TSC-CC7.3 Guidance

TSC-CC7.3 sits in the SOC 2 Common Criteria security monitoring family: you are expected to notice security events and then evaluate them to determine whether they could or did result in failures. In audit terms, this is less about buying a tool and more about demonstrating disciplined operational judgment: what you consider an event, how you review it, how you decide whether a failure occurred, and what you do next.

For a CCO or GRC lead, the fastest path is to operationalize CC7.3 as a lightweight but strict workflow that connects detection sources (SIEM, EDR, cloud logs, IAM alerts, application monitoring, third-party notifications) to a documented investigation and decision record. The output you need is plain: a trail that shows events were reviewed promptly, conclusions were consistent with your policy, and meaningful events triggered escalation, root cause analysis, and corrective actions.

This page gives requirement-level implementation guidance you can deploy quickly, with auditor-friendly artifacts and common pitfalls to avoid, anchored on the AICPA Trust Services Criteria.

Regulatory text

Requirement (excerpt): “The entity evaluates security events to determine whether they could or have resulted in failures.” ¹

What the operator must do:
You must have a defined, repeatable method to (1) receive or detect security events, (2) evaluate each event’s significance, and (3) determine whether the event indicates a failure (or could cause one) in the system, security controls, or service commitments. “Evaluate” means more than acknowledging an alert; it requires analysis and a recorded conclusion tied to your escalation and remediation process. ¹

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Plain-English interpretation (what CC7.3 really demands)

CC7.3 expects you to answer three questions for security-relevant signals:

1. What happened? Identify the event, affected system(s), and initial impact.
2. So what? Determine whether it represents a control breakdown, a policy violation, or a condition that could lead to a failure (confidentiality breach, availability incident, unauthorized access, integrity issue, etc.).
3. Now what? Escalate, contain, remediate, and document lessons learned where warranted.

Auditors typically treat “failure” broadly: a failure can be a security control not operating as designed (for example, logging disabled, MFA bypass, misconfigured access) or a service commitment failure (for example, outage caused by a security event) if those are in scope for your SOC 2 report.

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Who it applies to (entity + operational context)

Applies to:

• Any organization undergoing a SOC 2 audit under the AICPA Trust Services Criteria where the Security principle is in scope. ¹

Operationally relevant teams:

• Security operations (SOC), incident response, IT operations, cloud operations, engineering on-call
• GRC/compliance for control design, evidence strategy, and periodic review
• Product/platform owners for remediation ownership and preventative fixes

Where it shows up in practice:

• SIEM/EDR alert queues and ticketing systems
• Cloud security findings (CSPM), IAM anomaly alerts, WAF alerts
• Third-party breach notifications that implicate your environment
• Bug bounty or responsible disclosure intake that signals exploitation attempts

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What you actually need to do (step-by-step)

1) Write a short “Security Event Evaluation” procedure

Include:

• Event sources you consider in scope (SIEM, EDR, cloud logs, IAM, application telemetry, third-party notifications)
• Definitions: security event, security incident, and “failure” in your environment
• Roles and responsibilities: triage owner, incident commander, approver, escalation contacts
• Decision criteria for “could have resulted in failures” vs “resulted in failures”
• Minimum documentation fields required for every evaluated event

Keep it short but enforceable. Auditors need clarity more than length. ¹

2) Standardize event intake and triage

Implement a single workflow (even if tools vary):

• Route alerts into a central queue (ticketing system, case management, or SOAR)
• Require a first-pass classification: false positive, benign, suspicious, confirmed incident
• Apply a severity model that aligns to escalation requirements and response actions

Practical tip: define mandatory triage fields (asset, user, timestamp, detection source, initial hypothesis). Missing fields become an audit gap quickly.

3) Create an evaluation decision record for each event

For each event, document:

• What evidence you reviewed (logs, endpoint telemetry, IAM events, cloud audit logs)
• Your conclusion: no failure, potential failure, confirmed failure
• Rationale mapped to your criteria (why you reached that conclusion)
• Whether escalation occurred (and to whom), with timestamps

This is the core of the tsc-cc7.3 guidance requirement: a consistent evaluation with a traceable outcome. ¹

4) Define escalation and “failure” handling paths

If the evaluation indicates potential/confirmed failure:

• Open or link an incident record
• Trigger containment and eradication tasks
• Assign remediation owners and due dates
• Decide whether customer communications, legal/privacy review, or third-party notifications are required (based on your internal policies and contractual commitments)

Even if you do not have customer notification duties under CC7.3 itself, auditors expect to see that meaningful events do not stall in triage.

5) Maintain an audit trail (end-to-end)

Your evidence should connect:

• Alert/event → ticket/case → investigation notes → decision → escalation/remediation → closure

If you investigate in chat tools, pull key decisions into the ticket. Chat transcripts alone are rarely clean evidence.

6) Run periodic assessments of the process

At a defined cadence, review:

• A sample of closed events for documentation completeness
• Consistency of severity and “failure” labeling
• Missed escalations or recurring root causes

Document the review and corrective actions. ¹

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Required evidence and artifacts to retain

Auditors will generally want artifacts in three buckets: design, operation, and effectiveness. ¹

Control design (what you say you do)

• Security event evaluation policy/procedure
• Severity matrix and escalation criteria
• Roles/responsibilities (RACI) for triage and incident response
• Tooling inventory of event sources in scope (high level)

Evidence of operation (what you did)

• Event/alert tickets with timestamps, classifications, and dispositions
• Investigation notes showing what was reviewed and the conclusion
• Linked incident records for escalated events
• Change/patch/configuration tickets that show remediation completion

Evidence of effectiveness (proof it works)

• Internal review results of event handling quality
• Lessons learned / post-incident reviews tied to control improvements
• Metrics are optional, but consistency is not. If you do track metrics, keep them stable and explain how you use them.

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Common exam/audit questions and hangups

Questions you should be ready for

• “Show me your process for evaluating security events under CC7.3.” ¹
• “How do you decide whether an event indicates a control failure?”
• “Give me samples of alerts and walk me through the investigation and conclusion.”
• “How do you ensure alerts aren’t closed without adequate review?”
• “How do you know your evaluation process is consistent across analysts/teams?”

Hangups that cause SOC 2 findings

• No written criteria for “failure,” resulting in inconsistent dispositioning
• Evidence scattered across SIEM, tickets, and chat with no clear linkage
• Investigations that end with “closed” but no rationale or proof of review
• No periodic quality review of triage decisions ¹

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Frequent implementation mistakes and how to avoid them

Mistake	Why it fails in audit	Fix
Treating alert acknowledgment as “evaluation”	CC7.3 requires analysis and a conclusion about failures 1	Require minimum investigation fields + rationale before closure
No definition of “failure”	Reviewers can’t test consistency	Define failure categories: control failure, service commitment failure, policy failure
Closing as “false positive” without evidence	Auditors will sample and challenge	Attach log snippets, query references, or investigation notes
No linkage from event → remediation	CC7.3 expects you to detect and act	Enforce ticket linking between event case and fix
Lack of periodic review	Common SOC 2 documentation gap 1	Run scheduled QA reviews and store results

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Enforcement context and risk implications

SOC 2 is an audit framework, not a regulatory enforcement regime, so public enforcement is not the typical mechanism of consequence. The operational risk is still real: if you cannot show consistent security event evaluation, auditors may issue exceptions, narrow your scope, or require compensating controls. That can delay sales cycles, trigger customer assurance concerns, and weaken your incident response posture. ¹

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Practical 30/60/90-day execution plan

Day 0–30: Get to “audit-sample ready”

• Publish a Security Event Evaluation procedure aligned to CC7.3 language. ¹
• Define failure criteria and escalation thresholds; socialize with SecOps and IT.
• Standardize ticket fields (classification, severity, evidence reviewed, conclusion, approver if needed).
• Start retaining a clean evidence set for evaluated events (screenshots, exports, ticket links).

Day 31–60: Make it consistent across sources and teams

• Connect all major event sources into the same case workflow (or define a mapping if multiple tools remain).
• Train responders on what auditors test: rationale, evidence, and linkage to escalation.
• Add QA checks: a reviewer spot-checks closures for completeness and correct labeling.
• Start a recurring review meeting to discuss trends and repeat failures.

Day 61–90: Prove effectiveness and harden the control

• Run a formal periodic assessment of event handling quality; document findings and corrective actions. ¹
• Tune alerting and triage criteria based on what you learned (reduce noise, improve signal).
• Prepare an auditor walkthrough: pick representative samples and pre-build the narrative from alert to closure.
• If you use Daydream for third-party risk and control evidence management, map event sources and tickets into a single evidence register so sampling and linkage are fast during fieldwork.

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How Daydream fits (without creating new complexity)

CC7.3 audits often stall on evidence assembly: events live in security tools, decisions live in tickets, and process documents live elsewhere. Daydream can act as the control evidence hub where you (1) define the CC7.3 control language, (2) store the procedure and severity matrix, and (3) track samples with direct links to the underlying tickets and investigation artifacts. That reduces scramble during SOC 2 testing and makes periodic assessments easier to run and document.

Frequently Asked Questions

What counts as a “security event” for CC7.3?

Treat it as any security-relevant signal that warrants review: alerts, anomalies, reported vulnerabilities, or third-party notifications that could affect your system. Your procedure should explicitly list in-scope sources and how events enter the queue. ¹

Do we need a SIEM to meet the tsc-cc7.3 guidance requirement?

No specific tool is required. Auditors care that events are captured, evaluated, and documented consistently, with evidence that the process runs as written. ¹

How do we prove an event “could have resulted in failures” if no incident occurred?

Document the risk-based reasoning: affected asset criticality, exposure window, control gap, and why escalation was or wasn’t required. Keep the supporting evidence (queries, logs, screenshots) attached to the case.

Can we mark events as false positives without deep investigation notes?

You can, but you still need enough evidence to justify the disposition. A one-word closure is a common sampling failure because the auditor cannot re-perform or validate your conclusion.

What if different teams (IT, Security, Engineering) evaluate events differently?

Normalize the decision criteria and required fields across teams, then run periodic quality checks to enforce consistency. If workflows differ by team, document the differences and show how each meets the same evaluation intent. ¹

How many event samples should we retain for audit?

Retain enough to cover the audit period and show the range of outcomes (false positive, benign, escalated). Your auditor will set the sample size, so focus on making every retained sample complete, linked, and easy to walk through.

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Footnotes

1. AICPA Trust Services Criteria 2017, 2017