Cyber Risk Management Starts with Risk Quantification – Padraic O’Reilly – BSW #332

Cyber has been an historically hermetic practice. A dark art. Full of mysteries and presided over by magicians both good and bad. This is a bit of an exaggeration, yet there is some truth to it. Many in our industry knew that the SEC was evaluating the role that cyber risk management and incident disclosure plays in the pricing mechanism for an equity. Many of the participants in GRC, IRM, and Cyber Risk anticipated this before the SEC had even proposed such rules. Boards, C-Suites, and Information security teams within publicly traded companies brought it up occasionally in the year preceding its adoption. Lawyers on K Street actively advocated in the press against enacting such rules, and there is still a hearty back and forth concerning the merits of SEC involvement in cyber risk. But more transparency is a very welcome development. For investors, it’s essential.

Industry veterans say that this development hearkens back to Sarbanes Oxley, which had very big implications for Governance, Risk, and Compliance. This is likely cyber risk’s SOX moment, and the drop date is December 15th of this year on all 10-K filings. The SEC will not look kindly upon boilerplate disclosures, particularly if a cyber attack with significant losses occurs. So where do you start?

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