Today, there is no turning back. Regardless of their level of technical expertise, board members may no longer deflect responsibility for data infrastructure and data protection to the company’s officers or IT department.
Cybersecurity lapses impact multiple aspects of the company’s business, including operations, business relationships, compliance/disclosure obligations and costs. So what is a board to do? While each company operates under its particular, and peculiar, set of circumstances, every board should consider these prudent business practices.
Board Meetings. Routinely discuss data security/cyber liability at board meetings. Meeting minutes should reflect that those discussions occurred.
Oversight Committee. Charge an existing or newly-created committee with responsibility for oversight of management’s activities concerning data security policies, practices and procedures.
Information Technology Department. Regularly evaluate the adequacy of the IT department structure, organization and leadership.
Training. Require data security training. A recent survey of directors, board chairs and CEOs of U.S.-based publicly traded companies by BarkerGilmore and NYSE Governance Services found that additional cybersecurity risk expertise by general counsel or the legal department would provide the greatest value to the company and board.
Written Security Plan. Require and regularly review an information security plan that includes an inventory of data sources and devices, a listing of access rights, a responsibility map, and a breach response plan.
Data Retention Policy. Require and regularly review a data retention policy, which includes specific and enforceable deletion periods and procedures.
Security Testing. Require regular testing of the company’s data security procedures, training and capabilities, including “penetration” testing and tabletop exercises. The board and C-suite should participate.
Advisors. Retain advisors, including knowledgeable legal counsel, to provide guidance on data security risks and suitable risk responses.
Documentation. Require documentation of actions taken to secure the company’s data, or respond to a data breach.
Insurance. Require a regular insurance audit to determine the extent to which the company is or can be insured for data breach losses.
Many companies, including publicly-traded entities, have already recognized increasing data security threats and begun to implement various strategies to meet those threats. For example, as part of its data security strategy, Emdeon, a leading healthcare information technology provider, prioritizes specific industry threats to help it identify trends and proactively mitigate possible vulnerabilities.
Remember that cybersecurity ignorance is not bliss. While boards cannot guarantee the security of company data, neither can they delegate all data security responsibility. With intentional and informed efforts to identify and oversee these concerns, the board will fulfill its responsibilities to the company, and materially reduce the company’s data breach risks and costs.