Publicly traded companies must start disclosing more “actionable” information to shareholders and regulators around their cyber risks and vulnerabilities.

Authors of a new report argue that in the wake of the 2020 SolarWinds breach and increased regulatory fervor on Capitol Hill and the Securities and Exchange Commission, public companies “should be explaining to investors the specific risks they face from cybersecurity threats, including operational disruption, intellectual property theft, loss of sensitive client data, and fraud caused by business email compromises.”

In the legal realm, law firms who work on software supply chain breach cases are increasingly scrutinizing what a business knew or should have known about their software and hardware suppliers, as well as exposure to known risky vendors, when discussing issues like liability. At the SEC, internal guidance to staff around disclosure obligations for publicly traded companies calls for investors to get the same perspective around technology risks and their impact on business operations as management. The details should be “specifically tailored to a company’s unique facts and circumstances” and avoid vague or general language about experiencing “a cybersecurity incident” when they do suffer a breach.

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