With the U.S. Securities and Exchange Commission’s (SEC) new cybersecurity disclosure rules in full effect as of December 2023, public companies — and even the vendors that support them — are now under unprecedented pressure to not only report material cyber incidents within four business days but also demonstrate robust, actionable cybersecurity plans. This is pushing offensive security (OffSec) from a “nice-to-have” ancillary to a legal and strategic imperative.
The SEC Cybersecurity Disclosures Rule in Focus
Established in 2023, the SEC’s new cybersecurity disclosures rules officially came into effect in January 2025. Many companies have taken the liberty of relying on a soft grace period, but enforcement and scrutiny have ramped up mid-year. Largely due to this crackdown, record numbers of cyber incidents are now being publicly disclosed, as recent statistics attest.
Here is what companies need to understand.
What Does the New SEC Cyber Disclosures Rule Require?
The SEC’s rules now require that public U.S. companies report a material breach within 4 days of determining that the incident is material, as required by Item 1.05 of Form 8-K. Included in the disclosure must be the nature, timing, and scope of the incident, along with the impact, or potential impact, on the company – in terms of finances, reputation, and operations.
CISO and Private Company Concerns
CISOs face heightened personal and professional liability if they are found lacking in reporting or preparation under the new rules. For this reason, documentation, transparency, and thorough security testing are critical to protecting both companies and their leaders. Furthermore, the SEC expanded liability for cybersecurity breaches to the C-suite and executive board.
Additionally, companies doing business with public enterprises — especially those handling sensitive data or infrastructure — may also be expected to align with these standards.
Why Is OffSec in the Spotlight?
It’s now not enough to report a breach — you must show that you had a proactive, offensive security posture in place. The SEC wants to see that your organization is actively testing defenses, not just monitoring and responding. That means weaknesses in red teaming, threat simulation, or exploit discovery may now be interpreted as governance failures.
As companies face mounting pressure to disclose material cybersecurity incidents within 96 hours or less, offensive security becomes a lifeline for creating the infrastructure and reporting resources needed to fulfill those requirements.
Here’s how.
1. OffSec Enables Fast, Defensible Materiality Determinations
Under the SEC’s 4-day disclosure rule, companies must assess incident materiality “without unreasonable delay.” Offensive security provides concrete pre-incident evidence — like attack paths, exploited vulnerabilities, and risk simulations — that enables faster, more objective decisions during a breach.
2. Substantiates Governance Disclosures in Annual 10-K Filings
The SEC requires companies to describe the process used to identify and manage cyber risks. A formal OffSec program (vulnerability scans, pen tests, red teams, BAS) becomes the documented, auditable evidence of this process — proving real operational governance, not just theoretical controls.
3. Forms the Backbone of Effective Disclosure Controls and Procedures
The SEC doesn’t just evaluate breach responses — it audits the internal processes behind disclosure decisions. A structured OffSec program integrates findings into risk committee workflows, ensuring critical cybersecurity data flows from technical teams to legal and financial leadership.
4. Reduces Legal Liability and Regulatory Fines Through Demonstrable Diligence
The SEC penalizes governance failures and misleading language — not technical breaches. Companies with consistent OffSec practices can show regulators they acted in good faith, proactively identified risks, and disclosed them accurately, defending against negligence claims.
5. Clarifies Complex Materiality Scenarios Like “Low-and-Slow” Attacks
The SEC requires companies to report a series of related unauthorized occurrences if the cumulative effect is material. Offensive security, especially BAS and red teaming, helps detect and assess these hard-to-spot campaign-style threats that traditional tools often miss.
6. Drives More Accurate, Complete Incident Reporting (Form 8-K)
SEC rules demand specifics about incident timing, scope, and financial impact. OffSec exercises simulate these impacts in advance, giving legal and compliance teams the factual scenarios needed to avoid underreporting or minimizing the scope — both of which have triggered recent SEC fines.
7. Delivers High ROI by Preventing Costly Breaches and Fines
An annual investment in OffSec can prevent regulatory fines, breach costs, and reputational damage. The cost-benefit analysis overwhelmingly favors OffSec as a financial risk mitigation strategy — not just a compliance checkbox.
8. Strengthens Cyber Insurance, Investor Confidence, and Strategic Planning
OffSec results can reduce cyber insurance premiums, strengthen investor trust through transparency, and inform data-driven security spending. In a regulatory environment where cybersecurity equals financial risk, these benefits are now essential to long-term value creation.
9. Shifts Security Posture from Reactive to Resilient
The SEC emphasizes proactive governance. Offensive security flips the script from reactive incident response to continuous threat validation — demonstrating a culture of resilience that regulators and investors increasingly demand.
10. Validates Third-Party Oversight and Vendor Risk Management
Many breaches now involve third-party vendors (especially with the new Verizon Data Breach Investigations Report). OffSec exercises (especially red teaming and BAS) test not just internal systems, but third-party access, shadow IT, and supply chain vulnerabilities — essential for meeting SEC expectations around vendor oversight and governance.
11. Provides a Rehearsal for Incident Response Under Regulatory Pressure
Red teams and BAS simulate real attacks and help incident response teams practice under realistic, high-stress conditions. This makes the organization more capable of managing real-world incidents within the SEC’s tight timelines, avoiding missteps that lead to fines.
12. Addresses Qualitative Materiality Triggers Like Reputational Damage
Materiality isn’t just financial. Reputational harm, IP theft, or customer trust loss can also trigger disclosure. OffSec provides pre-incident data (e.g., what crown jewels are exposed) that supports qualitative judgments, making them faster, more accurate, and more defensible.
The Time to Act Is Now
This is not just about compliance — it’s about trust, reputation, and risk mitigation. Now is the time to audit your OffSec readiness and ensure your incident response and disclosure processes are airtight. Those without strong offensive security frameworks risk being left behind — or worse, exposed.
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