SEC Sweep Examinations of COVID-19 Business Continuity Plans
In response to the COVID-19 crisis, the Division of Investment Management has also encouraged firms to “evaluate their business continuity plans.”1 Moreover, the SEC is conducting sweep exams focused on Business Continuity Plans (“BCP”) with specific attention to the continuation of operations during the COVID-19 pandemic. Further, regular examinations may include greater focus on the firm’s BCP plans. Examples of the information requested by the SEC during these examinations include:
- Business continuity plan and other firm compliance policies and procedures addressing the continuity of business operations.
- Firm-issued policies, procedures guidance and other information tailored to address the continuity of the business operations specific to pandemics.
- Unforeseen issues or weaknesses in the activation of the BCP plan during the COVID-19 pandemic.
- How the BCP plan addresses the resiliency practices of third-party vendors, service providers and partners.
- Cybersecurity and policies and procedures regarding employee remote access – for more information on this topic please see the Alaric Alert COVID-19: Protecting Employees Without Sacrificing Cyber Security.
- General questions regarding difficulty or limitations in the ability to operate critical systems and operations during the pandemic.
Firms need to be prepared to respond to inquiries and information requests from regulators concerning their BCP’s and the firm’s response to the pandemic. Also, they should assess their current BCP to focus on maintaining business continuity and security when most or all of the workforce is remote.
Alaric can assist firms in reviewing and updating their business continuity plans and their pandemic continuity plans to comply with regulators expectations. With over 275 years of cumulative financial services compliance expertise, we have managed over 100 regulatory examinations while serving as chief compliance officers. Leveraging this experience, our team of former regulators, lawyers, and in-house chief compliance officers can help your firm be audit ready.
1 Division of Investment Management Staff Statement on Fund Board Meetings and Unforeseen or Emergency Circumstances Related to Coronavirus Disease 2019 (COVID-19), https://www.sec.gov/