The U.S. Securities and Exchange Commission (SEC) has proposed a new rule on Tuesday that would require registered investment advisors to have plans in place to ensure they could continue operating in the face of business disruptions due to events such as a natural disaster, a cyber attack, a technology failure, or the departure of key personnel, among other possibilities, so that client and investor harm is minimized.

“While an advisor may not always be able to prevent significant disruptions to its operations, advance planning and preparation can help mitigate the effects of such disruptions and in some cases, minimize the likelihood of their occurrence, which is an objective of this rule,” says SEC chairwoman Mary Jo White in a statement.

The proposed rule would require these plans to include policies and procedures dealing with their systems; the protection of data; the use of alternative physical locations; communication plans; reviews of third-party service providers; and plans for winding down. Firms would also be required to review the adequacy and effectiveness of these plans annually.

In addition to the proposed rule, the SEC also issued guidance addressing business continuity planning for registered investment companies.

“This is the latest action in the commission’s efforts to modernize and enhance regulatory safeguards for the asset-management industry, which includes rules previously proposed that would modernize the information reported to the commission and investors, enhance fund liquidity management, and strengthen the regulation of funds’ use of derivatives,” White notes.

The proposals will go out for a 60-day comment period.