Businesses of all sizes in every industry are bombarded with increasing numbers of articles, proposed standards, and advice on what companies should be doing to protect their own informational assets and their customers’ personal data. As the number of data breaches increases, so too does the scrutiny of federal regulators and the plaintiffs’ bar. 
 
In the past several years, not only the FTC and FCC but also the SEC, whose mission is to protect shareholders, have shown growing interest in cybersecurity issues and in ensuring corporations are vigilant in their data management. In the last year, two companies victimized by hackers who stole credit card information have faced high profile civil lawsuits seeking to hold corporate directors and officers liable for damages arising from these crimes. In our hyper-connected, cyber-reliant world, directors, officers and management of all companies must be resilient by educating themselves on both corporate and individual risks related to cybercrime.
 
Certainly, corporate officers cannot be expected to become corporate IT experts. However, while neither Congress nor the courts have expressly outlined the extent of a director’s duty of care with respect to data security, several recent federal cases offer guidance that both directors and officers could follow in advance of a corporate data-security breach which potentially exposes sensitive information of third parties that the company possesses. 

• Make data security and resources devoted to those areas a regular part of the agenda at board meetings, including regular presentations on these topics by IT officers.
• Consider designating one of the board’s committees or specific officers to have primary oversight on data security and ensure that the company’s data-protection measures are discussed regularly at meetings of the committee or specific officers.
• Periodically retain third-party consultants to assess and audit the company’s data protection systems and protocol. 
• Document steps taken to remediate identified data-security concerns.
• Identify individuals to orchestrate the company’s response to a data-breach, including legal counsel, IT, customer service, public relations and any other industry specific personnel. 
• Identify protocols for those individuals to require thorough investigation of any alleged data breaches, including meetings with senior officers as appropriate, while ensuring documentation of the response. 

Cybersecurity has become an issue which corporate officers are expected to anticipate and to manage, and federal and state agencies are proactively inquiring into companies’ cybersecurity practices. As it becomes increasingly necessary for all businesses to prevent and respond to cybercrime, companies will be required to take concrete action which evidences diligence and good faith efforts to protect the sensitive consumer information in their possession.
 
Patrick Mincey is a trial lawyer in Wilmington, where he founded the Criminal Defense Group at Cranfill Sumner & Hartzog LLP. His criminal practice ranges from representing individuals and corporate clients who are targets, subjects or witnesses in federal and state white collar proceedings to “blue collar” defendants charged with murder, drug conspiracies and assaults. To contact Patrick Mincey, call (910) 777-6017 or email him at [email protected].