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This is a great paper, it captures the essence and impact on Directors and Officers Liability and insurance. ‘What is Next for the Risk of Cybersecurity-Related Litigation?’
The SEC final cyber rule effects corporate risk transfer, playing with the traditional role of D&O and cyber insurance and transferring cyber risk into the board rooms of covered SEC registrants (and boards of organizations covered by EU NIS 2 and DORA, when they are finalized) in 2024).
This article lays out the possible future direction of cybersecurity incident-related suits, following the release of the SEC final cyber rule and the effect on D&O insurance. As SEC registrants grapple with complying with the final rule, that by its own definitions is broad in its interpretation of materiality, reasonableness and does not define adequate compliance. Compliance that registrants are unlikely to be equipped today to meet, relying instead on cyber insurance as a risk treatment tool.
One should not forget how complex it is to demonstrate cyber risk management and regulatory compliance, no risk score is going to help. Registrant may find themselves between a ‘rock and a hard place’, balancing reasonable and adequate compliance on one hand. Providing compliance data that could be used by plaintiffs lawyers to challenge a registrants disclosure of material cyber risk and incidents on the other.
Thank you Kevin LaCroix and Barry Rabkin
Ted Dziekanowski Rachel V. Rose, JD, MBA Bob Dix
#cybersecurity #cyberriskmanagement #cyberregulation #securitiesandexchangecommission #directorsandofficers
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