Originally posted on LinkedIn 12/18/2024
The recent SEC charges against Flagstar Bancorp (now Flagstar Financial, Inc.) are a stark reminder that transparency in cybersecurity incidents isn’t optional, it’s a regulatory, ethical, and business imperative.
Flagstar's failure to disclose the true extent of its 2021 Citrix Breach, which impacted 1.5 million individuals, reflects a broader issue:
Companies often underestimate the consequences of misrepresenting cyber incidents to investors, stakeholders, and customers. The SEC found Flagstar negligently misled the public, omitting key details about network disruptions, exfiltrated sensitive data, and the attack's material impact. This lack of transparency resulted in a $3.55M penalty and eroded trust.
What does this mean for organizations today?
1️⃣ Materiality Matters: If your risk disclosures say cyberattacks may compromise data but fail to mention they already have, you're misleading stakeholders. Material breaches must be disclosed accurately and promptly.
2️⃣ Controls and Processes Are Non-Negotiable: Strong internal procedures to assess, escalate, and disclose cyber risks in a timely manner are critical. Flagstar’s case highlights the dangers of ineffective disclosure controls.
3️⃣ Trust is on the Line: Investors and customers expect transparency, especially when it comes to their data. Misleading statements damage brand credibility and investor confidence long after fines are paid.
For security leaders and C-suite executives, this case is a call to action:
✅ Build robust disclosure processes
✅ Align teams on incident response
✅ Prioritize proactive communication
How Precize Inc Can Help:Precize provides organizations with the tools to improve cybersecurity risk visibility and streamline incident disclosures:
✅ Comprehensive Asset Context and Lineage: Understand the full impact of breaches by identifying which assets were compromised and their downstream effects.
✅ Risk Prioritization Based on Criticality: Quickly assess and prioritize incidents to inform materiality decisions and reporting accuracy.
✅ Automated Compliance Reporting:
Ensure timely and detailed compliance disclosures to meet regulatory standards and maintain stakeholder trust.As breaches increase, trust will belong to organizations that act transparently and decisively. Navigate cyber risk assessments, strengthen your disclosure controls, and avoid falling into disclosure failure traps.
