Insights

A reminder on SEC cyberliability guidance

July 15, 2013

Management Liability/D&O

Everyone knows that cyber-threats have become more prevalent and pose additional risks for companies. The SEC knows this too, and has long since issued informal guidance to companies when it comes to cybersecurity disclosure. Media reports concerning SEC Chairman Mary Jo White indicate that she’s interested in how companies have reacted to the SEC’s guidance, as well as any further SEC action that should be taken.

MD&A. The SEC recommends businesses disclose cyber-threats in their MD&A if the costs that could result from data breaches will have a material effect on operations or a company’s financial condition.

Risk factors. The SEC’s guidance includes asking companies to consider supplemental risk factor disclosures, including (1) the “probability of a cyberincident,” (2) the “quantitative and qualitative magnitude of those risks” and (3) a “description of relevant insurance coverage.”

This last category, insurance, can be tricky. As Woodruff Sawyer partner Lauri Floresca discussed in a recent article, this insurance is highly customized, and the availability of coverage can vary significantly. Working with a sophisticated insurance broker who is an expert in the area of cyberliablity is critical when it comes to this kind of insurance.


The views expressed in this blog are solely those of the author. This blog should not be taken as insurance or legal advice for your particular situation. Questions? Comments? Concerns? Email: phuskins@woodruffsawyer.com.

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All views expressed in this article are the author’s own and do not necessarily represent the position of Woodruff-Sawyer & Co.

Priya Cherian Huskins

Senior Vice President, Management Liability

Editor, Management Liability/D&O

Priya is a recognized expert and frequent speaker on D&O liability risk and its mitigation. In addition to consulting on D&O insurance, she counsels clients on corporate governance matters, including ways to reduce their exposure to shareholder lawsuits and regulatory investigations. Priya serves on the board of an S&P 500 public company and a large private company and has an impressive list of publications, speaking engagements, and awards for her influence and expertise in the industry. 

415.402.6527

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Priya Cherian Huskins

Senior Vice President, Management Liability

Editor, Management Liability/D&O

Priya is a recognized expert and frequent speaker on D&O liability risk and its mitigation. In addition to consulting on D&O insurance, she counsels clients on corporate governance matters, including ways to reduce their exposure to shareholder lawsuits and regulatory investigations. Priya serves on the board of an S&P 500 public company and a large private company and has an impressive list of publications, speaking engagements, and awards for her influence and expertise in the industry. 

415.402.6527

LinkedIn