170+ Cybersecurity Regulations and Counting: What SaaS Companies Need to Know

A recent paper from MIT Sloan, Analyzing and Categorizing Emerging Cybersecurity Regulations by Marotta and Madnick, examined more than 170 cybersecurity regulations across the US, EU, and other regions. The findings indicate that regulatory complexity is increasing rapidly, and 60% of organizations are projected to face challenges in meeting compliance requirements by 2026.

These challenges are not hypothetical. SaaS companies selling to enterprises, pursuing SOC 2 certification, or preparing for funding rounds are already experiencing significant regulatory pressure.

The Regulatory Landscape is Fragmented by Design

The MIT researchers identified the phenomenon of “Regulatory Pluralism,” which refers to the coexistence of overlapping regulations at local, federal, and international levels. For example, a SaaS company serving US healthcare clients, European enterprises, and government contractors may need to address multiple regulatory frameworks simultaneously, including:

HIPAA (healthcare data)
GDPR (EU data privacy)
CCPA/CPRA (California privacy)
SOC 2 (enterprise sales)
FedRAMP (government)
NIS2 Directive (EU network security)
SEC Cybersecurity Rules (if publicly traded)

Each regulation imposes distinct incident-reporting timelines, risk-assessment requirements, and technical controls. For instance, the GDPR mandates breach notification within 72 hours. CIRCIA requires critical infrastructure operators to report incidents within 72 hours and ransomware payments within 24 hours. The SEC requires disclosure of “material” incidents, although the definition of materiality remains intentionally ambiguous.

The paper categorizes 17 distinct regulatory features across five domains:

Category	What It Covers
Organizational Cybersecurity	Governance, cyber hygiene, supply chain security
Preparedness & Response	Risk assessment, incident reporting, operational resilience
Protection & Defense	Data privacy, critical infrastructure, national security
Software & Technology	SBOM, security by design, emerging tech (AI, IoT)
Information Sharing	Cross-border data transfer, threat intelligence exchange

Data privacy is the most prevalent feature across all regulations, while incident reporting represents the fastest-growing regulatory requirement.

The Gap Between Regulations and Technology

One of the paper’s most notable findings is the limited alignment between Security by Design principles and the realities of Emerging Technologies in current regulatory frameworks. In other words, regulations have not kept pace with contemporary software development and deployment practices.

This distinction is significant because SaaS companies operate differently from traditional enterprises. Their attack surface extends beyond an Active Directory domain and a perimeter firewall, encompassing:

Web applications exposed to the internet 24/7
APIs that third parties integrate with
Cloud infrastructure spanning multiple providers and regions
CI/CD pipelines that deploy code dozens of times per day
Mobile applications running on devices you don’t control

Traditional penetration testing, which often involves extensive internal network mapping and exploitation of unpatched Windows servers, does not adequately address the risks faced by modern SaaS environments. Such testing may fulfill compliance requirements but often overlooks critical vulnerabilities.

What the Regulations Actually Require

When you dig into the regulatory text, the requirements cluster around a few core themes:

1. Risk Assessment and Management

Nearly every framework requires documented risk assessment. The NIST Cybersecurity Framework 2.0 (released February 2024) now includes “Govern” as a core function, elevating cybersecurity to a board-level concern. The SEC’s 2023 rules require public companies to describe their “processes for assessing, identifying, and managing material risks from cybersecurity threats.”

In practice, organizations must demonstrate a comprehensive understanding of their attack surface and provide evidence of thorough testing.

2. Incident Reporting

The trend is toward faster, more detailed disclosure. CIRCIA requires reporting within 72 hours. NIS2 tightened the EU’s requirements and expanded the definition of covered entities. The paper notes that the Colonial Pipeline attack accelerated this trend—TSA issued new mandates requiring pipeline operators to report incidents within 12 hours.

In effect, organizations must be able to detect breaches promptly, which requires establishing a baseline for normal operations and implementing effective detection capabilities.

3. Security by Design

The EU Cyber Resilience Act (approved March 2024) mandates security-by-design for products with digital elements. The California IoT Act requires manufacturers to implement reasonable security features. CMMC 2.0 requires defense contractors to demonstrate that security practices are embedded in their operations.

Security must be integrated throughout the development process rather than added only in preparation for an audit.

4. Supply Chain Security

The SolarWinds breach demonstrated how a single compromised vendor can cascade across thousands of organizations. Regulations now explicitly address supply chain risk—FAR for federal contractors, GDPR for data processors, NIS2 for essential services.

Consequently, the security posture of vendors directly impacts an organization’s risk profile, and customers increasingly expect transparency regarding these practices.

The Penetration Testing Gap

A significant disconnect exists: most penetration testing engagements are structured for a regulatory environment that is now outdated.

A typical “enterprise pentest” focuses on:

Internal network enumeration
Active Directory exploitation
Privilege escalation on Windows endpoints
Physical security assessment

These risks are relevant for organizations with traditional IT infrastructure. However, SaaS companies operating on platforms such as AWS face a fundamentally different set of challenges:

No Active Directory (you use Okta or Google Workspace)
No internal network (everything is cloud-native)
No Windows servers (you run containers on Linux)
No physical offices to assess (your team is remote)

When auditors or enterprise customers request a “penetration test report,” they require evidence that the systems housing customer data have been thoroughly tested. For SaaS organizations, this entails:

Web Application Testing

OWASP Top 10 vulnerabilities
Business logic flaws specific to your application
Authentication and session management
API security (REST, GraphQL)
Input validation and injection attacks

Cloud Penetration Testing

IAM misconfigurations (overly permissive roles, exposed credentials)
Storage security (public S3 buckets, encryption at rest)
Network security (security groups, VPC configuration)
Serverless function vulnerabilities
Container and Kubernetes security

Mobile Application Testing

Certificate pinning implementation
Local data storage security
API communication security
Binary protections

These environments are susceptible to SSRF-to-cloud-credential attack chains. For example, the Capital One breach involved an SSRF vulnerability in a web application, which enabled an attacker to access the AWS metadata service and obtain IAM credentials, compromising 106 million customer records. Such vulnerabilities are not typically identified through traditional Active Directory domain scanning.

Mapping Testing to Compliance Requirements

The MIT paper identified CIS benchmarks as a key framework referenced across multiple regulations. The Center for Internet Security publishes benchmarks for AWS, Azure, and GCP that map directly to regulatory requirements.

A well-structured cloud penetration test should validate:

CIS Control Area	What We Test
Identity and Access Management	IAM policies, MFA enforcement, privilege escalation paths
Logging and Monitoring	CloudTrail configuration, log integrity, detection capabilities
Networking	Security group rules, VPC flow logs, exposed services
Storage	S3 bucket policies, encryption, public access

Similarly, web application testing should map to OWASP ASVS (Application Security Verification Standard), which provides three levels of rigor:

Level 1: Minimum for all applications
Level 2: Recommended for applications handling sensitive data
Level 3: Required for critical applications (healthcare, financial services)

When responding to enterprise customer inquiries regarding penetration testing, organizations should reference specific frameworks and demonstrate comprehensive coverage of relevant controls, rather than providing a simple affirmative response.

The Compliance Advantage

The MIT paper highlights that organizations adopting a proactive approach to compliance can achieve a significant competitive advantage.

“Instead of passively reacting to regulatory requirements as they emerge, organizations can proactively set their cybersecurity controls to not only meet but potentially surpass future regulatory expectations.”

For SaaS companies, maintaining an up-to-date penetration test report fulfills several critical functions:

Enterprise Sales: Procurement teams require third-party security validation. Having a recent report (not 18 months old) accelerates deal closure.
Investor Due Diligence: Series A and B investors increasingly ask about security posture. A penetration test demonstrates mature security practices.
Compliance Certifications: SOC 2, ISO 27001, and HIPAA audits often require evidence of penetration testing. Testing proactively avoids last-minute scrambles.
Incident Prevention: The primary objective is to identify vulnerabilities before they can be exploited by attackers.

What We Do at Bagheera Labs

We specialize in penetration testing for SaaS companies. Our engagements focus on the attack surface that actually matters for cloud-native organizations:

Web Application Penetration Testing

Manual testing beyond automated scanners
Business logic and authentication flaws
API security assessment
OWASP Top 10 and ASVS coverage

Cloud Penetration Testing

AWS, Azure, and GCP environments
IAM and privilege escalation
Storage and network misconfigurations
CIS benchmark validation

Mobile Application Testing

iOS and Android security assessment
API communication security
Local storage and credential handling

Our approach excludes Active Directory and internal network assessments, focusing instead on the attack surface relevant to modern SaaS operations.

Each engagement results in a single comprehensive report, with coverage mapped to both OWASP and CIS benchmarks—the frameworks most frequently referenced by enterprise customers and auditors.

The regulatory landscape continues to grow in complexity. The MIT researchers documented more than 170 regulations, with new requirements emerging regularly. NIS2 and the EU AI Act are now in effect, and state-level privacy laws continue to proliferate throughout the United States.

The critical consideration is not whether security testing is necessary, but whether the testing program aligns with the organization’s actual risk profile.

References:

Marotta, A., & Madnick, S. (2025). Analyzing and Categorizing Emerging Cybersecurity Regulations. ACM Computing Surveys, 58(2), Article 51. https://doi.org/10.1145/3757318