Item 1C. Cybersecurity
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Item 1C. Cybersecurity
Cybersecurity
We rely on information systems in our business to obtain, rapidly process, analyze, manage and store customer,
product, supplier and employee data to, among other things: maintain
and manage multiple information systems
worldwide to facilitate the purchase and distribution of thousands of
inventory items from numerous distribution
centers; receive, process and ship orders on a timely basis; manage the
accurate billing and collections for
thousands of customers; process payments to suppliers and vendors; provide
products and services that maintain
certain of our customers’ electronic medical or dental records (including
protected health information of their
patients) and maintain and manage global human resources, compensation
and payroll systems.
For these purposes,
we define “information systems” in a manner consistent with the definition
contained in the rules adopted by the
SEC to mean “electronic information resources, owned or used by the
registrant, including physical or virtual
infrastructure controlled by such information resources, or components thereof,
organized for the collection,
processing, maintenance, use, sharing, dissemination, or disposition
of the registrant's information to maintain or
support the registrant's operations.”
Cybersecurity Risk Management and Strategy
We have developed and implemented a cybersecurity risk mitigation strategy intended to protect our information
systems.
Our cybersecurity risk mitigation strategy is designed
so that the Company’s cybersecurity program is
aligned with generally accepted cybersecurity standards and frameworks,
in particular the NIST Cybersecurity
Framework, or “NIST CSF,” and our Company is externally audited, or certified, with ISO27001 partial scope.
We maintain an Office of Cybersecurity (“OCS”), led by our Chief Information Security Officer (“CISO”), which
oversees
the operations of our cyber risk mitigation strategy.
The OCS is a cross-functional, enterprise-wide
management team, which continuously evaluates our global cybersecurity
program’s effectiveness and is focused
on maintaining and protecting our information systems.
In overseeing the operations of our cyber risk mitigation
strategy, the OCS partners with our Global Technology Solutions team, which is led by our Chief Technology
Officer (“CTO”) and is comprised of over one hundred professionals that support our information
systems and
operations.
Our cyber risk mitigation strategy includes
monitoring
for and addressing risks that materialize within
the Company’s information systems, as well as at our
third-party
vendors, suppliers and other third-party business
partners.
Our CISO reports to our CTO.
Our CTO,
who also serves as Senior Vice President,
has more than 30 years of
experience leading large-scale global IT organizations and received a Bachelor of Business Administration
in
Business Computer Information Systems and a Master of Business Administration
from Hofstra University.
See
also
Item 1. Business, Other Executive Management
Our Vice President, Global CISO, who also serves as Vice
President and Head of the Office of Cyber Security, has over 30 years of experience leading global cybersecurity
and technology programs in large and complex corporations, and holds a Certified
Information Systems Security
Professional and a Certified Information Systems Auditor certification.
He also received a BS, Information
Technology and Security from Baker College.
The cybersecurity risk mitigation strategy is also overseen by
senior
managers who are members of our Executive Steering Committee, comprised
of the Company’s most senior
technology, legal and internal auditing officers.
Our CEO is regularly briefed on issues, incidents, and
developments, and our Board oversees our risk mitigation strategy principally
through its Audit Committee and
Regulatory, Compliance and Cybersecurity Committee, as described in more detail below.
Our cybersecurity risk management program includes, among other
elements:
risk assessments designed to help identify material cybersecurity risks
to our information systems;
a security team principally responsible for managing our (i) cybersecurity
risk assessment processes, and
(ii) defining cybersecurity control standards;
the use of expert external service providers to assess, test or otherwise assist
with aspects of our
cybersecurity controls, and to respond to specific cybersecurity threats;
the review and assessment of past cybersecurity incidents with a view to
learning from those events to
further strengthen our cyber risk mitigation strategy;
a written cybersecurity incident response plan that includes procedures
for responding to cybersecurity
incidents; and
a Global Information Security Policy, together with more detailed information security policies,
procedures, standards, and guidelines.
In addition, all employees with systems access are required to participate
in mandatory annual cybersecurity and
anti-phishing courses, along with compliance programs.
Our employees who perform financial gatekeeper roles
also receive additional mandatory annual data security training specific
to spoofing, phishing and similar data
security threats.
Per written Company policies, employees are also required
to safeguard confidential information.
Our cybersecurity risk strategy is integrated into our overall enterprise
risk management program, and our
cybersecurity team is supported by and connected with the enterprise risk
management team.
Prior Cyber Incidents
In addition to immaterial and unrelated prior incidents at certain of
our subsidiaries, in October 2023 Henry Schein
experienced a cyber incident that primarily affected the operations of our North American
and European dental and
medical distribution businesses.
Henry Schein One, our practice management software, revenue cycle
management
and patient relationship management solutions business was not affected, and
our manufacturing businesses were
mostly unaffected.
The October 2023 cyber incident disrupted key business operations,
adversely impacted our
financial results for the fourth quarter and full year 2023, diverted
attention of management, and caused the
Company to incur significant remediation costs.
The incident had residual impact on our financial results in 2024.
Cybersecurity Governance
Our Board has a Regulatory, Compliance and Cybersecurity Committee that focuses on cybersecurity oversight,
together with other board committees, principally the Audit Committee.
The purpose of the Regulatory,
Compliance and Cybersecurity Committee is to assist the Board by providing
guidance to, and oversight of, the
Company’s senior management responsible for assessing and managing Company-wide regulatory, corporate
compliance and cybersecurity risk management programs.
The primary responsibilities of the Regulatory,
Compliance and Cybersecurity Committee are to (i) discuss cybersecurity
strategic decisions, issues, challenges and
opportunities relating thereto, (ii) provide expertise to guide assessment
and monitoring of Company-wide
regulatory, corporate compliance and cybersecurity risk management budgeting, spending and capital investment,
(iii) monitor progress and status of the Company’s regulatory, corporate compliance and cybersecurity risk
management programs, (iv) review and evaluate major regulatory, corporate compliance and cybersecurity risk
management initiatives to identify emerging and future opportunities for synergy or to
leverage regulatory,
corporate compliance and cybersecurity risk management investments
more effectively and cost efficiently,
(v) report to the Audit Committee on regulatory, corporate compliance and cybersecurity risk management matters
reviewed by the Regulatory, Compliance and Cybersecurity Committee that may impact the Company’s financial
reporting and (vi) be generally available to, and communicate with,
the Company’s senior management, and to
inform the Board in the areas described above.
Our CISO and CTO, along with other key executives who are part of our Executive
Steering Committee, review
strategy, policy,
program effectiveness, standards, enforcement and cybersecurity issue management
with the
Board’s Regulatory,
Compliance and Cybersecurity Committee on at least a quarterly basis and
with the Audit
Committee on at least a bi-annual basis.
Our CTO
meets
with Board members outside of the formal meetings on a
regular basis as well as in connection with specific cybersecurity issues or
threats.
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