The answer to this question is clearly based upon the level of risk that the relocation company represents to its clients. First, one must gain an understanding of the services provided by the relocation company, the sensitivity of the data shared with the relocation company, the risk to the user organization should the relocation company experience a data loss or security incident, and the awarding of relocation benefits not in accordance with the user organization’s relocation policies.
The primary service provided by relocation companies is relocation expense management for user organizations. Many relocation companies also provide policy development or counseling, home sales, purchasing and rental, transportation of household goods and payroll and tax assistance. With these services, relocation companies also provide sophisticated tools for transferees to use to help manage the relocation and other services provided. These tools house sensitive transferee information and manage the expenses that impact the user organization’s financial statements.
Data and Risk
Depending on the type of service provided by the relocation company, the data being handled can span from names and addresses to social security numbers, bank account numbers, financial data, or payroll information. Some of this data is highly sensitive and if breached, could be used to commit identity theft. This could result in material impact to transferees. This could also be considered a required reportable event under most state information breach laws and result in substantial cost to the user organization. Not only does the relocation company hold this sensitive information, any vendor utilized by the relocation company in the services performed may also have access to the same information. Depending on where the transferees are moving from and to, there could be potentially hundreds of different vendors utilized by the relocation company. The inherent risk of providing such sensitive information must be considered by user organizations, and prior to selecting a relocation company, the sophistication of the security and internal controls of the relocation company needs to be assessed.
When performing services for a user organization, the relocation company is directed to follow the user organization’s policies for allowable services and expense thresholds. If these policies are not followed, there could be higher than expected costs or payments for services not allowed for the user organization. If payroll or tax services are performed by the relocation company, the accuracy of these services are essential to the employees being relocated.
Third-party management and regulatory requirements have significantly increased for a number of industries. In particular, regulators are placing increased pressure on financial institutions to assess the security and controls of third-party vendors, evaluate data protection practices and understand the risk of their business partners. Healthcare organizations have adopted policies that require all third parties to demonstrate HITRUST compliance. Organizations migrating to a cloud environment have also raised the awareness of the need to evaluate data-protection capabilities of all business partners with which they share information.
Should a relocation company have a SOC report? Clearly, there is considerable risk associated with many of the data-fueled services provided by relocation companies, along with significant financial implications, that would warrant a SOC report. While a SOC report is not a requirement of the industry, the report would demonstrate to the user organizations that the level of security providing protection of data and the accurate and complete processing of expenses are major objectives and are taken seriously by senior management of the organization. A SOC report would also present a distinct competitive and marketing advantage for the relocation company, providing an authoritative and respected method to communicate and demonstrate to the marketplace that protection of client information is as valuable as the quality of the service that it provides.
Do you think your organization could benefit from a SOC report? Visit our Service Organization Controls page or contact one of our professionals to discuss your needs.
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Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.