Catch the Hacker: SEC’s New Cyber Homework for Companies – A Comedic Take on Cybersecurity Disclosures

The SEC has embraced its new role as the strict teacher in “Catch the Hacker”, assigning “SEC Cybersecurity Disclosure Rules” homework to public companies. Now, these corporate pupils must spill the beans on cybersecurity incidents within four days, turning the vague term “material incident” into a riddle as clear as mud. Homework just got harder and funnier!

Hot Take:

Looks like the SEC is handing out homework assignments and pop quizzes to public companies when it comes to cybersecurity incidents. Now, these organizations have to disclose juicy details of a cybersecurity incident within four business days after determining its “materiality”. Sounds like a fun game of “Catch the Hacker”, where the companies are students and the SEC is the strict teacher. But hey, at least we’ll have a more organized record of cybersecurity incidents. No more digging through press releases or scrolling endlessly on trackers. The only catch? Figuring out what the SEC means by “material incident” – a term as clear as mud.

Key Points:

  • The 2023 Guidance now requires businesses to disclose a cybersecurity incident within four business days, making cybersecurity incidents more publicly accessible via SEC filings.
  • There is currently no centralized, permanent record of incidents, this new rule will change that.
  • Businesses will have to determine if an incident is “material”, a term that has been left vague and up for interpretation.
  • Companies that decide an incident is not material, and thus doesn’t require an 8-K disclosure, should be prepared to defend their decision to regulators or in lawsuits.
  • The final rules also require disclosing how company boards oversee risks from cybersecurity threats, increasing the need for board-level education on cybersecurity.

Need to know more?

SEC: The New Cybersecurity Principal

The SEC doesn't just want to know about cybersecurity incidents, they want to know yesterday! Or at least, within four business days. So, companies are now scrambling to understand the new rules and how to address them. Expect to see companies over-sharing or under-sharing as they figure out the balance.

Defining the Undefined

What's a material incident? Good question. Even the SEC doesn't seem to know. Or maybe they do, and they're just leaving it to companies to figure it out. Either way, deciding if an incident is material will be a game of risk assessment, reputation management, and data protection juggling.

Board of Directors: Cybersecurity Scholars

The rules also put the spotlight on company boards. They're now required to disclose how they oversee risks from cybersecurity threats. While they don't need to be cybersecurity experts, they'll need to understand the threat environment, attack trends, and common vulnerabilities. Essentially, they'll need to become cybersecurity scholars. So, get ready for some deep-dive discussions and third-party presentations on cybersecurity.
Tags: Company Boards, Cyber Risk Management, Cybersecurity Oversight, Disclosure Requirements, material incident, Public Company Compliance, SEC regulations