Cost of Silence: Why Cyber Disclosure Tests Leadership Not Security

Cybersecurity was a background issue in business for years. It was important but not often considered a strategic priority. It was behind goals for revenue, operational efficiency, and quarterly expectations. You could sense it, but only as a risk you hope to avoid.

What was the reason?

Was it because cyber incidents seemed like they weren't real until they were?

Did leaders believe their teams had everything under control?

Could it be that acknowledging the weakness of their systems equated to acknowledging the weakness of their choices?

For whatever reason, silence became the norm. People agreed that cybersecurity was important, but not so much that it would get in the way of business.

The mind sees what it’s willing to confront.

The government doesn't think that way anymore. The SEC made new rules about cybersecurity disclosures in July 2023. These rules say that public companies must report serious cyber incidents within four business days and give annual reports on how they manage risk and govern themselves. The SEC made the change clear: cybersecurity events can be just as important to investors as any other financial or operational event.

(Source: U.S. Securities and Exchange Commission—Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure Final Rule)

The rule is about reporting on time at its most basic level. But it shows a deeper truth about the market: investors, customers, and regulators no longer accept silence as a strategy. There are too many breaches, the stakes are too high, and the effects are too wide. People in the market want to know what they are getting. The market wants to know what businesses think about risk, how they prepare for it, and how honest they are when something goes wrong.

This demand arose for a reason. Cyber incidents have been happening more often and getting worse over the past ten years. High-profile breaches have put millions of customers at risk, messed up important infrastructure, and cost billions of dollars in market value. At the same time, there is more pressure from regulators around the world, and frameworks like the EU's NIS2 directive show that there is a move toward more accountability. The SEC's rules just make official what the market has been asking for: openness, consistency, and leadership that sees cybersecurity as a strategic priority instead of a technical afterthought.

The effects are big. The rules give customers a better idea of how companies deal with risk, building trust that has been missing from the cybersecurity conversation for a long time. Companies feel the pressure from within. Disclosure makes it necessary for security teams, lawyers, and executives to work together. Companies must clarify the definition of "material" in the context of cyber incidents, document their governance structures, and explain how the board monitors risk. These are not technical jobs; they are jobs that involve organizing.

This change is already impacting people's jobs. Skills in cyber governance, risk, and compliance are becoming more important. Now, security leaders need to talk clearly, not in jargon. Boards need to learn how to use technology safely. The work is growing beyond firewalls and threat detection to include culture, communication, and making decisions.

What This Could Mean for Private Companies in the Future

The SEC's rules only apply to public companies right now, but it's hard to believe that the effects will stop there. Regulation usually starts at the top of the market and moves down. This tendency is not because policymakers want to make things harder for smaller businesses, but because expectations change when transparency becomes the norm.

And that brings up a quiet but important question: If public companies have to report cyber incidents, how long will it be before private companies have to do the same?

Private businesses have been able to be more private for a long time. They can decide what to tell, when to tell it, and to whom. But cybersecurity doesn't care about how businesses are set up. A breach at a private company can be just as catastrophic as one at a public company for supply chains, customer data, or partners. The effects of a breach are the same for both private and public companies, even if their reporting requirements differ.

Investors, insurers, and business partners may start to expect the same level of openness from private companies as they do from public ones. This expectation may not initially stem from rules, but rather from contracts, due diligence, and market pressure. It might become normal to do cyber maturity assessments. It may not be possible to change incident reporting clauses. People may have to expect to share information in order to do business.

If that happens, the change will put private company leaders to the same test as it does public company boards. The test will assess their willingness to be open about risks, not their tech skills. This will test their ability to communicate effectively with each other. They should demonstrate a willingness to view cybersecurity as a shared responsibility rather than a burden for the company.

The Test of Leadership

This is why the new rules put more stress on leadership than on security. You can make technology stronger, fix it, or replace it. But leadership can't. To be honest about vulnerabilities, disclosure needs to happen not only in systems but also in processes, priorities, and readiness. It instructs leaders to confront the harsh reality that they can't eliminate risk, but they can mitigate it, doing so in front of everyone.

Therefore, the cost of remaining silent has never been greater. The market now expects leaders to view cybersecurity as a sign of their integrity, not because the SEC mandates it. Being open is no longer a choice. It will be a standard by which leaders are judged.

As with any form of quality, the expectation exists long before the rule.