May 23, 2023

GDPR Requirements: What They Mean for US Companies

Protect your customers from data security and data privacy dangers, or else: That’s the primary message of the EU’s General Data Protection Regulations, which are going into effect this coming May. Yes, the GDPR requirements will only apply to European companies and companies that do business with European clients, but company leaders should think twice before deciding the deadline doesn’t affect them. Here’s why.

A company’s European customer component may not be as small as some CEOs believe.

The protections of the GDPR apply not just to European residents, but also to all of the data that belongs to them, no matter where that data is processed. Some companies handle or process data as subcontractors and may not know exactly where the owners of that information reside. Unless they’re absolutely sure of the origins of every one of their clients, all businesses should take the GDPR deadlines seriously, or….

Non-compliant companies will face serious fines and penalties.

Companies that flout the mandates of the GDPR or let things slide until the deadline looms on the horizon may feel an impact so strong, it undermines their financial stability. The European Commission is serious about data protection in our modern age of threats, and compelling cooperation means levying heavy consequences for those who resist change. Fines may include four percent of a company’s annual revenue or 20 million Euros, whichever is greater.

Basic GDPR recommendations are more manageable than some companies recognize.

There’s no need to feel intimidated or overwhelmed by the steps involved in protecting customer data and meeting the standards of the new law. In fact, the basic demands of the law can be broken down into four simple components:

1.       Encrypt and attach pseudonyms to personal data,

2.       Ensure the confidentiality, integrity, availability, and resilience of all data processing systems,

3.       Restore availability and access to data after a breach or hack, and

4.       Regularly test and evaluate the effectiveness of all data security processes.

Easy, right? If checking off each of these four essential items doesn’t sound manageable by May, now is the time to get the expert help necessary to put the process in motion. Contact the team at Marana and we’ll determine where you are on the compliance timeline and what steps you’ll need to take next.


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Frequently Asked
Questions

What type of compliance standard can you help with?

We help our clients based on their needs. The majority of our contracts involve SOC-2, HIPAA, and most recently GDPR. Feel free to ask us if we can help with your particular case. If we aren't able to, we can most likely recommend you to someone who can.

How long does a SOC 2 engagement usually take?

We move as fast as our clients are able to make progress. Our fastest client to date got their SOC-2 Type I four months after signing our engagement letter. That record is up for grab if you are up for it.

In our experience however, it takes 6-9 months to achieve a SOC-2 Type I,  and 3-6 additional months to obtain a SOC-2 Type II report.

Which standard do you follow for your security policies?

All of our security policies follow the ISO-27001 standard. The Confidentiality, Integrity, and Availability standards cover the range of standards we like to work with for SOC 2.

Why do we have to become SOC 2 compliant if we are relying on AWS which is already compliant?

SOC 2 stands for Service Organization Control, meaning your clients are interested in understanding your controls, not your hosting provider’s control. As part of your vendor assessment we recommend reviewing AWS’ SOC 2 report, but relying on their report is not enough to become SOC 2 compliant.

Who is behind SOC 2?

The American Institute of CPAs. The AICPA is an established and respected organization that provides two forms of audits to companies that demonstrate evidence of a secure data-protection infrastructure. A Type I is a point in time audit that addresses the company’s description of its system, the suitability of the system’s design, and the effectiveness of its internal data controls. A Type II report happens over a period of time and emphasizes design and also focuses on the validity of the company’s controls.

Are SOC 2 reports a legal obligation?

No, but most enterprise level organizations that engage with sensitive data (again, almost all of them) have an obligation to their stakeholders to prove due diligence regarding data security, which means they’ll want to vet their service providers using this tool. SOC 2 can help these prospective service providers set themselves apart from the competition. Just as important, a SOC 2 report represents a meaningful and respected signifier of trust.

What can happen to a company without a SOC 2 report?

A lack of a SOC 2 report won’t result in legal problems, but it can and will limit outside assessments of the company’s commitment to data security. When large-scale clients look for providers, or large-scale backers look for a likely return on their investment, they don’t want concerns about security to stand in the way. Trust is a chain made of links that have each been put the test and have proven their ability to withstand pressure and scrutiny. Company leaders are wise to let SOC 2 auditors apply this pressure so their clients and backers don’t have to.

When is it too late for a SOC 2 audit?

Never. Even companies that have been in business for years but have never obtained a SOC 2 report can—and should—take steps in this direction now. Being compliant with SOC 2 can open the door to a broader base of more significant clients and larger contract opportunities. That being said, startups in the threshold of the marketplace, and new business owners who hope for an eventual public offering, should obtain a SOC 2 report during the development and financing process. By the time the company approaches Series B and C fundraising rounds, a report should be in hand.

How complicated is the auditing process?

The auditing process can be easy, or complicated depending on your level of preparation.

Preparing for the audit can take some time, attention, and the guidance of reliable data security experts. Don’t leave any part of this process to chance. Approach SOC 2 compliance one step at a time, and start by contacting a consulting firm with track record of experience in your area of the marketplace.