Recognizing the Risk
When it comes to managing cybersecurity risk, investment advisers are in a tough position. As the frequency and variety of cybersecurity risks mount, IT budgets and staffing do not always follow suit. Compliance and IT professionals are often asked to do more with less, which can seem overwhelming given an ever-expanding list of regulatory and business requirements as well as increased scrutiny of firms’ cybersecurity controls by third parties.
For years, smaller advisers in particular, and private fund advisers who did not process wires or maintain much personally identifiable information about natural persons, seemed to evoke a sense of invincibility in the face of growing cybersecurity threats, perhaps believing that their firms were sufficiently off the radar of hacker groups. Unfortunately, as headlines and anecdotes reveal, ransomware does not discriminate. Cyber incidents caused by negligent employees know no limits, and clients, third-party service providers, or portfolio companies may be the ultimate end targets for hackers simply using the adviser’s systems as a jumping-off point. Hopefully, advisers now are past the point of thinking they are not at risk for a cyber incident.
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