New SEC Cyber Security Compliance Requirement: Will It Impact Your Business?

The U.S. Securities and Exchange Commission (SEC) has recently set in place some new cyber security compliance rules to accommodate the growing world of technology. 

For businesses everywhere, cyber security continues to be a major concern. Technology is advancing by the day but that also means cyber criminals are becoming smarter. Recognizing this evolution, the SEC updated their cyber security compliance requirements. 

It is important for businesses to stay updated in all areas of technology, especially with growing cyber security concerns. So, let’s delve into the new SEC rules, and how they may affect your business. 

Understanding the SEC’s New Cyber Security Compliance Rules

The new SEC rules focus on the importance of taking the proper cyber security measures. Businesses that operate with the use of digital technology should understand the new requirements.

The main two new requirements are the disclosing of cyber security plans and reporting cyber security incidents in a timely manner. 

If your business is registered in the U.S. or is a foreign private issuer, these rules will affect you. Let’s discuss this more. 

Disclosure of Cyber Security Plans

The first requirement covers the information your business is required to report in regard to the cyber security measures you are taking. 

The report is to be made on the annual Form 10-K filing.  

In this report, businesses must include:

• Material effects (or reasonably likely material effects) from cyber security threats that have or could happen.
• The company’s process for assessing and managing material risks from cyber threats.
• The board of directors’ oversight of cyber security risks.
• Management’s role in managing cyber security threats and risks. 

Reporting Cyber Security Incidents

This rule is the disclosure of cybersecurity incidents on the new item 1.05 of Form 8-K. 

Businesses must report these incidents in a timely manner (four days after the incident is determined to be material). They are required to report certain aspects of these incidents such as scope, nature, timing and its material impact. 

There is one exception to the four-day rule: If the report would pose a substantial risk to public safety or national security the rule does not apply. 

Will Your Organization Be Impacted?

If your business is required to comply with the new SEC cyber security requirements, it may be time for an updated cyber security assessment of your protocols. 

What are some areas that these cyber security compliance requirements might impact your business?

Increased Innovation in Technology

As businesses work to ensure their technology meets the SEC requirements, they will be searching for advanced cyber security technology.

A surge in demand for better technology and cyber security measures will likely encourage a wave of innovation in the cyber security and technology industry. The increased innovation will lead to newer and better cyber security protocols and techniques.

Incident Response Protocols

Because the new requirements are heavily focused on incident response, businesses will be investing in new protocols to detect and respond to threats. This is beneficial to ensure a quick and effective response to events such as data breaches. 

Investor Confidence

For investors, cyber security is a big concern, and when businesses suffer from threats and breaches, investors will often lose their confidence. 

The good thing is, as protocols are being improved to comply with the new SEC rules, investors will take notice. The increased security will increase investors’ confidence in companies and could lead to better investments. 

Vendor Management Issues

Along with assessing current protocols within the business, companies also need to also assess their vendors’ protocols. Businesses will need to ensure that their vendors are taking the proper cyber security measures, and that they meet the new requirements.

The issues can arise if vendors are not handling cyber security efficiently. In this case, businesses may need to be on the hunt for alternative vendors that meet expectations. 

Burden on Time and Resources

The process of ensuring proper cyber security compliance and safety can be intense and time-consuming. The burden on a business’s time and resources might be substantial, especially if they are doing it alone and without an IT provider. 

Small businesses might especially feel this effect because of their already limited resources. That is why Aeko specialists are specially equipped to help manage  IT and cyber security for large and small businesses alike. 

Don’t let these new requirements scare you. Reach out for help from experienced pros.

Need Help With Cyber Security Compliance?

Ensuring you comply with all of the new SEC requirements, along with protecting yourself from the increased cyber security threats can be intimidating. You don’t have to do it all alone.

Contact us or book a consultation with our Aeko Technologies team. Together, we can assess your current cyber security protocols, and find a way to affordably and effectively update them to meet all compliance requirements.