New SEC Rules around Cybersecurity Incident Disclosures
The US Securities and Exchange Commission adopted final rules around the disclosure of cybersecurity incidents. There are two basic rules:
- Public companies must “disclose any cybersecurity incident they determine to be material” within four days, with potential delays if there is a national security risk.
- Public companies must “describe their processes, if any, for assessing, identifying, and managing material risks from cybersecurity threats” in their annual filings.
The rules go into effect this December.
In an email newsletter, Melissa Hathaway wrote:
Now that the rule is final, companies have approximately six months to one year to document and operationalize the policies and procedures for the identification and management of cybersecurity (information security/privacy) risks. Continuous assessment of the risk reduction activities should be elevated within an enterprise risk management framework and process. Good governance mechanisms delineate the accountability and responsibility for ensuring successful execution, while actionable, repeatable, meaningful, and time-dependent metrics or key performance indicators (KPI) should be used to reinforce realistic objectives and timelines. Management should assess the competency of the personnel responsible for implementing these policies and be ready to identify these people (by name) in their annual filing.