Protecting critical data and systems from cyberattacks is important today, especially in the finance industry. Unsurprisingly, cybercriminals are usually drawn to money, which there’s a lot in that sector. Hence, it’s the reason why there are lots of scam attempts in banks and private equity ventures.
A successful cyberattack in 2019 took $1.3 million from three private equity firms. This alarming event shows how much could be lost if you have weak cybersecurity. It should be a wake-up call for Private Equity (PE) firms and Venture Capital (VC) as one cyberattack can have significant ramifications.
With sensitive data stolen, consumers’ trust, deals, and market capitalizations of compromised portfolio companies can go along with it. Worse, unwanted lawsuits, investigations, and penalties can also surface, ultimately hurting a company’s ability to draw in or keep investors.
Given all this, it’s crucial to have strong cybersecurity measures to eliminate all the risks. Below are a few strategies that you can follow:
The best first step in your cybersecurity strategy is always risk assessment. Without it, you’ll be left guessing which steps to take to protect your company.
What you want to do is start to look for security vulnerabilities in your tools, systems, devices, and hardware and assess the current countermeasures around them. Once you’ve identified risks, redesign your cybersecurity controls for better security.
Besides what’s within your PE firm, it’s also a great idea to assess the security measures of portfolio companies using a shared security lens to know how you can improve them.
Using the latest technology is a must for any cybersecurity strategy. Old software systems won’t be able to manage modern risks as it also evolves as technology advances. Hence, private equity should ensure that their systems, applications, and networks are always up-to-date and secure. They should also invest in robust firewalls and modern antivirus software like next-gen antivirus to elevate protection against various attacks. All these can help keep your PE firm and portfolio companies safe from downfall because of weak security.
As you know, cybercriminals often target sensitive data when they attack. Once they steal it, they can corrupt or sell this valuable information. Considering that you deal with lots of financial data, it would be best to have an effective data management plan. It should cover everything from data collection, storage, and transfer. Below are a few tips you can follow:
You must know that many data breaches are caused by human error. Thus, it’s critical to provide security-focused training for your employees.
The training should include steps from spotting risks to preventing them. They must learn how to identify attacks like phishing and ransomware, which are common threats in the finance sector.
You must also empower your team with the latest AI platforms and other security tools to further your security. Finally, they must learn basic cybersecurity measures. Below are a few of them:
Passwords should always combine lower and uppercase letters, numbers, and special characters. Employees should update them regularly to ramp up security. You can suggest excellent password managers for them to use for easier password creation. Moreover, remind them not to share their passwords with anyone.
You must also require MFA to limit access to authorized personnel only. This will add another layer of security against unauthorized access.
If you allow your employees to work from home, provide them with the necessary tools for network security. Always advise them not to use public Wi-Fi and suggest a VPN that they can use if they work outside.
Due to the growing cybersecurity risk from outside vendors and third parties, PE and VC firms must execute cyber diligence on all their vendors and suppliers of portfolio companies. This should include examining their security history, audits, and practices and how they tangibly align with industry-standard frameworks like ISO and NIST.
It’s also good to ask for a written commitment when bringing on new clients. Doing so will maintain the privacy of your information and require them to notify you when a breach occurs.
Moreover, it’s essential to establish policies, protocols, and procedures to monitor their security practices. All these can help protect your companies against hackers.
Finally, it’s best to monitor your cybersecurity plan continuously. Security risks evolve occasionally, so it’s essential to constantly review your current strategy to keep up with them and new threats. You can conduct security audits at least once a year or more. Ask for help from a reputable outside firm to perform the audit to avoid biased assessment. And once you’ve identified new risks, modify your security strategy as soon as possible.
Now more than ever, cybersecurity is a crucial element of any organization, especially for private equity ventures. It can effectively protect your digital assets and mitigate financial losses. Follow the above cybersecurity strategies to get your firm one step ahead of cyber threats and attacks.
Contact us today if you require guidance on establishing any of the suggested strategies! We’d be happy to set you on the right path.