{"id":53557,"date":"2023-09-06T16:17:50","date_gmt":"2023-09-06T16:17:50","guid":{"rendered":"https:\/\/packetstormsecurity.com\/news\/view\/34982\/What-Businesses-Need-To-Know-To-Comply-With-SECs-New-Cyber-Disclosure-Rules.html"},"modified":"2023-09-06T16:17:50","modified_gmt":"2023-09-06T16:17:50","slug":"what-businesses-need-to-know-to-comply-with-secs-new-cyber-disclosure-rules","status":"publish","type":"post","link":"https:\/\/www.threatshub.org\/blog\/what-businesses-need-to-know-to-comply-with-secs-new-cyber-disclosure-rules\/","title":{"rendered":"What Businesses Need To Know To Comply With SEC’s New Cyber Disclosure Rules"},"content":{"rendered":"
<\/div>\n

New rules for publicly traded companies went into effect Sept. 5, with the Securities and Exchange Commission requiring businesses<\/a> to begin regularly reporting<\/a> on their cybersecurity risk management strategies, board-level cybersecurity governance and oversight and, of course, reporting rules for material cyber incidents.<\/p>\n

While the incident reporting portion won\u2019t go into effect right away \u2014 they go live Dec. 18 for larger public companies and 180 days after that for smaller businesses \u2014 businesses are already scrambling to parse out how the new rules may affect their approach to cybersecurity.<\/p>\n

There are exceptions for national security reasons, but most businesses should expect to file a notice to the SEC within four days of determining that an hack or security incident is \u201cmaterial\u201d in nature.  <\/p>\n

Harley Geiger, a cybersecurity policy lawyer at Venable and noted skeptic of the new rules, thinks companies should be ready for the possibility that will need to report a hack to the government while still investigating fundamental aspects of the breach.  <\/p>\n

\u201cBecause of the required timeline for disclosure, companies should be prepared to perform these assessments and disclosures even if the cybersecurity incident is ongoing,\u201d Geiger wrote<\/a> Tuesday. Public companies’ security, legal, and corporate communication teams should collaborate to adjust cyber incident response plans and financial reporting processes to accommodate these obligations.\u201d<\/p>\n

‘Materiality’ and disclosing breaches<\/h2>\n

On the disclosure front, one of the biggest questions businesses have had centers around \u201cmateriality,\u201d or how the SEC will define a covered incident.<\/p>\n

The SEC broadly defines materiality as something that could influence the decision-making of a potential investor. Interpretive guidance<\/a> developed by the agency around the term defines it as information \u201csuch that it is probable that the judgment of a reasonable person relying upon the report would have been changed or influenced by the inclusion or correction of the item.\u201d<\/p>\n

That means that any incident at a public company that could reasonably result in a lawsuit or regulatory inquiry, impact vendor or customer relationships, or otherwise harm a company\u2019s reputation or competitiveness, could be covered under the requirements.<\/p>\n

George Gerchow, a faculty member of IANS research, and chief security officer and senior vice president of IT at Sumo Logic, fretted that \u201cthere are still way too many unknowns at this time\u201d around the question of materiality.<\/p>\n

\u201cWe are trying to understand what a \u2018material incident\u2019 means, but it\u2019s still too ambiguous. Furthermore, there is very little guidance on how companies should handle third-party attacks. Supply chain attacks are on the rise and add another layer of complexity to reporting the full nature and scope of an incident. So, how are companies going to pull in third-parties and their team to handle an incident within such a short timeframe?\u201d he asked.<\/p>\n

The final regulation<\/a> issued by the SEC describes the term as security incidents that have \u201cmaterially affected or are reasonably likely to materially affect [a company\u2019s] business strategy, results of operations, or financial condition.\u201d Companies must file annual disclosures, as well as a form 8-K document, with the agency for specific security incidents that detail the nature, scope, timing and impact incident on their business operations or customers.<\/p>\n

Crucially, Geiger noted that unlike many other incident reporting rules, hacks reported under the new SEC regulations will be made open to the public through EDGAR, the agency\u2019s reporting system for publicly traded companies.<\/p>\n

\u201cThis may put companies in the position of publicly disclosing significant cyber incidents before the incident has been contained or mitigated, which may complicate companies’ recovery efforts and coordination with other federal agencies,\u201d he noted.<\/p>\n

Risk management and cybersecurity roles on boards<\/h2>\n

Other SEC measures going into effect Tuesday include a requirement for companies to describe their cybersecurity risk management strategies and how it practically integrates into the company\u2019s larger business operations, as well as a separate requirement to detail the role that boards of directors and management play in overseeing cyber risk and what kind of background experience top executives have in cybersecurity.<\/p>\n

That could mean that cybersecurity qualifications could become a bigger factor when hiring C-Suite and other executive positions as businesses attempt to comply. It could also mean that some businesses will look to play up or inflate the cybersecurity backgrounds of the candidates they do hire, as one expert remarked<\/a> to SC Media recently.<\/p>\n

It could also lead to mixed messages about how a business\u2019 cybersecurity program works in practice \u2014 the way it\u2019s carried out by practitioner staff \u2014 and the way it\u2019s described by executives who are further removed from the ground level reality.<\/p>\n

\u201cA general divide exists between the development of security policies and controls by management and security teams and the actual implementation of the policies and controls by data engineering and DevOps teams,\u201d said Ben Herzberg, chief scientist of data security at Satori. \u201cTeams on either side of development and implementation have their own priorities and objectives.\u201d<\/p>\n

READ MORE HERE<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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