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Ted Dziekanowski Materiality, Adequacy and Reasonable are the words that are important with the SEC final ruling. They are words that are both objective and subjective, as far as the SEC ruling. Objective in terms of having regulatory definitions, and subject as those definitions are open to different interpretations by those covered companies (that include Foreign Issuers). That are required to adhere using the lens of what a ‘reasonable investors or shareholder’ would expect to know.
In writing our paper on the final ruling we find that many of the objections for the proposed ruling such as incident response timing and detail, the declaration of board knowledge and experience and the reporting of cyber policies and procedures have been included in the ruling. Covered under umbrella terms of Materiality, Adequacy and Reasonable.
By example the ruling requires organizations to identifying material cyber risk, as far as a reasonable investor or shareholder sees them, report on cybersecurity processes (that include policies and procedures) and report material cyber incidents. Describe the board’s oversight of material cyber risk, identify any board committee or subcommittee responsible for oversight, how these are informed and the experience of the committee members to assess cyber risk. Boards and board members will still be held accountable by the ‘reasonable investor/ shareholder’ for their decisions.
We will discuss the ruling and implications for U.S domestic and foreign private Issuers in the coming weeks.
Rachel V. Rose, JD, MBA Stephen Pitt-Walker, JD, FGIA
#cybersecurity #cyberriskmanagement #securitiesandexchangecommission
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