The new cybersecurity mandates by the SEC for SaaS systems and SaaS-to-SaaS connections have brought about a need for heightened security measures among public companies. The SEC’s approach to cybersecurity has evolved to include data stored in SaaS systems and the third and fourth-party apps connected to them, with no distinction made between data stored on-premise, in the cloud, or in SaaS environments.

These new mandates come in response to the increasing prevalence of cybersecurity incidents and breaches, with the SEC stating that a significant data breach should not be viewed as immaterial simply because the data are housed in a cloud service. This shift in approach has been motivated by a substantial rise in cybersecurity incidents and the need to protect investors and maintain fair, orderly, and efficient markets.

Despite the perception that SaaS security is sufficient, the reality paints a different picture. The State of SaaS Security report by AppOmni revealed that while 71% of organizations rated their SaaS cybersecurity maturity as mid to high, 79% suffered a cybersecurity incident in the past 12 months. These concerns are further compounded by the widespread use of SaaS applications, with the average global organization using 130 SaaS applications by the end of 2022.

In addition to the vulnerabilities within SaaS systems, there is also a significant risk posed by SaaS-to-SaaS connections, which often go undetected by traditional scanning and monitoring tools. The interconnected nature of these digital ecosystems introduces governance challenges and cybersecurity risks, as organizations make SaaS-to-SaaS connections to enhance productivity. However, this also creates hidden pathways for threat actors to compromise sensitive data and gain unauthorized access.

As a result, the SEC is expanding its regulatory oversight to include prevention measures, requiring CISOs to describe their processes for assessing, identifying, and managing material risks from cybersecurity threats. These new regulations aim to force SaaS customers to adopt better cybersecurity hygiene and foster a proactive cybersecurity culture.

To comply with these new regulations and ensure the security of their SaaS systems and SaaS-to-SaaS connections, organizations can benefit from using a SaaS security posture management (SSPM) tool. This tool allows them to monitor configurations and permissions across all SaaS apps, understand the permissions and reach of SaaS-to-SaaS connections, and detect and alert for suspicious activity.

Ultimately, the SEC’s focus on cybersecurity for SaaS systems and SaaS-to-SaaS connections underscores the importance of protecting sensitive data and maintaining investor confidence. As organizations navigate these new regulations, the need for enhanced cybersecurity measures becomes paramount in safeguarding against data breaches and minimizing their impact.

In conclusion, the evolving approach by the SEC towards SaaS cybersecurity signifies a critical shift in regulatory oversight, prompting organizations to re-evaluate their security measures and adopt more robust cybersecurity practices in the ever-evolving digital landscape.

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