SEC Knowledge Graph Cybersecurity Risk Management and Incident Disclosure

To meet the sec knowledge graph cybersecurity risk management and incident disclosure requirement, treat cybersecurity statements to clients and the market as regulated advertising and ensure they are provably accurate, current, and supported by operating controls. Build a tight governance-and-evidence loop: documented cyber program, validated controls, and an incident triage/disclosure decision record that can withstand an SEC exam under the Marketing Rule.

Key takeaways:

• Your cybersecurity claims (websites, pitch decks, DDQs, RFPs) must not be materially false or misleading under the SEC Marketing Rule ¹.
• Operationalize “truthfulness” by mapping every external cyber statement to an owned control, test evidence, and an update cadence.
• Incident handling needs a defensible timeline: triage, materiality/disclosure decisioning, approvals, and retained artifacts that explain what you knew and when.

This requirement is easiest to operationalize if you stop treating it as a vague “cyber disclosure” concept and instead anchor it to one enforceable rule: registered investment advisers cannot disseminate advertisements containing untrue statements of material fact or statements that are otherwise false or misleading ¹. Cybersecurity is a common area where firms unintentionally cross that line because marketing, sales, and investor relations repeat boilerplate claims (“we encrypt all data,” “24/7 monitoring,” “SOC 2 certified,” “no incidents”) that are incomplete, outdated, or context-dependent.

The SEC’s Division of Examinations has explicitly signaled continued focus on Marketing Rule compliance ². That matters for cybersecurity risk management and incident disclosure because many “cyber disclosures” live inside marketing materials, client communications, RFP responses, due diligence questionnaires, and website security statements.

Your job as a CCO/GRC lead is to build a system that (1) controls what gets said externally about cyber risk and incidents, (2) proves those statements match reality, and (3) produces clean evidence during an exam or post-incident inquiry.

Requirement in plain English

You must ensure that any external communication that could be deemed an “advertisement” does not contain a materially untrue cybersecurity statement and is not misleading by omission or context. Practically, that means:

• Don’t claim controls you don’t operate.
• Don’t overstate maturity (“fully secure,” “industry-leading,” “all data encrypted”) if scope has exceptions.
• Don’t make incident-related statements (“no breaches,” “no material incidents”) unless you have a defined basis, owner approval, and a record of what you checked.
• Maintain records that demonstrate reasonable grounds for the claim at the time it was made.

This is the operational bridge between “cyber risk management” and “incident disclosure”: the rule polices the truthfulness of what you communicate, and your program/evidence must make those communications defensible ¹.

Who it applies to

Entity scope

• Registered Investment Advisers (RIAs) communicating with prospective or existing clients/investors ¹.

Operational scope (where this shows up in real life)

• Website security/privacy pages and “trust” pages.
• Pitch decks, due diligence decks, and investor letters.
• RFP/DDQ responses (even if “not marketing” in spirit, they function like marketing).
• Incident notifications to clients, counterparties, or consultants.
• Third-party due diligence narratives about your controls (SOC reports summaries, pen test summaries, attestations).

Regulatory text

Operator-relevant excerpt: “It shall constitute a fraudulent, deceptive, or manipulative act… for any investment adviser to disseminate any advertisement that includes any untrue statement of a material fact, or that is otherwise false or misleading.” ¹

What this means for operators

• Treat cybersecurity representations as Marketing Rule content when used to obtain or retain advisory clients.
• Build a substantiation file for each cybersecurity claim category (access controls, encryption, monitoring, incident response, third-party oversight).
• Institute review and approval controls so claims are checked before dissemination and re-checked on a cadence.

What you actually need to do (step-by-step)

Use the workflow below to operationalize the sec knowledge graph cybersecurity risk management and incident disclosure requirement quickly.

Step 1: Build an inventory of “cyber statements” that leave the building

Create a single list of every place your firm makes cybersecurity statements:

• Website pages and PDFs
• Standard pitch deck slides
• DDQ/RFP templates
• Client onboarding packets
• Incident communications templates
• Third-party risk summaries provided to clients

Output: “External Cybersecurity Statements Register” with location, owner, audience, and last reviewed date.

Step 2: Classify statements by claim type and risk

Tag each statement into a simple taxonomy:

• Control claims (e.g., MFA everywhere, encryption, EDR, logging)
• Program claims (governance, policies, audits, training)
• Incident claims (no incidents, materiality, notification timelines)
• Third-party claims (vendor oversight, SOC reports)

Then add a risk rating:

• High risk: absolute language (“all,” “always,” “never”), incident-related assertions, certifications/attestations.
• Medium risk: maturity claims (“robust,” “comprehensive”), general control descriptions.
• Low risk: factual, scoped statements with clear boundaries.

Step 3: Map each claim to a control owner and substantiation evidence

For every claim, document:

• Control owner (named role, not “IT”)
• System scope (which environments, subsidiaries, products)
• Proof (what evidence demonstrates the claim is true)
• Exceptions (where the claim is not true)
• Review cadence (how often you re-validate)

This is where many teams fail: they keep policies but can’t show operating evidence. Your substantiation should be operational, not aspirational.

Step 4: Fix misleading language and add scope qualifiers

Rewrite claims to be accurate without weakening them unnecessarily. Examples:

• Replace “We encrypt all data” with “We encrypt data in transit and use encryption at rest for in-scope systems, with documented exceptions approved through change management.”
• Replace “24/7 monitoring” with “We monitor security events through in-house and/or third-party alerting with defined escalation coverage.”

The goal is exam-defensible precision under the “false or misleading” standard ¹.

Step 5: Put cybersecurity statements under Marketing Rule review and recordkeeping

Implement a pre-dissemination control:

• Compliance review required for any new or changed cyber claim in marketing materials.
• Security sign-off required for technical accuracy.
• Legal review for incident-related language when relevant.

Also implement a post-dissemination check:

• Scheduled re-approval of the statements register.
• Triggered review when controls change (tool swap, vendor change, breach, audit finding).

The SEC has stated it will focus on Marketing Rule compliance in exams ². Assume this content gets sampled.

Step 6: Operationalize incident triage and disclosure decision logs

Even if you do not have a standalone “SEC incident disclosure rule” in this dataset, you still need incident decision evidence because misleading incident statements create anti-fraud exposure.

Minimum incident documentation:

• Detection date/time, initial reporter, and initial facts
• Classification and severity rationale
• Affected systems/data types (as known at the time)
• Client impact assessment (what services were affected)
• Communications decision: who must be informed, when, and why
• Approval chain: security, compliance, legal, senior management
• What was communicated externally and when
• Post-incident corrections to any prior marketing/cyber statements

Step 7: Validate controls periodically and track remediation to closure

Run targeted testing that maps to your public claims:

• Tabletop exercises for incident communications
• Access control sampling for MFA/admin use
• Logging/alerting checks for “monitoring” claims
• Vendor oversight sampling if you claim third-party risk governance

Track findings to closure with owners and dates. Your goal is to avoid stale claims that drift away from reality.

Where Daydream fits (naturally)

If you struggle with sprawl (claims scattered across decks, DDQs, and web pages), Daydream can act as the system of record for (1) your external cybersecurity statements register, (2) claim-to-control mapping, and (3) evidence collection tied to control owners. That reduces “orphan claims” that nobody is actively substantiating.

Required evidence and artifacts to retain

Keep artifacts in an exam-ready folder structure mapped to the statements register.

Core artifacts

• External Cybersecurity Statements Register (with version history)
• Approval records (compliance + security + legal where applicable)
• Substantiation pack per claim category:
  • Policies and standards (governance, incident response)
  • Control operation evidence (configs, screenshots, reports, tickets)
  • Audit/assessment outputs if referenced externally (ensure accurate summaries)
• Incident triage and disclosure decision logs
• Copies of external communications (client notices, investor letters, emails)
• Control validation results and remediation tracker

Practical tip: retain “point-in-time” evidence. If you claim something in March, you need proof it was true in March, not proof it’s true today.

Common exam/audit questions and hangups

Expect questions aligned to Marketing Rule governance and substantiation:

• “Show me where cybersecurity representations appear in advertisements and who approves them.” ¹
• “How do you ensure your cyber claims are not misleading as environments change?”
• “Do you have records supporting each claim in this pitch deck/website statement?”
• “Describe your incident escalation process. Show evidence of a recent incident decision timeline.”
• “Where are exceptions documented (systems not covered by encryption, MFA, monitoring)?”
• “How do third parties factor into your cyber claims (outsourced SOC, cloud providers)?”

Typical hangup: marketing content owners can’t produce substantiation quickly, and security owners weren’t aware the claims existed.

Frequent implementation mistakes and how to avoid them

Mistake	Why it fails	Fix
Copying generic cyber language into decks/DDQs	Creates misleading statements under a broad anti-fraud standard 1	Require substantiation before publication; ban absolute terms without scope notes
Treating incident communications as purely “IT ops”	You lose the defensible record of what you knew and when	Maintain an incident decision log with compliance/legal sign-off
No linkage between controls and disclosures	You can’t prove truthfulness	Map every claim to an owner + evidence + review cadence
Over-claiming third-party controls	Your provider’s controls may not cover your full environment	Document shared responsibility and cite scope precisely
Stale claims after tooling changes	Common after SOC vendor swaps or IAM redesign	Triggered review on material control changes

Enforcement context and risk implications (without overreach)

The key risk is anti-fraud exposure if your cyber statements are materially untrue or misleading in advertisements ¹. Separately, the SEC is emphasizing Marketing Rule compliance in its exam program ². Even without a cited enforcement case here, this combination increases the odds that exam staff will test your substantiation discipline, especially for cybersecurity narratives used to win business.

Practical 30/60/90-day execution plan

Days 1–30: Stop the bleeding and build the inventory

• Freeze new cybersecurity claims in marketing materials unless approved.
• Build the External Cybersecurity Statements Register.
• Identify the top high-risk claims (absolute language, incident claims, certifications).
• Assign control owners and create a substantiation checklist template.
• Stand up an incident triage/disclosure decision log format and require its use.

Days 31–60: Substantiate, rewrite, and implement workflow controls

• Map each high/medium risk claim to evidence; document exceptions.
• Rewrite misleading statements; update templates (DDQ/RFP/pitch deck).
• Implement a formal approval workflow (compliance + security; legal for incident language).
• Centralize storage for point-in-time evidence tied to each claim.

Days 61–90: Test, remediate, and make it exam-ready

• Run a tabletop focused on incident communications and decision evidence.
• Perform targeted validation testing for top claims (MFA, encryption, monitoring, backups).
• Close gaps or downgrade claims to match reality.
• Conduct an internal “mock exam” sampling exercise: pick a deck and produce substantiation within a business day.

Frequently Asked Questions

Do RFPs and DDQs count as “advertisements” under the Marketing Rule?

If the content is used to obtain or retain advisory clients, treat it as in-scope for Marketing Rule controls and substantiation ¹. Operationally, put DDQ/RFP templates into the same statements register and approval workflow as pitch decks.

Can we say “we have not experienced a breach”?

Only if you define what you mean by “breach,” document the lookback basis, and have approvals and records supporting the statement at the time it was made. Otherwise, use scoped language (e.g., “no known material incidents as of [date]”) and keep the decision record.

How do we handle shared responsibility in cloud services without sounding weak?

State what you control and what the provider controls, and avoid implying you manage underlying cloud infrastructure controls you do not operate. Keep a short “scope and dependencies” note attached to the relevant claim in your substantiation pack.

What evidence is most persuasive to an SEC examiner for cybersecurity claims?

Evidence that shows control operation, not just policy, such as configuration exports, alerting/escalation records, access reviews, and testing results tied to the specific claim. Store it by claim so you can produce it quickly ¹.

Who should approve cybersecurity statements in marketing materials?

Compliance should approve for Marketing Rule risk, and Security should approve technical accuracy; Legal should approve incident-related and liability-sensitive language. Document approvals and keep a version history for the materials ¹.

We outsource security monitoring to a third party. Can we still claim “24/7 monitoring”?

You can, but only if the third party’s coverage hours, escalation paths, and scope match the claim. Keep the contract/SOW sections, escalation runbooks, and sample alert tickets as substantiation.

Related compliance topics

• 2025 SEC Marketing Rule Examination Focus Areas
• Arizona Investment Adviser Advertising Rules and Disclosure Requirements
• Best Execution: 2025 Standards (SEC Trend)
• Best Execution: Fiduciary Duty (SEC 206)
• Best Execution: Trade Allocation (SEC 206)

Footnotes

1. 17 CFR 275.206(4)-1

2. Division of Examinations - 2025 Examination Priorities