Directors Risk From Data Breaches

Directors need to give regular attention to whether the corporation has instituted adequate controls to mitigate the risk and harm of a data security breach. Failure to do so could, in theory, expose directors to liability for the corporation’s costs arising from a breach. In a Today’s General Counsel article, attorneys from Skadden Arps look at the issue, including practical steps that directors can take to mitigate their risk. Director data security efforts, they write, fall into two broad categories: Risk mitigation to prevent or minimize the impact of a cyber attack, and crisis management once an attack occurs. Board oversight of both aspects is recommended.