​GAM 2019: Risk and the Regulator

U.S. SEC Commissioner Peirce talks risk and what's on the horizon for the agency.

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​In the second general session of the day, IIA President and CEO Richard Chambers spoke with Commissioner Hester M. Peirce of the U.S. Securities and Exchange Commission (SEC). Some takeaways from this session: 

  • Peirce, who was sworn in a little over a year ago, talked about changes at the SEC. She noted that internal auditors provide a vital service and "only as a last resort should we turn to regulation." 
  • Chambers noted that the SEC recently created a chief risk officer (CRO) role. Peirce said the SEC is a very attractive target for a lot of risks. "[The CRO] comes at a time when we're trying to think through the risks our organization faces," she explained. "The goal is to think through those things before they become an issue."
  • Peirce said the SEC is very personnel focused, "but sometimes we need to think if there are ways we can bring technology in to make our personnel more effective." 


Chambers asked Peirce what the most serious risks to investor confidence in capital markets are. Pierce shared: 

  • Brexit. There is so much uncertainty about rules that are going to govern Brexit, she said, and the financial industry is such a global industry. 
  • Cyber. The risk is that financial institutions do not do a good job of protecting themselves.
  • Regulating the capital markets: The SEC needs to modernize. "We tend to be very paper-based at the SEC. It's a risk. We need to be much more willing to let firms experiment with technology." 


The SEC's strategic focus moving forward?

  • Focusing on retail investors — cases that deal with smaller issues but can wipe away someone's retirement savings.
  • Communicating with retail investors in a way they can understand. Giving them information the way that they need it. "What can we do to make our market more attractive to companies — to make them want to go public," she asks.
  • Innovation. "We're an old agency," she said. "How can we modernize our rules?"
  • Performance (elevating SEC analytical capabilities). The SEC has invested in technology that allows it to look at the market and see what activity is going on. 

Anne Millage
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About the Author



Anne MillageAnne Millage<p> Anne Millage is editor in chi​ef of <em>Internal Auditor</em> magazine and editorial director at The IIA.​​​</p>https://iaonline.theiia.org/authors/Pages/Anne-Millage.aspx


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