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Thank you for posting Ted Dziekanowski. This ruling is not about incident management, that accounts for less than 10% or what the SEC seeks to achieve. The SEC final ruling is broader in its scope and application than the original proposal, it creates many complex challenges for U.S domestic and Foreign Issuers.
The ruling is about ‘Left of Bang’ cyber risk management, situational awareness and risk mitigation prior to an incident.
In ones opinion the bar for compliance got a whole lot more complicated and subjective. Boards will still be required to oversight and assure cybersecurity risk management compliance. Instead the cyber experience of committees and company directors will be required to be reported and managements role in the oversight of cyber risk. Organizations will be required to report their cybersecuirty risk management process to a degree that a ‘reasonable investor’ can understand the cyber posture of a firm. Covered entities will be required to assess and report material cyber risks, that include but not limited to 3rd party supplier risk (cloud, supply chain). They will have to account for ‘material’ effect cyber incidents within their supply chains and the short, medium and longer term material effects of cyber incidents such as brand damage, lost customers.
One suspects that the broad, descriptive approach adopted by the SEC will allow for challenging times in court. As ‘materiality’, ‘reasonableness’ and ‘appropriateness’ are all subjective and organisation will have to prepare their assessment and remediation programs accordingly.
Watch for our white paper on the ruling, where we discuss it in detail and the opportunities, challenges and legal and fiduciary obligations for compliance. We wrote our compliance program focusing on cyber risk based regulatory compliance, accommodating the SEC final ruling.
Rachel V. Rose, JD, MBA Stephen Pitt-Walker, JD, FGIA
#cybersecurity #cyberriskmanagement #cyberregulation #securitiesandexchangecommission
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