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Consider Your Cybersecurity-Related Disclosures

By Randi Morrison posted 02-15-2018 09:18 AM

  
Further to yesterday's report in the weekly Society Alert: "SEC Staff Working on Further Cybersecurity Disclosure Guidance," in her remarks this week at Stanford University: "Mutualism: Reimagining the Role of Shareholders in Modern Corporate Governance," SEC Commissioner Stein expressed her dissatisfaction with the current state of play on corporate cybersecurity disclosure and the Commission's efforts to expand corporate cybersecurity disclosure requirements beyond the 2011-issued guidance:
We at the Commission have not yet adequately pressed forward. While the Commission’s staff has released disclosure guidance for public companies to consider when dealing with cyberrisks and breaches, the Commission can and should do more. I believe the Commission should consider rules to require disclosure of a firm’s enterprise-wide consideration of cyberrisks. I also believe that we should develop rules to ensure that market intermediaries, including broker-dealers and investment advisers, develop and implement policies and procedures to protect investors’ personal information.

The security and integrity of a corporation’s assets, like the SEC’s, is a great responsibility. As I said earlier, cybersecurity has been viewed by many as simply an “IT” problem, hoisted on the shoulders of a company’s chief information officer. Too often, this has led to a failure to integrate cybersecurity into a firm’s enterprise risk management framework. To be sure, some companies are focused on cyberthreats and recognize their potential economic threat. But companies need to do more than simply recognize the problem. They need to heed the calls of their shareholders and treat cyberthreats as a business risk. Corporations and shareholders will both benefit from greater transparency and focus on the risks related to unintended data loss and the collateral consequences.
See our recent Cybersecurity News & Resources report; these also-recent reports: "Cybersecurity-Related Disclosure: Here's How" and "Cybersecurity Oversight & Program Checklist"; sample risk oversight disclosures galore in Donnelley,s Guide to Effective Proxies (posted on our Annual Meeting page), and numerous additional cybersecurity & data privacy management and board oversight resources on our webpage here.
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