SEC Cybersecurity Risk Management and Incident Disclosure

To meet the sec cybersecurity risk management and incident disclosure requirement, you must run cybersecurity governance and incident-handling processes that match what you tell clients and regulators, and you must be able to prove those statements are not false or misleading. For SEC-registered investment advisers, misleading claims about controls, monitoring, or incident response can create antifraud exposure under the SEC’s advertising standard. (17 CFR 275.206(4)-1)

Key takeaways:

• Treat cybersecurity statements to clients (including marketing materials) as regulated claims; validate them like any other disclosure. (17 CFR 275.206(4)-1)
• Operationalize a repeatable loop: risk assessment → control implementation → testing → disclosure governance → evidence retention.
• Build an incident triage and disclosure decision log with Legal/Compliance sign-off so you can defend materiality and timing decisions.

Compliance leaders often inherit “cybersecurity disclosure” as a loose collection of policy PDFs, security tooling, and one-off client questionnaires. That setup breaks down during an SEC exam because the question is rarely “Do you have a policy?” It is “Are your statements accurate, consistent, and supported by evidence?”

The most practical way to operationalize SEC expectations is to treat cybersecurity risk management and incident disclosure as a truth-in-communications control system: every claim you make (in marketing, RFPs, DDQs, pitch decks, website content, client letters, and incident communications) must be accurate, current, and backed by operating controls and records. Under the SEC’s investment adviser advertising rule, disseminating an advertisement that contains an untrue statement of material fact or is otherwise false or misleading is treated as fraudulent, deceptive, or manipulative conduct. (17 CFR 275.206(4)-1)

This page gives requirement-level implementation guidance you can put in place quickly: who is in scope, what to build, what evidence to retain, what examiners commonly ask, and a practical execution plan. It is written for a CCO, Compliance Officer, or GRC lead coordinating Security, Legal, IR, and client-facing teams.

Plain-English interpretation (what the requirement means in practice)

For SEC-registered investment advisers, cybersecurity “risk management and incident disclosure” becomes a compliance requirement the moment you communicate about it. If you say you encrypt data, monitor continuously, have a tested incident response plan, notify clients within a stated timeframe, or maintain certain certifications, those statements must be true, not misleading, and supportable.

Operationally, you need:

1. cybersecurity governance that produces consistent decisions,
2. documented risk assessments and safeguards that match your claims,
3. an incident triage and disclosure governance process, and
4. evidence that proves what happened, when, who approved what, and why.

The SEC Division of Examinations has publicly stated it will focus on compliance with recently adopted SEC rules including the Marketing Rule. (2025-exam-priorities) That matters because many cybersecurity statements appear in marketing-adjacent channels (DDQs, pitch materials, and website copy). If your cyber narrative is overstated, stale, or inconsistent across channels, you have avoidable exam and enforcement risk.

Who it applies to (entity + operational context)

In scope entities

• Registered Investment Advisers (RIAs) that disseminate advertisements or marketing communications. (17 CFR 275.206(4)-1)

In scope operational contexts (practical)

• Marketing and business development: pitch decks, website security statements, capability brochures.
• Client and prospect diligence: DDQs, RFP responses, SOC reports shared with clients, security addenda.
• Ongoing client communications: quarterly letters, breach notifications, “service disruption” notices.
• Third party oversight: statements about how you manage third-party access, cloud security, or outsourcing controls.

Key point for operators: you do not operationalize this requirement only inside Security. You operationalize it across Compliance, Security, Legal, Investor Relations/Client Service, and Sales, because those teams create and distribute statements that can be treated as advertisements. (17 CFR 275.206(4)-1)

Regulatory text

Excerpt (primary requirement):
“It shall constitute a fraudulent, deceptive, or manipulative act, practice, or course of business within the meaning of section 206(4) of the 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.” (17 CFR 275.206(4)-1)

Operator translation: what you must do

• Inventory cybersecurity-related statements that could be considered advertising or marketing communications.
• Implement controls to validate those statements before publication and on a recurring basis.
• Maintain records showing your cybersecurity program and incident practices match what you represented.

This is why “SEC cybersecurity risk management and incident disclosure requirement” work often starts with communications governance: if you cannot prove your statements are accurate, your technical controls will not save you in an exam focused on misleading claims. (17 CFR 275.206(4)-1)

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

1) Build a “cyber claims register” (your single source of truth)

Create a register of every externally shared cybersecurity statement, tagged with:

• Channel: website, deck, DDQ, contract exhibit, client letter
• Exact claim language (copy/paste)
• Owner: function accountable for accuracy (Security, IT, Compliance, Legal)
• Evidence link: where proof lives (policy, config, ticket, report)
• Review cadence trigger: change-driven (new tool, new process) and periodic review

Why it matters: this is how you prevent Sales from reusing old language after controls change, and how you avoid inconsistent answers across different DDQs.

2) Map each claim to controls and “proof”

For each claim, document:

• Control description (what you do)
• Control operator (named role, not just a team)
• Control frequency (event-driven, daily/weekly, quarterly)
• System of record (SIEM, ticketing, IAM, GRC tool)
• What would make the claim untrue (failure conditions)

Example mapping:

• Claim: “We enforce MFA for remote access.”
• Proof: IdP policy export + quarterly access review evidence + exception register (if any).

If you have exceptions, rewrite the claim so it remains accurate (e.g., “MFA is required for remote access with documented exceptions approved by Security/Compliance”).

3) Formalize cybersecurity governance that matches disclosures

Minimum governance elements to document and run:

• A written cybersecurity governance standard aligned to what you disclose externally, with named control owners and a review cadence.
• A change management hook: security control changes trigger an update review of related external statements.
• A Compliance checkpoint for outbound materials that contain cyber claims.

This is not paperwork for its own sake. It is your mechanism for preventing misleading statements. (17 CFR 275.206(4)-1)

4) Implement an incident triage + disclosure decision process (with logs)

Create a documented workflow that:

• Defines what counts as a “cyber incident” for internal escalation (broader than “breach”).
• Establishes severity tiers and required notifications internally (Security, Legal, Compliance, business owner).
• Creates a disclosure decision log: date/time of key facts, materiality analysis notes, decision makers, and communications approved.

A disclosure decision log should capture:

• What happened (known facts vs assumptions)
• Systems/data impacted (including third parties)
• Client impact assessment (availability, confidentiality, integrity, financial harm)
• Decision: notify clients now / monitor / wait for more facts
• Rationale and approvers (Legal/Compliance sign-off)

This is also how you defend that client communications were not misleading, because you can show what you knew at the time you spoke. (17 CFR 275.206(4)-1)

5) Test what you claim (tabletop + targeted validation)

Run periodic control validation to prove your controls operate as described, and track remediation to closure. A practical approach:

• Tabletop test for incident response and client notification decisions.
• Targeted testing for high-risk claims (MFA enforcement, backups/restore, privileged access, logging/monitoring).
• Remediation tracker with owners, due dates, and closure evidence.

Testing is where many firms find “marketing drift,” such as claims of “24/7 monitoring” without defined coverage or escalation criteria.

6) Put a review-and-approval gate in front of external cyber statements

Operationalize a lightweight but strict workflow:

• Intake request (Sales/IR submits content)
• Security verifies technical accuracy
• Compliance verifies consistency with other disclosures and records
• Legal reviews sensitive representations (especially incident notification language)
• Version control and retention

If you do only one thing: stop ad hoc DDQ responses from being sent without a control/evidence check. That is a common source of misleading statements.

Required evidence and artifacts to retain (exam-ready)

Keep these as a minimum set, organized so you can produce them quickly:

Governance and program

• Cybersecurity governance standard, with roles, responsibilities, and review history
• Cyber risk assessment methodology and latest outputs (findings + treatment decisions)
• Control library mapped to external claims (the “claims register” + mappings)

Controls and operations

• Access control evidence (MFA policy, access reviews, privileged access approvals)
• Logging/monitoring coverage documentation and escalation procedures
• Vulnerability management and patching records (tickets, exceptions, remediation evidence)
• Backup/restore test records (proof of restore capability, not just backups configured)

Incident management

• Incident response plan + escalation matrix
• Incident tickets and timeline records
• Disclosure decision logs with Legal/Compliance sign-off
• Copies of client communications and approval trail

Change control

• Records showing that material changes in tools/processes triggered review of external statements

Common exam/audit questions and hangups

Expect questions that force you to connect words to reality:

1. “Show me where you stated X, and show me the evidence it’s true.”
   Hangup: content scattered across decks, DDQs, and websites with no central ownership.

2. “How do you ensure cybersecurity statements stay current?”
   Hangup: no trigger from security change management to update client-facing materials.

3. “Walk me through your last incident: who decided what to disclose and why?”
   Hangup: no decision log; decisions made in chat/phone with no durable record.

4. “Do your RFP/DDQ responses match your policies and actual operations?”
   Hangup: templated answers that overstate controls.

The Division of Examinations has signaled focus on Marketing Rule compliance. (2025-exam-priorities) Cyber claims embedded in marketing and diligence materials sit directly in that blast radius.

Frequent implementation mistakes (and how to avoid them)

• Mistake: treating DDQs as informal questionnaires.
  Fix: route DDQs through the same review gate as advertisements, with evidence attachments or references. (17 CFR 275.206(4)-1)

• Mistake: absolute language (“all data is encrypted,” “24/7 monitoring”).
  Fix: qualify accurately, document scope, and maintain an exception register.

• Mistake: incident communications written without a controlled fact set.
  Fix: require a disclosure decision log entry before any client-facing statement.

• Mistake: policies that describe an ideal state, not actual operations.
  Fix: tie every policy section to an implemented control and a system of record; remove aspirational claims.

Enforcement context and risk implications

No public enforcement cases were provided in the supplied source catalog, so this page does not list specific actions. Practically, the risk for a CCO is that inaccurate cybersecurity representations can be framed as misleading advertisements under the SEC’s antifraud standard for investment adviser advertising. (17 CFR 275.206(4)-1) Even without a major incident, inconsistent statements across marketing channels can become an exam finding and create remediation, client trust, and disclosure complications.

Practical 30/60/90-day execution plan (operator-ready)

Day 0–30: Get control of external statements

• Stand up the cyber claims register and inventory all external cybersecurity statements.
• Freeze unreviewed reuse: require review for new DDQs/RFPs and updated decks.
• Define owners and approvers (Security + Compliance + Legal) and document the workflow.

Day 31–60: Evidence mapping + incident disclosure governance

• Map top claims to controls and proof; prioritize high-exposure channels (website, pitch deck, top client DDQs).
• Implement incident triage criteria and the disclosure decision log template.
• Run a tabletop focused on: fact development, decision authority, and client communications approval.

Day 61–90: Validate, remediate, and operationalize

• Perform targeted validation of the highest-risk claims; open remediation tickets where gaps exist.
• Update language to match reality; remove or narrow anything you cannot prove.
• Put the process on rails in your GRC system (or a controlled repository) so evidence and approvals are retained.

Where Daydream fits naturally Daydream helps you centralize claims, map them to controls, and retain the approval and evidence trail that exam teams ask for. It reduces the manual burden of proving that cybersecurity statements were reviewed, accurate at the time, and supported by artifacts.

Frequently Asked Questions

Do DDQ and RFP cybersecurity responses count as “advertisements” under the SEC standard?

The rule applies to “advertisements” disseminated by an investment adviser, and the compliance risk shows up when any external communication contains material untrue or misleading statements. Treat DDQs/RFPs as in-scope for review and substantiation because they are commonly used to market services. (17 CFR 275.206(4)-1)

What’s the single artifact that improves exam readiness the fastest?

A cyber claims register mapped to evidence, with a documented review workflow. It lets you answer “where did you say this” and “prove it” without scrambling across teams. (17 CFR 275.206(4)-1)

How do we handle statements that are partially true but have exceptions?

Rewrite the statement to define scope and document exceptions in an exception register with approvals. “MFA required for remote access, with documented exceptions” is defensible if the exception process is real and evidenced.

Who should approve incident-related client communications?

Require Security for technical accuracy, Legal for liability/privilege considerations, and Compliance for consistency with prior disclosures and regulatory posture. Record the approval in the disclosure decision log.

We don’t have perfect controls yet; can we still respond to client cyber questionnaires?

Yes, but answer narrowly and precisely, and avoid absolute language you cannot prove. If a control is planned, label it as planned with a realistic description, and do not present it as implemented. (17 CFR 275.206(4)-1)

What will the SEC focus on in exams that touches this area?

The SEC Division of Examinations has stated it will focus on compliance with recently adopted rules including the Marketing Rule. Expect scrutiny on whether your cybersecurity-related marketing statements are accurate and supported. (2025-exam-priorities)