Cybersecurity Looms Large for GCs, According to Survey Reports

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By Ellen Rosen

May 21 — A new survey report found that directors and general counsel agree that “the single biggest issue companies face today is getting their arms around IT and cyber risks.”

The 15th annual “Law and Boardroom Study” conducted by NYSE Governance Services and FTI Consulting polled approximately 500 directors and general counsel of U.S. publicly traded companies.

After cybersecurity, directors and general counsel said operational risk, corporate reputation and crisis preparedness keep them “up at night.” The directors and chief legal officers only diverge on two points: Directors say that succession planning is among their top five worries, while regulatory compliance rounds out the top five list of general counsel concerns, according to the report released May 20.

Breach Detection Abilities Uncertain 

The NYSE-FTI survey found that 57 percent of directors, and close to half of general counsel, said they weren't “entirely confident” that their company could “quickly detect a cyber breach.”

That finding is consistent with a separate study by Grant Thornton LLP, which found that only 17 percent of general counsel think their companies are “very well-prepared to effectively respond to data breaches,” while 58 percent said they are “somewhat prepared.”

The Grant Thornton survey, which was released May 19, was conducted by ALM Marketing Services and involved 254 respondents.

Despite the overarching concern about cyber issues, the NYSE-FTI study found that general counsel actually focus most on compliance, mergers and acquisitions and litigation.

Shareholder Activism

Shareholder activism also looms large for most general counsel and directors, not surprisingly given its increased prominence generally.

Of the general counsel surveyed, 43 percent in the NYSE-FTI report said they are “extremely concerned/concerned about shareholder activism and litigation.”

More than two-thirds of directors and general counsel said they have analyzed their vulnerabilities to activists; 60 percent of both groups said they think their boards should participate in “an activist training scenario.”

To contact the reporter on this story: Ellen Rosen in New York at erosen14@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

The NYSE Governance Services survey report is available at http://www.fticonsulting.com/global2/media/collateral/united-states/law-in-the-boardroom-in-2015.pdf.

The Grant Thornton survey report is available at http://www.grantthornton.com/~/media/content-page-files/advisory/pdfs/2015/BAS-CGC-Survey-150513-FINAL.ashx.

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