Deloitte and the USC Marshall Arkley Institute for Risk Management have released their third annual review of risk factor disclosures of S&P 500 companies. Given heightened cybersecurity risk and the Securities and Exchange Commission’s (SEC) recent Final Cybersecurity Rule, this year’s report focuses on cybersecurity risk factors. The final report can be accessed here.

Since 2021, Deloitte and USC Marshall Arkley Institute for Risk Management have analysed annual reports of S&P 500 companies to understand reporting trends and the impact of the amended SEC risk disclosure rules. Over the past year, the business world and society have experienced extreme volatility due to factors such as complex geopolitics, devastating natural disasters, emerging technologies (GenAI), and systemic banking risk. In the face of these risks, public companies continue to be challenged in protecting enterprise value and stakeholder trust.

The report includes the following highlights:

  • Materiality Analysis
    • Over 40% of companies disclosed explicitly that they had not experienced a “material” cybersecurity incident. Over half of those companies stated they had not experienced a “material” cybersecurity incident “to date,” while most other companies did not include any time period.
  • Heightened Cybersecurity Risk
    • Over 25% of companies noted that the war in Ukraine has amplified cybersecurity risk.
    • Over 40% of companies noted that remote work has increased cybersecurity risk.
    • 9 companies disclosed an actual increase in attacks on their remote workers.
  • Cyber Insurance
    • Nearly half of companies disclosed that their cyber insurance was unlikely to cover all cybersecurity related losses due to policy scope and/or limits.
      • Nearly 4% of companies stated that their cyber insurance does not or may not cover reputational losses associated with a cybersecurity incident.
      • Over 10% of companies noted they may not be able to obtain cyber insurance on acceptable terms.

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