Continuous compliance cycle: sorting the quick from the dead (SEC-regulated firms)
How to level up your AI governance and security game without wasting time on unnecessary compliance games
Why continuous compliance is non-negotiable for companies the Securities and Exchange Commission (SEC) regulates:
Technology is changing faster
AI is popping up everywhere
Demand for returns means using it isn’t optional
as-a-Service deployments are the norm, making governance key
Regulatory requirements are complex and evolving quickly
The SEC is “sweeping” for AI use
Investment advisor cybersecurity rules are due soon
Some have already been hit with “AI washing” charges
Additional proposed AI rules layer on even more demands
The costs of non-compliance are high
Data breach victims are suing a private equity firm
The SEC fined eight firms $750,000 for not having or following cyber policies
Another paid $4 million because of material nonpublic information mishandling
How StackAware advises SEC-regulated clients handle these risks
1. Assign clear accountability
If everyone is in charge, no one is in charge
Defining policy and procedure ownership is the key here
We recommend the PRIDE framework to keep everyone on the same page
2. Implement a continuous review process
Yearly reviews aren’t enough to stay secure and compliant. Drive them based on:
Emerging risks
Business events
New compliance demands
Technological developments
“Regulation-by-enforcement” events
3. Leverage compliance-as-code
PDF policies aren’t going to cut it. You’ll be dealing with:
Unclear references
Duplicative and conflicting documents
Painful change management and review meetings
Use a single source of truth to drive your compliance program and reap the rewards.
Define standards-focused “views” of your policies while still allowing for effective cyber risk management.
And take a peek at the StackAware AI governance platform if you want to see what this looks like.
Security is compliance
Companies can tie themselves in knots checking compliance boxes while neglecting risk-based cybersecurity practices that actually stop breaches. Examples include:
Relying solely on audit reports when evaluating vendor security
Publishing “just ban it” AI policies no one follows, leading to shadow AI
Boiling the ocean by claiming/trying to fix “all high and critical” vulnerabilities
The single best way to stay out of compliance hot water?
A strong cybersecurity posture.
That’s because regulators clearly think, “no smoke, no fire.”
So preventing any embers from bursting into flames will help you on two fronts: avoiding breaches and the penalties that often follow them.
Which is why StackAware advises against performative compliance efforts when they aren’t mandatory. Rather, focus on getting your cybersecurity shields up.
In 2024, continuous compliance is the name of the game.
Poor security when leveraging AI tools (and in general) will hurt your bottom line: directly - through fines - and indirectly - through all of the other types of damage incidents cause.
So if you are looking to stay one step ahead of cyber criminals and an increasingly aggressive SEC while still driving returns with AI, we can help.