With an increasing number of cyber threats and attacks targeting sensitive financial data, it is imperative for alternative investment firms to implement robust cybersecurity measures.
Increasing investor and regulatory demands on firms’ cybersecurity programs add further complication and urgency to this effort.
This is especially true of private equity, where funds must not only focus on protecting the assets of the management company, but also those of their portfolio companies. This case study plots the journey of a leading Private Equity Firm that set out to enhance its cybersecurity posture and that of its active portfolio.
Designing a Comprehensive Cyber Program
A leading private equity fund with >$2B AUM has a diverse portfolio of control investments. The fund realized that both the management company and the portfolio companies (PortCo’s) had varied infrastructure, platforms, providers, and policies, making it a challenge to develop a consistent and comprehensive cyber posture. The fund approached Drawbridge to assess the cyber risk profile of the firm and its PortCo’s, and then to assist in building a cyber program to ensure current vulnerabilities were addressed and future risks avoided.
The end goal: architect an enterprise-wide cyber program that meets regulatory compliance requirements and evidences a strong cyber posture to their investors, LPs, and other critical stakeholders.
Key Program Components
Drawbridge partnered with the Private Equity Firm to develop a complete cybersecurity program for the management company and its PortCo’s. The emphasis was on a deliberate, methodical program implementation that would provide the greatest cyber protection with the least amount of effort and intervention from the companies. This program included:
1. Cyber Risk Assessment
- Drawbridge conducted an expansive Cyber Risk Assessment across the management company and the portfolio companies to establish a cyber baseline. During this process, key vulnerabilities and deficiencies were identified and prioritized, enabling the firm to focus on the most impactful companies and risks for remediation.
2. Policy Development & Training
- Incident Response Plan (IRP): Developed a tailored IRP outlining steps to be taken in case of a cybersecurity breach. The plan focused on swift detection, containment, eradication, recovery, and post-incident analysis. The firm’s Incident Response Plan proved invaluable during a real-world cyber incident, allowing swift containment and minimizing potential damage. Employees were well-prepared, facilitating an efficient response.
- Written Information Security Policy (WISP): Crafted a comprehensive WISP detailing security protocols, data handling guidelines, and employee responsibilities, fostering a security-oriented culture within the organization.
- Incident Response Tabletop Exercise: Conducted simulated cybersecurity incidents, enabling staff to practice their roles and responses, enhancing preparedness and communication during real-time cyber threats.
3. Vendor Risk Assessment
Deployed a rigorous Vendor Risk Assessment process to evaluate third-party vendors’ cybersecurity measures, ensuring that partners adhered to industry standards and posed no undue risks to the firm’s digital assets. This risk assessment process identified and rectified vulnerabilities in third-party partnerships, ensuring that the firm’s ecosystem was secure from external threats.
4. User Awareness & Training
Implemented a targeted phishing awareness training program, educating employees about phishing threats, common tactics used by attackers, and best practices to identify and mitigate phishing attempts. This training significantly increased employees’ awareness levels. They became adept at recognizing phishing attempts, reducing the likelihood of successful attacks and potential data breaches.
By investing in a comprehensive cybersecurity strategy encompassing policy development, vendor risk assessment and employee training, the Private Equity Firm materially improved defenses against cyber threats for both the management company and its PortCo’s. The firm’s proactive approach not only protected its sensitive data but also instilled confidence among clients and stakeholders, reinforcing its position as a trusted player in the private equity industry. This case study serves as a testament to the effectiveness of a well-rounded cybersecurity approach in safeguarding critical assets and ensuring business continuity in the face of evolving cyber threats.
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