POTBELLY CORP 10-K Cybersecurity GRC - 2025-03-06

Page last updated on March 6, 2025

POTBELLY CORP reported their cybersecurity risk management and governance process in a yearly 10-K filed on 2025-03-06 16:29:00 EST.

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10-K filed on 2025-03-06

POTBELLY CORP filed a 10-K at 2025-03-06 16:29:00 EST
Accession Number: 0001195734-25-000029

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Item 1C. Cybersecurity.

ITEM 1C. CYBERSECURITY Our dedication to maintaining the trust and confidence of our customers, franchisees, and employees is fundamental to our operations. This commitment is reflected in our cybersecurity program, which encompasses policies, standards, processes, and practices and is fully integrated into our Corporate Security Policy and Enterprise Risk Management Program. Our Cybersecurity Program promotes a proactive and resilient approach to protecting the integrity, confidentiality, and availability of our systems and data. We utilize multiple information systems, including accounting software, customer relationship management solutions, our mobile app, online ordering platforms, point-of-sale software and data warehouse. In the ordinary course of business, we collect, and our franchisees may collect confidential information. To protect the information that we gather and the availability of our IT systems from cybersecurity threats, we have an ongoing cybersecurity risk mitigation program, which includes continuous detection, prevention and monitoring from an external cybersecurity service provider. A cybersecurity threat is any potential unauthorized occurrence, or a series related to unauthorized occurrences, on or conducted through our information systems or the information systems of a third party that we utilize in our business which may adversely affect the confidentiality, integrity or availability of our information systems or any information residing therein. Our cybersecurity policies, standards, processes and practices are based on the Center for Internet Security Critical Security Controls framework and include the following components: ◦ Collaborative Approach: We have implemented a comprehensive, cross-functional approach to identifying, preventing and mitigating cybersecurity threats and incidents, while also implementing controls and procedures that provide for the prompt escalation of certain cybersecurity incidents so that decisions regarding the public disclosure and reporting of such incidents can be made by management in a timely manner. ◦ Deployment of Technical Safeguards: We deploy technical safeguards designed to protect our information systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware functionality and access controls, which are evaluated and improved through vulnerability assessments, penetration testing and cybersecurity threat intelligence. We identify and address information security risks by using a defense-in-depth methodology that provides multiple, redundant defensive measures in case if a security control fails or a vulnerability is exploited. ◦ Development and Testing of Incident Response and Recovery Planning: We have developed and maintain comprehensive incident response and recovery plans that address our response to a cybersecurity threat, and such Plans are tested and evaluated annually. Our annual testing of these plans include a wide range of activities, such as audits, tabletop exercises, threat modeling, vulnerability assessments, penetration testing and other exercises focused on evaluating the effectiveness of our cybersecurity measures and planning. We maintain cybersecurity insurance to protect our organization from potential financial losses due to cyber incidents, such as data breaches, ransomware attacks, and other cyber-related events. Our cyber insurance policy is a key part of our risk management strategy. However, it is important to note that this coverage may not completely cover all potential losses or liabilities associated with a cybersecurity incident. We regularly review and update our policy to ensure it aligns with evolving risks and industry standards. By having this insurance in place, we are better prepared to manage the financial consequences of any cyber threats we may face. We engage third parties to asses our cybersecurity measures, including information security maturity assessments, internal audits and independent reviews of our information security control environment and operating effectiveness. The results of such assessments, audits and reviews are reported to the Audit Committee, and we adjust our cybersecurity policies, standards, processes and practices as necessary based on the information provided by these assessments, audits and reviews. ◦ Outside Consultants: We engage various outside consultants, including contractors, assessors, auditors, outside attorneys and other third parties, to, among other things, externally audit our systems against top information security standards, including controls for Payment Card Industry Data Security Standard (PCI DSS) and conduct regular testing of our networks and systems to evaluate and strengthen our cybersecurity posture. 33 ◦ Third-Party Risk Management: We maintain a comprehensive, risk-based approach to identifying and overseeing cybersecurity risks presented by third parties, including service providers, franchisees and other external users of our systems, as well as the systems of third parties that could adversely impact our business in the event of a cybersecurity incident affecting those third-party systems. We conduct due diligence on third-party vendors by performing risk assessments and evaluating their compliance with relevant regulations, such as the Service Organization Control reports (SOC1 and SOC2). We also seek to obtain contractual assurance that our vendors will maintain adequate controls, such as adequate security against data breaches. ◦ Implementation of Regular and Mandatory Employee Training and Awareness Programs: We provide regular, mandatory training for personnel regarding cybersecurity threats as a means to equip our personnel with effective tools to address cybersecurity threats, and to communicate our evolving information security policies, standards, processes and practices. As of the date of this report, we are not aware of any material risks from cybersecurity threats, including those resulting from previous cybersecurity incidents, that have materially affected us, or that are reasonably likely to affect us, including our business strategy, results of operations or financial condition. Governance The Board has delegated to the Audit Committee the responsibility for monitoring and overseeing the Company’s cybersecurity and other information technology risks, controls, strategies and procedures. The Audit Committee receives timely information regarding any cybersecurity incident that meets established reporting thresholds, as well as ongoing updates regarding any such incident until it has been addressed. On a quarterly basis, the Audit Committee discusses our approach to cybersecurity risk management with our Chief Information Officer (“CIO”). The Audit Committee makes regular reports to the full Board regarding our information technology risks. Each member of our Audit Committee is experienced in the area of information security, either as a result of their professional history, current responsibilities in overseeing processes and controls in this area at the Company, or both. The Audit Committee may discuss such processes and controls with our internal accounting and security teams and independent registered public accounting firm. Our CIO manages our Cyber Security Program, including the management of risks arising from cybersecurity threats. Our management receives quarterly, and more frequently, if necessary, presentations and reports on cybersecurity risks, which address a wide range of topics including recent developments, evolving standards, vulnerability assessments, third-party and independent reviews, the threat environment, technological trends and information security considerations arising with respect to our peers and third parties. Our CIO works, in coordination with our senior management, to implement new programs, as needed, and to oversee our current programs which are designed to protect our information systems from cybersecurity threats and to promptly respond to any cybersecurity incidents in accordance with our incident response and recovery plans. Our CIO monitors the prevention, detection, mitigation and remediation of cybersecurity threats and incidents in real time, and report such threats and incidents to the Audit Committee when appropriate. Our CIO has served in various roles in information technology and information security for over 20 years, including serving in senior leadership roles overseeing information technology systems, including previous service at a company in our industry. Our CIO serves on the Board of Directors of the Chicago chapter of the Society for Information Management where he has the opportunity to interact with senior IT leaders throughout the technology and business fields, including in the industry, government and academic sectors. 34

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