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Cybersecurity and the board of directors: avoiding personal liability — Part I of III

Jul 23 2013 Steven L. Caponi

The likelihood of a cybersecurity breach hitting one's company in the near future is as certain as will be the resulting drop in shareholder value, finger pointing, fines, regulatory headaches and civil litigation alleging the board was asleep at the wheel in the face of a known danger. In a letter to the Chairman of the Securities and Exchange Commission from five U.S. senators, including Commerce committee Chairman Jay Rockefeller, the Senators noted: "Every day, malicious actors attack and disrupt computer networks to steal valuable trade secrets, intellectual property, and financial and confidential information, causing significant damage to the United States Government, our citizens, our business, and our country." Making no decision can be worse than making a bad decision. A prudent board of directors should conclude that managing cyber risks requires affirmative action by directors to defend against cyber attacks and the proactive implementation of procedures to respond

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