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A great paper from the Harvard School of law highlighting the challenges S&P 500 firms will face when it comes to complying with the SEC Cyber governance rules. Especially when it comes to filing material cyber risks and material cyber incidents. This article analyses the risk factors disclosed by S&P 500 companies following the SECs requirements for companies to disclose material risk factors from 2020.
Many firms have not experienced a material cybersecurity incident, most made extensive disclosures around the significance of cybersecurity risk to their business. The report identifies challenges in the availability and cost of cyber insurance and requirement of additional cyber governance disclosures.
The report makes for interesting reading, since 2020 there has been little increase in corporate reporting of risks. Companies feel safer keeping to generic headlines. Looking at past filings in line with the SECs new final cyber rule, most companies discussed cybersecurity risks but over 40% disclosed that they had not experienced a material cybersecurity incident ‘to date’. Yet direct and indirect cybersecurity risks have been increasing significantly. Whether that is a direct cyber attack or through a third party suppliers.
The report highlights the opportunities and challenges covered SEC companies face with disclosing material cybersecurity risks and material cybersecurity incidents. Especially given past filings and the potential for the SEC to raise questions over the previous disclosures of material cyber risks at a time when cyber risks have been increasing.
Ted Dziekanowski Brian D. McCarthy
#cybersecurity #cyberriskmanagement #securitiesandexchangecommission
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