Canada: Canadian Securities Regulators Issue Guidance For Canadian Issuers On The Disclosure Of Cyber Security Risks And Incidents


As part of ongoing efforts by the Canadian Securities Administrators (CSA) to highlight cyber security risks for issuers, registrants and other regulated entities, staff from the British Columbia Securities Commission, the Ontario Securities Commission, and the Autorité des marchés financiers (Staff) recently published CSA Multilateral Staff Notice 51-347: Disclosure of cyber security risks and incidents [PDF] (the Staff Notice).

The Staff Notice, which is directed at Canadian issuers, is a result of a recent cyber security disclosure review. Staff reviewed the most recent filings of the 240 constituents of the S&P/TSX Composite Index to assess both cyber security risk factor disclosure and cyber security incident disclosure. This review was larger in scope than past reviews and reflects Staff's opinion that issuers in all industries may be exposed to cyber security risk.

Risk factor disclosure

Staff's review of risk factor disclosure found that 61% of reviewed issuers addressed cyber security issues in their risk factor disclosure, and 20% of reviewed issuers identified a person, group or committee as being responsible for their cyber security strategy, most commonly the audit committee. The Staff review found that disclosure generally focused on dependence on information technology, although some issuers noted specific factors such as the issuer's industry, ownership of specified assets, the nature of operations or status as government contractors as factors increasing cyber security risk.

Cyber security risk disclosure should be included in an issuer's filings if the risk is material to the issuer. Staff recommend that materiality of cyber security risk be determined by an assessment of the probability that a breach will occur and the anticipated magnitude of the effect of a breach. Staff also acknowledge that all issuers are increasingly dependent on information technology and all issuers may be exposed to a cyber-attack. This suggests that the CSA expects increasing numbers of issuers to provide cyber security risk disclosure.

Staff expect risk factor disclosure to focus on material, issuer-specific risks tailored to the issuer's particular circumstances and to avoid generic or boilerplate language. Accordingly, the onus is on issuers to prepare risk factor disclosure that takes into account: (i) the types and sources of cyber security exposure, (ii) the level of exposure and the reasons for the level of exposure, (iii) the issuer's preparedness for addressing the risk, (iv) the potential consequences of a cyber-attack and (v) prior material cyber security incidents, or series of incidents, and the prior incident's effects on the issuer's cyber security risk – all of which is consistent with the guidance on cybersecurity disclosure published by the United States Securities and Exchange Commission (SEC) and guidance prepared by the International Organization of Securities Commissions (IOSCO) in its report on cyber security in securities markets [PDF].

The Staff Notice also expects issuers to address how they mitigate cyber security risk and their reliance on third-party experts for cyber security strategy or remediation. SEC and IOSCO guidance contain similar suggestions. However, issuers should be reminded that form requirements for risk factor disclosure direct issuers to not de-emphasize a risk factor by including excessive caveats or conditions. Therefore, any description of an issuer's cyber-attack mitigation efforts should be prepared in a manner that does not diminish or otherwise caveat cyber security risk factor disclosure.

Incident disclosure

Another focus of the Staff Notice is cyber security incident disclosure. Unlike the relatively common inclusion of cyber security risk factor disclosure in securities filings, Staff found that issuers rarely disclose cyber security incidents, and in the material recently reviewed by Staff no issuer identified a cyber security incident as material.

The Staff Notice reminds issuers that a cyber security incident (or incidents) must be disclosed in accordance with securities legislation if it is a material fact or material change to the issuer's business. When determining the materiality of a cyber security incident, Staff noted:

  • There is no bright-line test and the threshold at which a cyber security incident becomes material will vary between issuers and industries.
  • Determining materiality requires a contextual analysis of the cyber security incident. Staff note that an isolated cyber security incident may not be material but a series of minor incidents may become material, depending on the type of disruption caused.
  • Cyber security incidents may not be detected right away, and the severity of the incident may be difficult to determine. Staff therefore remind issuers that determining the materiality of a cyber security incident is necessarily a dynamic process that runs through the detection, assessment and remediation phases.

The CSA expects that issuers that have adopted a cyber security remediation plan address in the plan how the issuer will assess the materiality of a cyber security incident for purposes of determining whether and how to disclose the incident. If an issuer has determined a cyber security incident should be disclosed, Staff recommends that the issuer consider and potentially provide disclosure as to the expected impact and costs of the incident. Similarly, Staff expects that issuers required to establish and maintain disclosure controls and procedures apply those controls and procedures to detected cyber security incidents so as to ensure that any incidents are communicated to management appropriately and disclosure decisions are made in a timely manner.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.