The Role of Penetration Testing in Compliance: Meeting Industry Standards

How we did it: SaaS companies and Software providers listen up

Bright studio lights beam down on contestants sitting at laptops, furiously typing away. But this isn't a typing competition - it's a race to hack into a simulated banking application first. Clocks count down as progress bars creep forward. Who will emerge victorious?

This hacking scene plays out not on reality TV but at Defcon's "Capture the Flag" ethical hacking games. It offers a glimpse into the mindset of a penetration tester. Like clever burglars, pen-testers use tools and creativity to find every possible way into a protected system - but for a constructive purpose: hardening cyber defences.

For SaaS and software companies, penetration testing is critical for strengthening security and satisfying compliance mandates. Let's explore leveraging pen tests to keep customer data safe and auditors happy.

Why Pentesting Matters for SaaS Security

SaaS and cloud-based software vendors store sensitive customer data central to business operations. Whether healthcare records, financial information, intellectual property, or other confidential data, SaaS providers are lucrative targets for hackers seeking valuable records. A data breach could be catastrophic for customer trust and achieving compliance.

SaaS providers must regularly pentest their applications, APIs, networks, databases, and cloud infrastructure to validate security and prevent actual attacks. Ethical pen tests identify vulnerabilities and misconfigurations before bad actors do. Testing mimics actual attacks, assuring that defences work.

Well-executed penetration tests combine automated scanning with manual hacking techniques. Automated tools quickly find low-hanging flaws, while expert testers uncover business logic issues that devices miss. Repeated testing also builds familiarity with the environment needed to test creatively.

Meeting Compliance Mandates Through Testing

Regular penetration testing is a central component for meeting key compliance frameworks mandatory for SaaS and software companies handling sensitive customer data.

PCI DSS: The PCI Data Security Standard applies to any vendor that processes, stores, or transmits credit card data. Requirement 11.3 mandates annual external and internal penetration testing, particularly after any significant environmental changes that could impact security. Testing must cover the entire cardholder data environment to maintain compliance.
HIPAA: The HIPAA Security Rule requires covered entities to implement mechanisms for guarding healthcare data integrity, confidentiality, and availability. Conducting annual penetration testing is specifically called out as an implementation specification under the Security Management Process standard. HIPAA also requires remediating any critical test findings.
SOC 2: This trusted data security certification for cloud/SaaS providers has testing procedures built into the SOC 2 Trust Services Criteria. Penetration testing provides auditors with evidence that security controls function correctly to meet criteria like infrastructure and software vulnerability management.
FedRAMP: For cloud services used by US government agencies, FedRAMP has rigorous pentest requirements, including annual testing, retesting all moderate+ findings, and demonstrating remediation efforts. Providers must submit detailed test results and remediation information.
GDPR: While not an explicit GDPR requirement, penetration testing demonstrates a SaaS company is taking proactive measures to secure EU citizen data in compliance with privacy principles. Documenting testing helps establish accountability around security controls.
Overall, continuous investment in penetration testing is necessary for SaaS/software vendors to satisfy significant compliance regulations and, more importantly, truly protect customer data.

Notable SaaS Compliance Failures and Breaches

Financial penalties, lawsuits, and embarrassing headlines - are just some of the unfortunate consequences SaaS companies can face when compliance lapses lead to data breaches. Let's explore some cautionary tales of non-compliance and how compliance-driven penetration testing could have helped avoid disaster.
Popular communications platform Twilio failed a PCI DSS audit after an internal API misconfiguration exposed customer call data. The compliance failure forced Twilio to take impacted products offline abruptly, causing significant disruption for thousands of customers.
Email marketing leader Mailchimp fell short on SOC 2 security controls. Hackers exploited the weakness to breach systems and steal data from over 100 Mailchimp customers. The New York State Department of Financial Services hit Mailchimp with a $4 million penalty for the incident.

RingCentral (2022)

VoIP provider RingCentral suffered a breach that leaked sensitive customer call records and account data. RingCentral lacked controls mandated by compliance frameworks like HIPAA and GDPR that could have prevented the breach, triggering multiple state investigations.

Web infrastructure company Cloudflare exposed private keys, passwords, and other secrets, betraying promises made in its own published SOC 2 report. According to California's data breach notification law, Cloudflare was compelled to report the incident. 

These incidents inflicted significant damages both to the affected SaaS vendors and their customers:
Customer Churn and Revenue Loss: Angry customers fled breached vendors, directly hitting revenues. Twilio lost major customers like Airbnb and Okta.
Regulatory Fines and Lawsuits: New York DFS fined Mailchimp $4 million—RingCentral faces steep penalties from state regulators. Customers filed class action lawsuits.
Reputational Damage: All the incidents generated terrible PR, associating vendors with lax security. Brand reputations took a significant hit.
Increased Scrutiny and Reporting Requirements: Regulators mandated tightened controls, more frequent audits, and additional compliance reporting. 

How Compliance-Driven Pentesting Could Have Helped

What if these vendors had leveraged comprehensive, compliance-focused penetration testing?
Discovered Security Gaps: Pentests could have surfaced vulnerabilities like misconfigurations that hackers ultimately exploited.
Validated Control Effectiveness: Testing would ensure security controls met compliance requirements on paper and in practice.
Highlighted Risks for Remediation: Management would be aware of risks revealed by pen tests warranting priority fixing.
Met Compliance Testing Standards: Pentest reports could demonstrate vendors satisfy testing mandates in PCI DSS, HIPAA, SOC 2 etc.
Regular, rigorous penetration testing tailored to compliance requirements could have saved these SaaS vendors from failure. Wise SaaS companies make compliance-driven pen-testing a standard security practice long before disaster strikes.

Keys For Your Business to Making Pentests Compliance-Ready

Specific best practices ensure penetration testing provides maximum value for both security and compliance:

Appropriate Scoping: Pentests should be scoped to emulate likely attack vectors and access levels based on the threat model. Testing also needs to span compliance-relevant systems storing sensitive and regulated data.
Retesting / Continuous Testing: Compliance requires regular testing, such as annually for HIPAA or after significant changes for PCI DSS. Shorter 90-day intervals further strengthen defences. Automating elements of testing increases the frequency.
Post-Pentest Remediation: More than simply conducting tests is required. Vendors must also remediate findings, especially critical ones. Tracking remediation progress provides auditors with evidence of risk reduction.
Reporting: Comprehensive reports contain the technical details and proof of testing rigour that auditors seek. Mere vulnerability scan reports need to be more thorough.

Going Beyond Compliance Minimums

While penetrating testing for compliance sets a security baseline, truly robust defences require going above and beyond minimal mandated testing.

Test More than Compliance Covers - Don't limit pen tests to only systems in scope for PCI, HIPAA etc. Expand testing to additional environments, new features, and forward-looking use cases still need to be subject to regulations. Proactively assess future coverage areas.

Combine Automated and Manual Testing - Automated scans help rapidly identify surface vulnerabilities, but compliance-worthy testing involves manual hacking techniques to uncover deeper logic flaws scanners can't find. Blend both approaches for maximum coverage.
Attack From All Angles - Don't penetration test solely from outside or inside perspectives. Real-world attackers use both external access and compromised internal identities. Mimic these tactics from all vectors.
Go Deep and Wide - Test the application and lower-level network, cloud, identity, and system components. Hack individual features and end-to-end workflows.
Fix Everything Critical - Your business needs to patch more surface issues to pass an audit. Eliminate all penetration test findings deemed a high or critical risk for complete protection.
Confirm Remediation - Rescan to verify fixes remediate the root causes of findings, not just symptoms. Certain flaws require deep re-architecting to address fully.
Innovate Testing - Continuously expand methodologies with creative new exploit techniques, custom tooling, and fresh perspectives to avoid complacency.
SaaS companies can achieve robust cyber resilience on par with industry leaders by taking testing beyond the minimum needed for compliance checkmarks.

Partnering for Success

Conducting practical pen tests requires specialised expertise, tools, and time that in-house teams may need more. Leveraging an experienced penetration testing service provider brings several benefits for compliance and overall cyber defence:

Depth of Experience: Seasoned pros conduct more creative, thorough tests based on extensive experience hacking similar environments.

Objective Perspective: External testers approach systems without assumptions of developers or in-house staff.

Latest Techniques: Consultants stay on top of emerging hacker tricks, attack vectors, and tools.

Efficient Testing: Dedicated testers need minimal time and information to start testing. No ramp-up or training is required.

Actionable Results: Testing services deliver detailed reports with prioritised remediation guidance mapped to compliance controls. Partnering with seasoned penetration testers provides SaaS companies with a fast track to compliance while taking security programs to the next level.

The Next Step for Your SaaS Business

With an ethical hacking dream team on their side, SaaS providers can tackle compliance standards and strengthen defences with confidence. Connect with professional pentest experts to get started. Feel free to reach out to our team of certified masters to discuss your compliance and security goals - we'd be happy to help review your needs. Let the games begin!
The costly consequences of compliance failures make a compelling case for SaaS and software companies to invest in comprehensive penetration testing programs that exceed check-the-box auditing.

Don't leave your organisation exposed and your customer's data at risk. Avoid the reputational damage and expensive lawsuits that come with breaches resulting from non-compliance.
Partner with the experts at Microminder to implement customisable penetration testing tailored to your specific compliance requirements and security goals. Our experienced team provides in-depth compliance-ready reporting to satisfy auditors while bolstering your cyber defences.
Contact Microminder today to start with continuous penetration testing designed to help your systems and organisation stay ahead of evolving threats while meeting essential industry standards for security and compliance. Don't become the next SaaS company to make headlines for the wrong reasons!