08/01/2023
4 min read
- New Rules for Disclosure of Material Cybersecurity Incidents
In the event of a cybersecurity incident with material consequences, companies must promptly submit a Form 8-K. The evaluation of whether the incident is “material” hinges on its impact on operations and compromised data. If additional relevant information surfaces, companies are obligated to update their previously filed forms. However, any delay in disclosure is allowed only if approved by the U.S. Attorney General. Being well-prepared beforehand is crucial for companies to meet stringent reporting timelines and make well-informed decisions.
2. Timely Reporting of Cybersecurity Incidents
Companies must adhere to a strict timeline for disclosure by submitting Form 8-K within four business days of identifying a material cybersecurity incident. Nevertheless, there is a provision that permits delayed disclosure under certain circumstances. If the United States Attorney General determines that immediate disclosure could significantly jeopardize national security or public safety, the company may delay disclosure. However, this delay is contingent upon notifying the SEC in writing about the situation.
3. Enhanced Cybersecurity Risk Management Disclosure
- Describe their processes for assessing, identifying, and managing material risks from cybersecurity threats.
- Disclose the material effects or reasonably likely material effects of cybersecurity risks and any previous cybersecurity incidents.
This enhanced disclosure provides investors with valuable insights into the company’s preparedness and proactive approach to addressing cybersecurity challenges.
4. Corporate Governance and Management’s Role
Under New Item 106(c) of Regulation S-K, companies must disclose two essential aspects of cybersecurity:
- The board’s role in overseeing cybersecurity risks.
- How management assesses and manages material cybersecurity risks.
This ensures that cybersecurity risk management is given equal importance as other significant business risks and is closely monitored at the highest levels of corporate governance. Investors gain insights into the company’s commitment to cybersecurity and its ability to address potential threats effectively.
5. Disclosures for Foreign Private Issuers
- The board’s oversight of cybersecurity risks.
- Management’s accountability in assessing and addressing significant cybersecurity threats.
This move ensures a consistent level of transparency across all companies, irrespective of their geographic location.
Timelines for Adoption
Who does it Impact?
The new SEC cybersecurity rule aims to enhance transparency regarding company breaches and ensure prompt notification of cybersecurity incidents to the public. As a result, several parties will be affected by this rule change, including:
Navigating the New Rules
By following these steps, corporate executives can navigate the cybersecurity disclosure rules, meet their compliance requirements safeguarding their companies’ reputation, financial stability, and overall resilience in the face of evolving cyber threats.
- Assemble a cross-functional team involving IT, legal, finance, HR, government relations, and communications to assess the implications for the company’s crisis management plans.
- Review and update existing plans and protocols to align with the new rules. Conduct simulations and tabletop exercises to prepare employees for handling cybersecurity incidents effectively.
- Modernize business continuity planning to address the real risk of sustained operational impairment from cybersecurity threats like ransomware.
- Prepare to include cybersecurity risk management information in the company’s annual report. Identify potential gaps in existing information and develop a clear narrative for disclosure.
- Comply with incident disclosure timelines: Publicly listed companies must comply with the incident disclosure requirements starting from December 18, 2023, and provide cybersecurity risk management disclosures in annual reports for fiscal years ending on or after December 15, 2023.
Source: Kirkland & Ellis
Empowering Organizations with Unified Cybersecurity Risk Management: The Caveonix Advantage
Caveonix stands at the forefront of cybersecurity risk management, offering public companies and organizations of all sizes the tools they need to fortify their defenses and meet the SEC’s new requirements. Caveonix empowers organizations to address security challenges, comply with regulatory requirements, and strengthen their overall defense posture.
By promoting seamless communication, personalization, and collaboration among teams, Caveonix paves the way for a cohesive and efficient approach to cybersecurity risk management. Here’s how Caveonix can help organizations bolster their defenses and navigate the complex regulatory landscape:
- The Challenge of Organizational Intricacies: In any organization, the challenge lies in effectively integrating the efforts of multiple teams responsible for risk assessment, security, compliance, and governance. Each team operates with its own set of requirements and procedures, which can result in confusion, miscommunication, and inefficiencies. This lack of a unified approach may lead to organizational misalignment and hinder the organization’s ability to address security issues and regulatory compliance effectively.
- The Unified Approach: Caveonix’s unified security, compliance, and governance management platform streamlines information exchange, continuous monitoring, assessment, and reporting. It enables seamless communication among all teams involved, thus ensuring that all stakeholders have access to the necessary information and can collaborate effectively towards a common goal.
- Customizable Dashboard: The platform’s dashboard is fully customizable based on user roles, allowing team members to personalize their dashboard and widget arrangements as needed. This level of customization ensures that each user can focus on the most relevant data and insights for their specific responsibilities. It optimizes efficiency and productivity by providing a personalized user experience.
- Intuitive Insights: Each user dashboard can have insights that are unique to their role. With a rich library of insights, users can quickly assess the risk and start taking action based on recommended prioritization. The insights dashboard supports different categories such as risk, compliance, CIEM, public exposure, network, policy violations, secure configurations, IAM, and serverless containers.
- Collaborative Approach for Success: By adopting Caveonix’s platform, organizations can foster a sense of unity and shared purpose among all members involved in risk management, compliance, and governance. The collaborative approach enables better decision-making, improved risk assessment, and proactive responses to potential threats.
- Board-Level Reporting: The platform enables companies to generate comprehensive cybersecurity reports that provide the necessary information for board-level oversight, facilitating proactive governance and strategic decision-making.
- Incident Response Readiness: With Caveonix’s incident response preparedness tools, companies can enhance their ability to respond promptly and effectively to cybersecurity incidents, meeting the SEC’s disclosure requirements.
- Regulatory Compliance Support: Caveonix stays abreast of evolving cybersecurity regulations, helping companies stay compliant not only with the SEC’s rules but also with other local to global regulatory requirements.
Embracing the SEC’s new rules on cybersecurity risk management is an opportunity for public companies to enhance their resilience against cyber threats. By leveraging Caveonix’s unified platform, organizations can leverage cutting-edge technology, robust risk assessment, and personalized solutions to meet these regulatory requirements effectively.
Discover how Caveonix can help you comply with the new SEC requirements