Cybersecurity: 36 Questions Every Director Should Ask

by Sheppard Mullin Richter & Hampton LLP

Cyber security, data loss, hacking and schemes to steal personal information and assets electronically are all over the news daily. Companies are the primary targets of these actions since they accumulate information, store it and use it for their internal efforts, for their clients and in interacting with the world outside. In an effort to prevent problems before they arise, and to be in the best possible posture should their company become a victim of these damaging events, below is a list of questions that general counsel, senior management and corporate directors should be asking of themselves and their companies:

  1. Why should my company be concerned?
  2. Who would want to target us?
  3. Is the problem likely to come from within or outside the company?
  4. What components of the company are tied directly to computer networks?
  5. What company records are accessible by network?
  6. Can someone explain to me in layperson language how we are protected?
  7. Who is ultimately responsible for the integrity of our system/data?
  8. How can I be assured that our security is up to date?
  9. Do we need a Chief Privacy Officer?
  10. How do we control the authorization of access?
  11. Is the level of access commensurate with the job responsibilities?
  12. How do we withdraw access?
  13. What alarms/indicators does our network have to show unauthorized access?
  14. What’s the plan for an interruption of service?
  15. Do we have a secure backup system/offsite data vault/redundant servers and how long until we are up and running “cleanly” after a serious breach?
  16. How do we prevent authorized users from exploiting the data to which they have access?
  17. Does the company have adequate internal controls to detect employee abuses?
  18. Are we vulnerable to worms/viruses or whatever from our own employees bringing software onto our system/network?
  19. Are we encouraging employees to share their concerns about vulnerabilities?
  20. Have our independent auditors approved our internal controls for cybersecurity?
  21. Can we test our systems before there’s a problem?
  22. Have we retained a qualified company to send “Tiger Teams” against our systems/network to try to hack it and exploit its weaknesses?
  23. Do we have a rapid response plan?
  24. Are there companies we can retain who will not only help protect our network, but also help us recover from an attack or successful infiltration?
  25. Do we have a secure backup system/offsite data vault/redundant servers and how long until we are up and running “cleanly” after a serious breach?
  26. How expensive could a data breach be?
  27. Are we adequately insured?
  28. Has the company sufficiently disclosed to investors the risks of a data breach?
  29. What laws govern our duties to disclose a data breach?
  30. How much and when must we disclose?
  31. What are all the risks of disclosure of an event, whether required by law or not?
  32. What are the litigation risks to management, the Board, shareholders and the company of a successful hack, data theft and/or system failure?
  33. Can state or federal investigators help us?
  34. Are we waiving any legal protections/privileges by disclosing or working with government entities?
  35. How do we preserve those legal protections/privileges and still do what we need to do?
  36. What can outside counsel offer the company?

Sheppard Mullin has significant experience in dealing with cybersecurity and privacy issues, both from a legal standpoint and from a data processing/technical standpoint. In addition, Sheppard Mullin has been identifying and working with experts whose job it is to prevent these events, others who help deal with these events when they occur and their aftermath, relevant experienced prosecutors and even insurance professionals who have products covering these kinds of losses.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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