SEC's Clayton Says Companies' Awareness of Cyber Threats Is Growing

The Securities and Exchange Commission is seeing an “appreciation” in company boardrooms “of the importance” of cybersecurity threats, Securities and Exchange Commission Chairman Jay Clayton said Monday.

“We’re seeing increased expertise in the boardroom” on cybersecurity, he says, as companies look beyond cyberattack prevention. They’re saying: “We’ve got this suite of data we need to protect. How can we wall it off? How can we segregate it?” Clayton said at a conference on regulatory developments held in Washington by the American Institute of Certified Public Accountants.

Companies, Clayton added, are also assessing which information they actually need. “What are the things we do need to do our business? Are we collecting them in a way that we can best protect them?” Having “not just a backward- looking conversation, but a forward-looking conversation in the boardroom is essential to moving this [cybersecurity] issue forward.”

SEC Chief Accountant Wesley Bricker said at the conference that technology “can be an ally to companies in their financial reporting activities.”

Technology, he said, “enables good reporting in many, many instances. Technology also enables good auditing, in many, many instances. So it’s an ally in advancing things.” While technology can also “be the opponent; it doesn’t need to be. Reconciling that difference is understanding what technology is designed to do and what it can do, and also what its limitations and risks are. What we don’t want to achieve is a lower-quality reporting system just because we’ve augmented it.”

In other words, he continued, “it’s a balancing of a technology and innovation mindset but also not missing the human element — the human intelligence element of financial reporting.”