How to Build a SOC2-Compliant Risk Management Program

In today's digital landscape, a robust risk management program is essential for organizations seeking SOC2 compliance. While an IT-focused approach may satisfy basic requirements, an enterprise-wide risk management program delivers comprehensive protection and demonstrates stronger commitment to security. This blog explores how to build an effective SOC2-compliant risk management program that goes beyond minimal compliance.

Understanding SOC2 and Risk Assessment

SOC2 is a framework designed for service organizations to demonstrate their security controls. Unlike ISO 27001 (which focuses on information security management systems), SOC2 emphasizes service commitments and system requirements. Risk assessment is a critical component of SOC2 compliance, specifically addressed in Common Criteria 3.

It's worth noting that ISO 31000 is the standard specifically covering risk assessment methodology, while SOC2 incorporates risk assessment as part of its broader framework. Organizations seeking SOC2 compliance should understand this distinction when developing their risk management program.

Comprehensive Risk Assessment and Treatment

Once assets are identified, SOC2 requires a systematic, repeatable, and documented risk assessment process. While SOC2 doesn't mandate a specific methodology, it requires organizations to:

1. Identify threats and vulnerabilities for each asset

2. Analyze likelihood and potential impact

3. Evaluate existing controls

4. Determine risk levels

Organizations should consider both technical and non-technical threats, including those from third-party vendors. A quantitative approach to risk assessment (using numerical values rather than just "high/medium/low" ratings) provides more precise insights for decision-making.

For risk treatment, SOC2 outlines four options:

• Reduce risk by implementing additional controls

• Avoid risk by eliminating its source

• Transfer risk through insurance or outsourcing

• Accept risk if it falls within tolerance levels

Each treatment decision must be documented in a Risk Treatment Plan that includes controls to be implemented, responsible parties, and implementation timeframes. Enterprise-wide risk assessment ensures that treatment decisions align with broader business objectives rather than just technical considerations.

Managing Residual Risk: Beyond Implementation

After implementing controls, residual risk the risk that remains despite safeguards must be managed effectively. SOC2 requires organizations to assess whether residual risk is acceptable based on business risk appetite and legal obligations.

For each treated risk, document the remaining threat level and likelihood. If residual risk exceeds acceptable thresholds, implement additional controls or reassess your approach. Management must formally review and approve the acceptance of any residual risk.

Effective residual risk management requires continuous monitoring through:

• Scheduled reviews (at least annually)

• Internal audits

• Incident reporting and analysis

• Management oversight

This ongoing process ensures that your risk management program evolves with changing threats, technologies, and business requirements. An enterprise-wide approach to residual risk management provides better visibility into potential impacts across the organization, not just within IT systems.

Enterprise-Wide Asset Identification: The Foundation

The cornerstone of any effective risk management program is comprehensive asset identification. SOC2 requires organizations to identify information assets within the scope of their systems, but an enterprise-wide approach extends beyond IT assets to include:

• Tangible assets: Hardware, facilities, physical documents

• Intangible assets: Data, intellectual property, software

• Human resources: Employees and contractors with access to sensitive information

• Services: Cloud providers and third-party platforms

A thorough asset identification process should involve stakeholders from across departments, not just IT. This collaborative approach ensures nothing is overlooked and provides a more complete picture of what needs protection. For each asset, document the owner, type, location, sensitivity level, and dependencies on other systems.

This enterprise-wide asset identification approach provides a stronger foundation than IT-focused methods by capturing the full scope of organizational assets that could impact security and compliance.

Benefits of an Enterprise-Wide Approach

While an IT risk assessment may satisfy basic SOC2 requirements, an enterprise-wide risk management program delivers significant advantages:

• More comprehensive coverage of organizational risks

• Better alignment with business objectives

• Improved stakeholder engagement and understanding

• More effective resource allocation

• Enhanced ability to demonstrate due diligence to clients and regulators

By taking this broader approach, organizations build not just compliance but long-term operational resilience.

Building a SOC2-compliant risk management program requires looking beyond IT to embrace an enterprise-wide perspective. By focusing on comprehensive asset identification, systematic risk assessment, and effective residual risk management, organizations can develop a security foundation that meets SOC2 standards while supporting broader business objectives.

Remember that risk management is not a one-time event but a continuous journey that evolves with your business, technology, and the threat landscape.

At Audit Advantage Group, we specialize in helping organizations build SOC2-compliant risk management programs that are practical, scalable, and tailored to your operational needs. Let us guide you through every step of the process, from asset inventory to ongoing risk monitoring.