Cybersecurity Disclosures: A How-To Guide

by Bryan Cave

In October of 2011, the U.S. Securities and Exchange Commission (“SEC”) issued guidance regarding a public company’s obligations to disclose cybersecurity risks and cyber incidents (the “Cybersecurity Disclosure Guidance”).1 The Cybersecurity Disclosure Guidance applies to all SEC registrants and relates to disclosures under the Securities Act of 1933 and the Securities Exchange Act of 1934.

The SEC staff acknowledged in the Cybersecurity Disclosure Guidance that no existing disclosure requirement explicitly refers to cybersecurity risks and cyber incidents, but has made clear that there are a number of disclosure requirements that might impose an obligation on an issuer to disclose such risks and incidents. The Cybersecurity Disclosure Guidance specifically discusses disclosures required when discussing a company’s risk factors, MD&A, business descriptions, legal proceedings, financial statements and disclosure controls and procedures. The staff stated that as with other operational and financial matters, issuers “should review, on an ongoing basis, the adequacy of their disclosures relating to cybersecurity risks and cyber incidents,” with a view to ensuring timely, comprehensive and accurate information that a reasonable investor would consider material. The staff also made clear that if a cyber incident occurs, such as a data breach, registrants should be certain to disclose any material impact of the incident on their business operations and explain how they have taken steps to mitigate damage.

Since the original publication of the Cybersecurity Disclosure Guidance, the SEC has remained focused on the implications of cybersecurity on public companies and regulated financial service firms. In 2014 the SEC’s Office of Compliance Inspections and Examinations issued a national exam program alert providing a framework for assessing cyber risk and announcing a plan to examine a sampling of registered broker-dealers and investment advisors to review their cybersecurity preparedness. All public companies should evaluate their current disclosures to ensure that they are consistent with the Cybersecurity Disclosure Guidance and should consider implementing a readiness plan to ensure appropriate and timely disclosures in the event of a cyber incident. The following provides a snapshot of information concerning cybersecurity risks.


The percentage of Fortune 500 companies that identified cybersecurity risk in a SEC filing in 2012 (the year after the SEC issued the Cyber Disclosure Guide).2


The percentage of Fortune 500 companies in 2012 that described the extent of cybersecurity risk as “critical,” “significant,” “materially harmful,” or “seriously harmful” to their business operations.3


The percentage of global company executives that described insufficient preparation to manage cyber threats as a risk that could have a “significant impact” on their organizations in 2015.4

What every public company should do about cybersecurity disclosures:

  1. Evaluate the company’s procedures for assessing the materiality of cybersecurity matters and implement a regular schedule of ongoing review, perhaps in connection with the company’s regular quarterly reporting processes.
  2. Determine what disclosure should be made in the company’s SEC filings based on the company’s exposure to a cybersecurity incident and the materiality of actions being taken proactively by the company to mitigate risk.
  3. Review the company’s current disclosures and compare those disclosures to peer companies with similar cybersecurity risks and issues.
  4. Consider establishing a disclosure readiness plan in the event of a cyber incident. Review the implications for such a plan of active shelf registration statements, share buyback programs and other ongoing securities market activities.
  5. Ensure involvement by the board of directors or the risk management committee of the board in the cybersecurity risk assessment and disclosure planning.

1. Securities and Exchange Commission, CF Disclosure Guidance Topic No. 2: Cybersecurity, Oct. 13, 2011,

2. Willis, Fortune 500 Cyber Disclosure Report, 2013,

3. Id.

4. Protiviti, Executive Prospectives on Top Risks for 2015, 2015,

[View source.]

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.

© Bryan Cave | Attorney Advertising

Written by:

Bryan Cave

Bryan Cave on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.