If your vendor isn’t SOC 2 compliant, your business is sitting on a ticking time bomb.

Many companies don’t realize that trusting a third-party provider without SOC 2 certification leaves them exposed to data breaches, regulatory fines, and operational chaos — risks that can seriously harm your bottom line.

In this article, you’ll find a straightforward list of crucial steps to ensure your vendor is SOC 2 compliant and why it matters in the first place.

And if you’re worried that assessing compliance is too time-consuming or complex, think again.

With the right insights and a few simple strategies, you’ll have what it takes to safeguard your business from unnecessary risks, no matter your experience level or resources.

Let’s dive right in!

Why Does It Matter If My Vendor is SOC 2 Compliant or Not?

SOC 2 compliance isn’t just some arbitrary benchmark; it’s a critical signal that a vendor values data security and privacy.

When a vendor can’t demonstrate SOC 2 compliance, it’s essentially saying, “We’re willing to take risks with your sensitive data.”

That’s a gamble most businesses can’t afford to make.

Understanding SOC 2 Compliance

SOC 2 compliance goes beyond a checklist — it’s proof that a vendor’s data protection standards meet stringent industry requirements.

There are two main SOC 2 report types:

• Type I verifies that controls are in place at a given time,
• Type II shows how these controls function over several months.

Type II is the gold standard here. It offers more insight into whether the vendor consistently safeguards data.

SOC 2 compliance focuses on five Trust Services Criteria: security, availability, processing integrity, confidentiality, and privacy.

For any business relying on third-party vendors, especially those handling sensitive information, this level of transparency is essential.

If a vendor isn’t SOC 2 compliant, it may lack the infrastructure needed to prevent unauthorized access, data breaches, and compliance issues — all of which can become your problem quicker than you could imagine.

Key Risks of Working with a Non-Compliant Vendor

If a vendor handles your business’s sensitive customer data (at least some of it) and they aren’t SOC 2 compliant, you’re operating at an unreasonable amount of risk.

Here’s why:

Data Breaches and Security Vulnerabilities

According to a 2023 IBM report, data breaches cost companies an average of $4.45 million.

Companies that don’t take data security seriously are the ones who pay the consequences.

A non-compliant vendor means potentially weak or ineffective controls that could expose sensitive information to people, who you don’t want to be exploring the ins and outs of your data management systems.

Legal and Regulatory Penalties

When regulatory bodies come knocking, non-compliance isn’t something you can brush off.

Companies dealing with sensitive data are often legally required to meet specific security standards.

Working with vendors who don’t meet these standards can put your business on the hook for substantial fines and penalties. Failing to manage third-party risks can lead to fines under GDPR, CCPA, or industry-specific standards.

And if you think these regulatory issues won’t impact you because they stem from your vendor’s actions — think again (and think hard).

Compliance is your responsibility, no matter who drops the ball.

Operational and Business Disruptions

Data security issues don’t just create external chaos; they can bring your internal operations to a standstill.

Downtime, data loss, and slow recovery processes mean productivity is impacted, deadlines are missed, and business operations suffer.

With a non-compliant vendor, you’re in uncharted territory if something goes wrong, facing costly interruptions and a scramble to get things back on track.

What’s the First Thing I Should Do To Make Sure My Vendor is Really SOC 2 Compliant?

It all starts with the auditor (if they have gone through an audit of course).

Reviewing the Auditor’s Credentials

SOC 2 reports should only be issued by licensed Certified Public Accountant (CPA) firms.

You’re looking for credentials that mean something in the industry, like Certified Information Systems Security Professional (CISSP) or Certified Information Systems Auditor (CISA).

These certifications reflect the auditor’s understanding of information security and complex IT systems.

If your vendor is dealing with a non-CPA organization or an uncredentialed auditor, that’s a major red flag.

NB! Knowing the auditor is the tip of the iceberg in making sure your vendor(s) are SOC 2 compliant. Get the only guide you will ever need for evaluating a vendor’s SOC 2 report by clicking here.

Author Bio:

Christian Khoury is a former Deloitte risk & compliance analyst, is the founder of EasyAudit, an AI-driven platform that simplifies SOC 2 compliance for busy founders. Leveraging his industry expertise, he created EasyAudit to simplify and reduce the cost of compliance for businesses, transforming complex processes into an efficient, automated solution.