How to Meet SEC Cybersecurity Disclosure Requirements with Proactive Application Security

In July 2023, the SEC fundamentally changed cybersecurity accountability for public companies. Material cybersecurity incidents now require disclosure within four business days of materiality determination. Annual disclosures about risk management processes, board oversight, and program effectiveness are mandatory. The first compliance deadlines began in December 2023, and enforcement actions were already underway in 2024.

For application security teams, the SEC needs more than incident response plans. They require demonstrable risk management processes. They need to see systematic approaches to identifying, assessing, and managing cybersecurity threats before they become incidents.

This creates a clear mandate for AppSec: prevent material incidents through proactive testing, maintain complete attack surface visibility for risk assessment, and document everything in ways that satisfy regulatory scrutiny.

Understanding the SEC Cybersecurity Disclosure Rules

Material Incident Disclosure (Form 8-K, Item 1.05)

When a cybersecurity incident is determined to be material, you have four business days to file disclosure. That disclosure must include:

• The nature, scope, and timing of the incident
• Material impact or reasonably likely material impact on the company
• Impact on financial condition and results of operations

The timeline starts when you determine materiality, and that determination must happen “without unreasonable delay” after discovery. The only exception: if the U.S. Attorney General determines immediate disclosure poses national security or public safety risk.

Annual Risk Management Disclosures (Form 10-K, Regulation S-K Item 106)

Your annual filing must describe:

• Processes for assessing, identifying, and managing material cybersecurity risks
• Whether risks have materially affected (or are reasonably likely to affect) business strategy, operations, or financial condition
• Board oversight of cybersecurity risks
• Management’s role and expertise in managing cybersecurity threats
• Use of third-party assessors, consultants, or auditors
• Processes for overseeing third-party service provider risks

What “Material” Means for Application Security

The legal standard: information is material if there’s a “substantial likelihood that a reasonable shareholder would consider it important” in making investment decisions. Would the information “significantly alter the total mix of information available to investors?”

For application security, materiality extends beyond direct financial impact:

• Customer data breach through API vulnerability – Almost certainly material
• Exposure of PII, financial data, or intellectual property – Material
• Business logic flaw allowing unauthorized access – Potentially material depending on scope
• Brand damage and loss of customer trust – Material impact on business value
• Litigation or regulatory exposure – Material risk to financial condition

A material code change that introduces a significant vulnerability could be considered material even before exploitation. This is why dynamic testing is critical; SAST flags potential issues, but DAST determines exploitability.

The questions you need to answer “yes” to:

• Can you demonstrate processes for “assessing, identifying, and managing material risks from cybersecurity threats”?
• Do you have evidence these processes are followed consistently?
• Can you prove what was tested, when, and what was found?
• Can you show board oversight and management involvement?

How StackHawk Enables Proactive SEC Compliance

1. Prevent Material Incidents Through Shift-Left Security Testing

SEC Requirement: Material incident disclosure within four business days (Item 1.05, Form 8-K)

The reality: Four business days is an extremely tight timeline for investigating incidents, assessing scope and impact, determining materiality, and filing disclosure. By the time an incident reaches production, the damage may already be material. You need to reduce the likelihood of incidents that would trigger disclosure requirements in the first place.

How StackHawk prevents disclosure-triggering incidents:

Runtime API and application security testing runs directly in CI/CD pipelines before code reaches production. Every code change is tested automatically with no manual security gate delays. StackHawk finds exploitable vulnerabilities including OWASP Top 10, business logic flaws, authorization bypasses, and API-specific risks.

StackHawk tests REST, GraphQL, gRPC, and SOAP endpoints—all modern API architectures. It validates authentication flows, authorization controls, and business logic. Most importantly, it actively attempts to exploit vulnerabilities to prove exploitability, not just flag potential issues. This catches the types of API vulnerabilities that lead to material breaches.

Configurable quality gates block deployment of critical vulnerabilities. Vulnerabilities caught in CI/CD never reach production. There’s no exposure window where attackers could exploit issues, and no emergency incident response while code is live.

The Compliance Benefit

• Fewer material incidents to disclose. Proactive prevention reduces disclosure obligations.
• Better incident context if disclosure is needed. Pre-production testing history shows what was tested and when.
• Demonstrates systematic risk management. Automated testing in CI/CD proves you have processes for identifying vulnerabilities.
• Creates an audit trail. Every test run is documented with results, findings, and remediation status

2. Maintain Complete Attack Surface Visibility for Risk Assessment

SEC Requirement: Describe processes for assessing and identifying material cybersecurity risks (Regulation S-K Item 106)

The reality: You can’t assess risks for applications and APIs you don’t know exist. Shadow APIs and undocumented endpoints are common sources of breaches. AI-accelerated development means new attack surface appears constantly, and manual inventory processes can’t keep pace. “We don’t know what we have” isn’t an acceptable answer for SEC disclosures.

How StackHawk provides attack surface visibility:

StackHawk automatically maps every API and application from source code analysis. It discovers shadow APIs, internal microservices, and deprecated endpoints still in code. New attack surface is detected the moment code is committed.

It auto-generates and updates OpenAPI specifications from source code, tracks which applications handle sensitive data (PII, financial information, intellectual property), identifies frameworks and languages, and maps relationships between applications, APIs, and code repositories.

StackHawk flags applications based on business impact indicators: which APIs process cardholder data, PII, or other sensitive information, which applications are internet-facing versus internal, and which applications are connected to critical business functions.

The Compliance Benefit

• Demonstrates systematic risk identification. You can describe specific processes for discovering your attack surface.
• Provides evidence of comprehensive coverage. Inventory shows you know what you have, where it is, and if it’s covered by security testing.
• Enables informed materiality assessments. When incidents occur, you can quickly assess scope based on complete attack surface knowledge.
• Creates foundation for board reporting. You can confidently report to the board about the scope of protected systems.

3. Establish Documented, Repeatable Risk Management Processes

SEC Requirement: Describe processes for managing material risks from cybersecurity threats (Regulation S-K Item 106)

The reality: The SEC requires you to describe risk management processes “in sufficient detail for a reasonable investor to understand.” Ad-hoc security testing doesn’t constitute a “process.” Manual, inconsistent testing can’t be documented as systematic risk management. You need evidence that processes are actually followed, not just documented in policies.

How StackHawk creates systematic processes:

Security testing is defined in code (YAML configuration) and not dependent on someone remembering to test. Consistent, repeatable testing runs across all applications and teams. Version-controlled scan configurations provide an audit trail of what’s tested and how. Automated processes run on every commit without manual intervention.

Quality gates enforce risk management by blocking deployments based on vulnerability severity. You set organizational standards for what types of findings prevent production deployment and automatically enforce security requirements without manual security team gatekeeping. This demonstrates that critical vulnerabilities are systematically prevented from reaching production.

Tests run in CI/CD infrastructure where development already happens. Findings are delivered directly to Jira, Slack, and pull request comments. Developers receive actionable remediation guidance in their tools. Fix verification confirms vulnerabilities are actually resolved before closing.

Testing happens on every code commit. New attack surface is automatically discovered and tested. Historical data shows risk trends over time.

The Compliance Benefit

• Describable processes. You can explain exactly how vulnerabilities are identified, assessed, prioritized, and remediated.
• Evidence of consistency. Automated testing proves processes are followed every time.
• Third-party involvement. You can document the use of StackHawk as a security testing tool in your processes.
• Process for significant changes. Every code commit is automatically tested, helping to address the SEC requirement for change management.

4. Provide Board-Level Visibility and Program Oversight

SEC Requirement: Describe board oversight of cybersecurity risks and management’s role in assessing and managing threats (Regulation S-K Item 106)

The reality: Boards need to understand organizational cybersecurity posture without getting lost in technical details. You need to demonstrate that the board actively oversees cybersecurity risk. Management needs data to report progress, effectiveness, and risk trends to the board. Technical vulnerability data doesn’t translate well to executive decision-making.

How StackHawk provides program-level metrics:

StackHawk tracks testing coverage, i.e. the percentage of applications and APIs under active security testing. It provides the data to measure pre-production detection rate (vulnerabilities caught before production deployment), mean time to remediation (MTTR), vulnerability trends showing whether security posture is improving or degrading, and risk reduction metrics demonstrating measurable decrease in high-severity vulnerabilities.

The Attack Surface dashboard shows which applications pose highest risk based on sensitivity of data processed, which applications are actively tested versus not under coverage, where security resources should be allocated for maximum impact, and comparative view of security posture across different teams or business units.

StackHawk provides the underlying data needed to build executive-level security reports. Customers can export scan results or use the StackHawk API to aggregate security metrics into their existing reporting tools and dashboards. This data supports high-level views of security program effectiveness, trend analysis showing improvement over time, and risk indicators that inform board discussions about cybersecurity investments.

The Compliance Benefit

• Describable board oversight. You can articulate how the board receives information about cybersecurity risks.
• Informed decision-making. Your board has the data needed to oversee cybersecurity risk effectively.
• Supports annual disclosure requirements. You have the data needed for Form 10-K cybersecurity disclosures.

5. Create Comprehensive Audit Trails for Regulatory Scrutiny

SEC Requirement: All cybersecurity disclosures; evidence of systematic processes

The reality: SEC enforcement actions show that inadequate documentation and misleading disclosures result in penalties. You need to prove that disclosed processes are actually followed in practice. Audit trails must show consistent application of security testing across all applications. You must be able to demonstrate that you knew about your attack surface and tested it appropriately.

How StackHawk provides documentation:

Every scan is automatically logged with timestamp, configuration, and results. Pipeline integration shows exactly when each application was tested. Findings are tracked from discovery through remediation to closure. Version-controlled scan configurations provide history of testing methodology changes.

Testing runs automatically on every commit and is not dependent on manual processes. Quality gate enforcement logs prove that policies are automatically applied. Developer remediation activity demonstrates that vulnerabilities are actually fixed. Re-scan verification confirms vulnerabilities don’t reappear after fixes.

StackHawk records what was tested (which applications, APIs, endpoints), when testing occurred (every CI/CD pipeline run), what was found (specific vulnerabilities with severity levels), how findings were addressed (remediation actions, fixes, verification), and who was involved (code owners, security team, management).

The combination of code visibility and testing gives you a clear overview of test coverage. Integration with SAST tools shows where static analysis is running, providing complete visibility into your security testing program.

If an incident occurs, you can reconstruct exactly what was tested and when, whether vulnerable code went through security testing, whether vulnerability was introduced by tested code or untested changes, and evidence for determining when the issue was introduced.

The Compliance Benefit

• Supports Form 8-K disclosures. If an incident occurs, have complete context for assessing scope and impact.
• Evidence for Form 10-K annual disclosures. You can prove your described processes are actually followed.
• Defense against enforcement actions. Documentation shows good-faith systematic risk management.
• Materiality determination support. Audit trail helps assess whether incidents meet materiality threshold.
• Demonstrates “without unreasonable delay.” You can show you have processes for timely risk identification.

Getting Started With StackHawk to Support SEC Compliance

Assess your current disclosure readiness:

• Do we have complete visibility into our application and API attack surface?
• Can we describe systematic processes for identifying and managing application security risks?
• Do we have audit trails showing our processes are consistently followed?
• Can we provide the board with meaningful metrics about security program effectiveness?
• Do our current security tools provide the documentation needed for annual disclosures?

The bottom line: Organizations must have systematic, demonstrable processes for risk management. Annual disclosure requirements demand evidence of consistent, effective security programs. SEC enforcement actions show regulators are actively monitoring compliance. The time to implement systematic processes is before incidents occur, not during crisis response.

StackHawk’s shift-left approach prevents incidents that would require disclosure. Complete attack surface visibility provides the foundation for risk assessment. Automated, continuous testing creates systematic processes that satisfy SEC requirements. Program-level metrics enable meaningful board oversight and annual disclosures.

With SEC enforcement underway and ongoing disclosure requirements, evaluate whether your application security program provides the visibility, processes, and documentation needed for compliance. Schedule a demo to see how StackHawk supports proactive risk management and SEC disclosure readiness.