SOC 2 vs. ISO 27001: What’s the Difference and Which One is Right for Your Business?

When it comes to securing your business and proving to clients that you’re protecting their data, certifications like SOC 2 and ISO 27001 are two of the most recognized standards in the industry. Both are essential when it comes to ensuring your organization meets high security, privacy, and operational standards. However, while they share similar goals, they have different scopes, requirements, and approaches.

If you’ve been wondering about the difference between SOC 2 and ISO 27001, and which certification your business needs, you’re not alone. Whether you're based in Austin, Dallas, Houston, or elsewhere, understanding the nuances between these two can help you make the right choice for your company’s security needs.

What is SOC 2?

Let’s start with SOC 2. A SOC 2 report is an audit conducted by a third-party firm to evaluate how well your organization protects customer data, specifically focusing on five Trust Service Criteria:

• Security: How well your company prevents unauthorized access to its systems.
• Availability: Ensuring systems are available for use when needed.
• Processing Integrity: Verifying that data is processed correctly and without errors.
• Confidentiality: Ensuring sensitive data remains protected from unauthorized access.
• Privacy: Protecting personally identifiable information (PII).

SOC 2 was developed by the American Institute of Certified Public Accountants (AICPA) and is specifically designed for technology companies, service providers, and any business that handles sensitive customer information. A SOC 2 Type 1 audit evaluates the design of your controls at a single point in time, while a SOC 2 Type 2 audit evaluates how well your controls perform over a specific period (usually 6-12 months).

SOC 2 is ideal for companies that want to demonstrate their commitment to protecting customer data, and it’s commonly required by businesses in industries like SaaS, cloud computing, financial services, healthcare, and e-commerce.

What is ISO 27001?

Now, let’s look at ISO 27001. ISO 27001 is an internationally recognized standard for establishing, implementing, maintaining, and improving an Information Security Management System (ISMS). It’s a framework that helps organizations manage and protect their information through a set of well-defined policies, procedures, and controls.

ISO 27001 applies to any organization, regardless of its size, industry, or geographical location. It focuses on a comprehensive approach to information security management, ensuring that risks to confidential, personal, and sensitive data are identified and mitigated across the organization.

The ISO 27001 standard provides a broader, more holistic framework than SOC 2, as it covers not just the technical aspects of data security but also the management, governance, and risk management processes. ISO 27001 requires the company to perform regular internal audits and risk assessments, and it includes ongoing improvement as a part of the certification process.

ISO 27001 certification is recognized globally and can be a great choice if your business operates internationally or wants to show a commitment to a formal, organization-wide information security program.

Key Differences Between SOC 2 and ISO 27001

At a high level, the key differences between SOC 2 and ISO 27001 come down to their scope, focus, and implementation:

1. Scope & Focus

• SOC 2 focuses on how your organization manages and protects customer data based on the five Trust Service Criteria. It’s more narrowly focused on data protection and privacy, and is primarily designed for service providers in sectors like tech, cloud services, and SaaS.
• ISO 27001, on the other hand, provides a broader, organizational-wide approach to information security. It focuses on managing the entire security framework, including risk assessments, governance, and continuous improvement. ISO 27001 covers not just data protection, but also areas like physical security, business continuity, and incident management.

2. Audit Process

• SOC 2 is an audit, not a certification. A third-party CPA firm evaluates your controls over a period of time (SOC 2 Type 2) or at a single point in time (SOC 2 Type 1), and issues a report. This report is shared with your clients to demonstrate your adherence to the Trust Service Criteria.
• ISO 27001, on the other hand, is a formal certification. It involves an external auditor who assesses your organization’s ISMS (Information Security Management System) to ensure it meets the requirements outlined in the ISO 27001 standard. Once your organization passes the audit, you receive certification that can be used to demonstrate your information security capabilities to clients, partners, and regulators.

3. Geographical Recognition

• SOC 2 is primarily recognized and used in the United States, although it’s becoming more well-known globally, particularly among tech companies.
• ISO 27001 is internationally recognized and widely adopted across the globe, making it an ideal choice for businesses that operate in multiple countries or serve international clients.

4. Certifying Bodies

• SOC 2 audits are performed by licensed Certified Public Accountants (CPAs) or firms with specific expertise in IT security and compliance.
• ISO 27001 certifications are awarded by accredited certification bodies, which are authorized to evaluate organizations against the ISO standard.

Which One is Right for Your Business?

Now that you understand the key differences, the next question is: Which one is right for your business?

SOC 2 might be right for your business if:

• Your company provides services to clients that require proof of data security, such as SaaS, cloud, or fintech businesses.
• You primarily serve clients in the United States or North America.
• You need a report that can be shared with clients to demonstrate your commitment to data security.
• You’re focused on specific controls related to data security, privacy, availability, and processing integrity.

ISO 27001 might be right for your business if:

• Your organization has a broader focus on enterprise-wide information security management and risk mitigation.
• You’re operating internationally and want a globally recognized certification.
• You’re looking for a comprehensive framework to manage all aspects of information security, not just data protection.
• You want to demonstrate an ongoing commitment to continuous improvement in information security management.

In some cases, businesses opt to pursue both SOC 2 and ISO 27001 certifications. This might make sense if your business operates globally and you want to meet both local compliance requirements (SOC 2) and international standards (ISO 27001).

SOC 2 vs ISO 27001

In summary, SOC 2 and ISO 27001 both help organizations improve their data security, but they do so in different ways. SOC 2 is ideal for service providers in the United States who want to prove they meet high standards of data protection and privacy. ISO 27001 is more comprehensive and globally recognized, providing a broader approach to managing and securing all types of sensitive information across the organization.

At NDB, we specialize in helping businesses with both SOC 2 audits and ISO 27001 certifications. Whether you’re based in Austin, Dallas, Houston, or anywhere else, we can guide you through the process, ensuring you get the certification or report that best fits your company’s needs. Reach out today to learn more about how we can support your organization’s security journey.