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Thank you for sharing Ted Dziekanowski. $100Mn is a significant figure and likely one that MGM will justify, but its not over yet. One expects that the company will pick up further legal costs and potentially regulatory fines for the data breach.
In some ways MGM has had a lucky escape, if MGM were caught under the SEC cyber rule, things could have been worst. Materiality won’t just be a financial write down under the SEC rule. A company will have to document the medium term impact of a cyber attack, including legal costs, regulatory fines, brand and reputational damage and impacts to customers and suppliers.
The challenge is that reasonable investors will require organizations to be transparent, open and honest. The current class actions launched on MGM claim the company failed to manage cyber. Going forward organizations will be providing data to the SEC on their material cyber risk management. that will be data reasonable investors will use to challenge regulatory compliance. Worst still the insurance industry has not yet come out and decided if D&O or cyber insurance will cover breaches in regulatory compliance.
Boards are going to have to take a harder look at their cyber risk management, whether they want to or not, that includes foreign issuers.
Brian D. McCarthy Bob Dix Rachel V. Rose, JD, MBA
#cybersecurity #cyberriskmanagement #cyberregulation #mgm
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