03-15-13 | Blog Post

State of Cloud Security: Vetting Applications and Cloud Providers for Compliance and Security

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The latest report from the Ponemon Institute, located in Traverse City, Michigan, sought to analyze trends in cloud security among organizations that use software as a service (SaaS) and infrastructure as a service (IaaS). Only half of organizations are assessing the effect of the cloud on the ability to protect confidential information, and similarly, 51 percent are concerned about the security of cloud computing resources, per usual.

State of Cloud Security
State of Cloud Security; Source: The Ponemon Institute

Only 43 percent of organizations audit or assess cloud computing resources before deployment. While vetting cloud computing providers for security may seem time-consuming, organizations should ask if their cloud infrastructure as a service providers (IaaS) can provide an updated audit report of their services and data center facilities. What types of audits should you look for in a cloud computing/data center provider?

The Statement on Standards for Attestation Engagements No. 16 replaced SAS 70 in June 2011. A SSAE 16 audit measures the controls relevant to financial reporting; it verifies that the controls and processes set in place by a data center are actually followed. There are two types:

  • Type I – A data center’s description and assertion of controls, as reported by the company.
  • Type II – Auditors test the accuracy of the controls and the implementation and effectiveness of controls over a specified period of time.

The first of three new Service Organization Controls reports developed by the AICPA, this report measures the controls of a data center as relevant to financial reporting. It is essentially the same as a SSAE 16 audit.

SOC 2 measures controls specifically related to IT and data center service providers, and gives the most insight into your service provider’s ability to secure your data in their hosting environment. The five controls are security, availability, processing integrity (ensuring system accuracy, completion and authorization), confidentiality and privacy. There are two types:

  • Type I – A data center’s system and suitability of its design of controls, as reported by the company.
  • Type II – Includes everything in Type 1, with the addition of verification of an auditor’s opinion on the operating effectiveness of the controls.

This report includes the auditor’s opinion of SOC 2 components with an additional seal of approval to be used on websites and other documents. The report is less detailed and technical than a SOC 2 report, but can be used for marketing.

For e-commerce and healthcare cloud users, industry-specific compliance is required. To best ensure security, seek the following audits and audit reports from your HIPAA or PCI hosting provider:

Mandated by the U.S. Health and Human Services Dept., the Health Insurance Portability and Accountability Act of 1996 specifies laws to secure protected health information (PHI), or patient health data (medical records).

When it comes to data centers, a hosting provider’s facilities, solutions and staff need to meet HIPAA compliance in order to ensure sensitive patient information is protected. A HIPAA audit conducted by an independent auditor against the OCR HIPAA Audit Protocol can provide a documented report to prove a data center operator has the proper policies and procedures in place to provide HIPAA hosting solutions in fully HIPAA compliant data centers.

The recent final HIPAA omnibus rule mandates that HIPAA cloud providers, are, in fact, considered business associates – and subsequently, are held responsible for compliance, same as covered entities and subcontractors.

No other audit or report can provide evidence of full HIPAA compliance.

The Payment Card Industry Data Security Standard was created by the major credit card issuers, and applies to companies that accept, store process and transmit credit cardholder data.

When it comes to hosting providers, they need to prove they have a PCI compliant data center facility with an independent audit conducted by a QSA (Quality Security Assessor) to prove they have achieved an attestation of compliance with the latest PCI DSS version 2.0 standards. They should also know what specific technical, physical and administrative security services can help your company fulfill the 12 PCI requirements.

Trusting your mission critical data and applications to a managed cloud hosting provider without the above audits and audit reports is akin to gambling when the risks are simply too high – when the lifeblood of your business is uptime and availability, you need to invest accordingly. Likewise, partnering with a cloud provider that prioritizes compliance and security will help your company win in longevity.

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Security of Cloud Computing Users Study (PDF)

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