IT vendor security and maintaining ongoing SOC 2 compliance.
Additionally, your vendor management policy should specify the following measures that your vendors must put in place:
Risk Assessment: Your third-party vendors must 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. This aligns with your SOC 2 compliance and SaaS compliance efforts.
SLA: Generally, you will have an SLA in place with your IT vendors, which defines incident response times and other aspects of service levels. These are crucial for both compliance automation and vendor accountability.
Controls for cybersecurity: Controls must be implemented to mitigate identified risks. An audit may verify the effectiveness of your vendors’ controls. 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. This supports your IT vendor security plan and compliance framework.
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 necessary to ensure that software is regularly patched and updated, that new risks are identified, that security incidents are documented and reported, and that employees receive ongoing security awareness training. These practices are a cornerstone of SaaS compliance and SOC 2 compliance.
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, such as AWS, Azure, or 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 primarily focuses on the data center itself, which is helpful but far from comprehensive. You must also do a deeper due diligence assessment of your vendors to understand:
- Risk assessment and management
- Who has access to your personal information
- How third-party risk is managed
- How the critical vendor uses your data
- Response and notification to security incidents
Security, AI Risk Management, and Compliance with Akitra!
In the competitive landscape of SaaS businesses, trust is paramount amidst data breaches and privacy concerns. Akitra addresses this need with its leading AI-powered Compliance Automation platform. Our platform empowers customers to prevent sensitive data disclosure and mitigate risks, meeting the expectations of customers and partners in the rapidly evolving landscape of data security and compliance. Through automated evidence collection and continuous monitoring, paired with customizable policies, Akitra ensures organizations are compliance-ready for various frameworks such as SOC 1, SOC 2, HIPAA, GDPR, PCI DSS, ISO 27001, ISO 27701, ISO 27017, ISO 27018, ISO 9001, ISO 13485, ISO 42001, NIST 800-53, NIST 800-171, NIST AI RMF, FedRAMP, CCPA, CMMC, SOX ITGC, and more such as CIS AWS Foundations Benchmark, Australian ISM and Essential Eight etc. In addition, companies can use Akitra’s Risk Management product for overall risk management using quantitative methodologies such as Factorial Analysis of Information Risks (FAIR) and qualitative methods, including NIST-based for your company, Vulnerability Assessment and Pen Testing services, Third Party Vendor Risk Management, Trust Center, and AI-based Automated Questionnaire Response product to streamline and expedite security questionnaire response processes, delivering huge cost savings. Our compliance and security experts provide customized guidance to navigate the end-to-end compliance process confidently. Last but not least, we have also developed a resource hub called Akitra Academy, which offers easy-to-learn short video courses on security, compliance, and related topics of immense significance for today’s fast-growing companies.
Our solution offers substantial time and cost savings, including discounted audit fees, enabling fast and cost-effective compliance certification. Customers achieve continuous compliance as they grow, becoming certified under multiple frameworks through a single automation platform.
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FAQs
What are the key elements of a SOC 2 vendor management policy?
It should cover vendor risk evaluations, service-level agreements, security controls, and compliance obligations.
What should I do if a vendor lacks SOC 2 compliance?
You should assess their risk using a security questionnaire and verify their data protection measures to ensure compliance.
