Jessica Lipson and Brian Forman Discuss Cybersecurity Vigilance with Private Funds CFO Magazine

Partners Jessica Lipson, co-chair of Morrison Cohen’s Technology, Data and IP Practice, and Brian Forman, chair of the Investment Funds and Advisers Practice, were quoted in a Private Funds CFO article entitled “The Rise of Integrated Vigilance in Cybersecurity.”

The article discussed how regulatory scrutiny, increased cybersecurity risks and dependence on third party technology has prompted CFOs to fully integrate their technology, compliance and governance efforts as part of a holistic defense strategy. Jessica noted that recent legal developments have made cybersecurity vigilance more challenging, however, because “there are so many different requirements, from so many regulatory bodies.”

While larger companies typically have strong in-house cybersecurity teams, Jessica recommended that smaller companies, which often operate on tighter budgets and hire external service providers, should carefully assess the provider’s track record. “Vetting providers involves pulling out the war stories,” Jessica said. “Find out what happened when that breach was discovered at 2am, and what the vendor did, so that you can understand their approach, and how they think about security planning and responses.”

Along with all other regulatory requirements already in effect, the article discussed proposed regulations issued by the Department of Homeland Security (DHS), which will apply to any company considered to be “critical infrastructure,” and require disclosure of material data incidents within 72 hours of discovery. Brian addressed concerns about the DHS’s proposed rules. “We hope that when the rules are finalized it will become clear how the regulator defines ‘materiality’ in terms of a breach,” he said. Exact disclosure requirements are also unclear. “If a firm is to report a breach, what are they supposed to include in that report?” Brian posited. “If it’s the cause of the breach, that can take forensic investigators weeks or months to discern.”

Subscribers to Private Funds CFO, read the full article here.