Critical Update Needed: Cybersecurity Expertise in the Boardroom

8 Pages Posted: 20 Nov 2017

See all articles by David F. Larcker

David F. Larcker

Stanford University - Graduate School of Business

Peter C. Reiss

Stanford Graduate School of Business; National Bureau of Economic Research (NBER)

Brian Tayan

Stanford University - Graduate School of Business

Date Written: November 16, 2017

Abstract

The board of directors is expected to ensure that management has identified and developed processes to mitigate risks facing the organization, including risks arising from data theft and the loss of information. Unfortunately, recent experience suggests that companies are not doing a sufficient job of securing this data. In this Closer Look, we examine the types of cyberattacks that occur and how companies respond to them.

We ask:

• What steps can the board take to prevent, monitor, and mitigate data theft? • What data, metrics, and information should board members review to satisfy themselves that management has taken proper steps to minimize cyber risks? • What qualifications should a board member have in order to constructively contribute to boardroom discussions on cybersecurity? • How difficult is it to find board candidates with these skills?

The Stanford Closer Look series is a collection of short case studies through which we explore topics, issues, and controversies in corporate governance and executive leadership. In each study, we take a targeted look at a specific issue that is relevant to the current debate on governance and explain why it is so important. Larcker and Tayan are co-authors of the books Corporate Governance Matters and A Real Look at Real World Corporate Governance.

Keywords: Board of directors, risk, cybersecurity, cyber threats, data theft, risk management, audit, internal controls, corporate governance research

JEL Classification: G3

Suggested Citation

Larcker, David F. and Reiss, Peter C. and Tayan, Brian, Critical Update Needed: Cybersecurity Expertise in the Boardroom (November 16, 2017). Rock Center for Corporate Governance at Stanford University Closer Look Series: Topics, Issues and Controversies in Corporate Governance No. CGRP-69; Stanford University Graduate School of Business Research Paper No. 17-70. Available at SSRN: https://ssrn.com/abstract=3074594

David F. Larcker (Contact Author)

Stanford University - Graduate School of Business ( email )

Graduate School of Business
518 Memorial Way
Stanford, CA 94305-5015
United States
650-725-6159 (Phone)

Peter C. Reiss

Stanford Graduate School of Business ( email )

Stanford, CA 94305-5015
United States
650-725 2759 (Phone)
650-725-7979 (Fax)

HOME PAGE: http://www.stanford.edu/~preiss

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Brian Tayan

Stanford University - Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

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