What key factors have contributed to increased personal liability risks for CISOs?
The role of the CISO has evolved significantly over the past year. The notable shift toward increased personal liability is largely the result of three factors:
First, organizations are at greater cybersecurity risk than ever. Attackers and their wares are growing more advanced by the day. At the same time, for all their benefits, new technologies, such as AI, often result in increasingly complex digital infrastructures that may hide security vulnerabilities ripe for the picking.
Second, the evolving regulatory landscape. Laws such as the Digital Operations Resiliency Act (DORA) in Europe and various new regulations from the US Securities and Exchange Commission (SEC) legally place personal responsibility for data breaches squarely on the shoulders of the CISO.
Finally, broader public awareness of security lapses. The SEC now requires publicly traded companies to disclose material cybersecurity incidents within four days. This is on top of the Strengthening American Cybersecurity Act that requires entities that own or operate critical infrastructure to report cyber incidents and ransom payments within 24 to 72 hours.
How have high-profile cyber incidents influenced the perception and reality of personal liability for CISOs?
Even if many organizations are now required to disclose cybersecurity incidents in a timely manner—as I just mentioned—that doesn’t mean all of those incidents become common knowledge. In fact, relatively few do. High-profile cybersecurity breaches—the incidents that most affect the general public—are those that drive intensified public scrutiny. As these incidents grab headlines, customers demand change. Unfortunately for the CISO, in these cases, perception is reality, and they often become the sacrificial lamb even if a broader set of executives and board members should share liability.
What proactive steps can CISOs take to mitigate the risk of personal liability?
As the saying goes, “an ounce of prevention is worth a pound of cure.” So, first and foremost, do your core job by strengthening your organization’s cyber resilience. Ensure your team has the resources, skills and guidance to maintain visibility into all of your assets; properly configure perimeter defenses; protect business-critical data and apps with a robust backup and recovery strategy; enforce strong security policies for things like passwords, the principle of least privilege and remote and personal device access; conduct effective employee cybersecurity awareness training; and finally, test and rehearse, test and rehearse, test and rehearse.
It also helps to fight fire with fire. Cybercriminals are using AI to improve their tactics. Implementing AI-powered technology to improve the effectiveness of each of the above cyber resilience steps will help ensure you stay one step ahead of bad actors and avoid the risk of being held personally liable for a successful breach.
Another key is establishing clear lines of communication with other executive leaders and board members. Be completely transparent and avoid the temptation to paper over emerging and potential issues you don’t quite yet understand or have the resources to deal with. It’s much better to be able to say, “I told you so,” than, “should have, could have, would have.”
How effective are directors and officers insurance policies in protecting CISOs from personal liability?
Directors and officers (D&O) liability insurance can offer some protection for the CISO, but its effectiveness in the dynamic realm of cybersecurity is not 100% certain. These policies typically cover legal fees and damages resulting from lawsuits against executives for decisions made in their professional capacities, but regulations that include personal accountability for cybersecurity failures might challenge the scope and limits of traditional D&O coverage.
Insurance providers may need to adjust their policies to address the specific risks faced by CISOs. While this will lead to more effective, tailored coverage, it could also potentially lead to higher premiums or so many exclusions that it becomes impractical.
How can organizations better support their CISOs to ensure they are not unfairly held liable for cyber incidents?
Organizations need to develop a culture of welcomed transparency. If the CISO is afraid to bring hard truths to the executive leadership team and board, there’s a problem. On our team, we tend not really even talk about the things that are going well. Instead, we focus almost exclusively on what we need to improve. Red flags aren’t something we avoid, but embrace, so everyone is aware of risks and potential vulnerabilities.
Just as important, even the best security team will fail if not given necessary resources. This includes not just ongoing budgetary support to execute the above cyber resilience strategies, but also the authority to implement critical security measures. If security recommendations are consistently overridden or ignored by other parts of the organization, the CISO’s efforts become futile.
What advice would you give to current and aspiring CISOs in navigating the complexities of personal liability?
The biggest area of improvement needed for most CISOs is communication skills. As I stated, transparency is just as important as anything else in avoiding cybersecurity breaches and the resulting risk of personal liability, and transparency requires effective communication. Not only that, but negotiating for the resources you need to execute the cyber resilience strategies that will protect both your organization and you also requires effective communication. Lastly, effective communication plays a key role in your ability to get organization-wide buy-in to cybersecurity best practices by positioning cybersecurity as a business enabler rather than hindrance.
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