Kean stressed the need for boards to understand emerging cyber threats, saying, “There is a whole universe of potential cyber risk not understood at a board level. This, in turn, creates a risk that directors will fail to discharge their duty of care and duty to promote the success of the company. Their fiduciary duties require them to gain some understanding of the cyber threat faced by their companies and to ensure adequate and proportionate procedures are adopted to mitigate the consequences of a serious data breach.”

The SEC guidance was issued last October in response to concerns that it was hard for investors to assess security risks if companies fail to disclose data breaches in their public filings.

There are five specific disclosure areas addressed in the guidance:

• Pre-attack exposure analysis.
• Cyber incidents.
• Exposure to the firm in description of business.
• Legal proceedings.
• Financial statement implication.

On another panel at the event, Jeremy Smith, Willis' cyber liabilities practice leader, discussed the development of cyber-liability insurance, saying, “The convergence of cyber coverage in recent years was largely due to a lack of sophisticated claims data and significant increases in cybercrime.”

However, Smith noted that brokers are now pushing for further innovation from the market and have managed to secure additional coverage for Payment Card Industry fines (an independent body created by the major credit-card companies that have set information-transmission standards), third-party vendors and terrorism.

Advanced Persistent Threats (APTs), such as theAuroravirus and Nightdragon, are the next challenge for the insurance industry, according to Smith. “APTs are sustained attacks designed to steal intellectual property over a number of years. The insurance industry hasn't fully tackled this threat yet, but I hope that brokers and insurers will find a solution together in the future.”

Smith went on to warn that companies with large exposures should consider tailored cyber policies.