Yahoo identified hack risk, but its risk-management approach is unclear

Yahoo identified the nightmare scenario of a massive breach of customer data in its 2015 annual report as one of the biggest risks facing the company, which looks prescient in the aftermath of this week's revelation that 500 million Yahoo accounts were compromised by a possible state-sponsored hack.

How Yahoo, which is in the midst of a proposed friendly takeover by Verizon, decided to manage that risk has yet to be answered. Verizon has been a leading player in the...