By Simon Eyre, Chief Information Security Officer, Drawbridge
Why intelligence-led approaches are essential to meet rising threats, regulatory demands and investor expectations
Alternative investment firms have strengthened internal cybersecurity significantly over the past decade. Controls are more mature, governance is better defined, and boards are more engaged. Yet many of the most disruptive incidents still originate outside the firm – through third parties.
Administrators, custodians, cloud providers, data vendors and other critical partners expand your attack surface. From a security standpoint, your risk profile is no longer determined solely by your own controls, but by the weakest control across your vendor ecosystem.
The SEC’s amended Regulation S-P makes that reality harder to ignore.
Reg S-P raises the bar on proof – not just policy
The recent amendments to Reg S-P represent one of the most meaningful shifts in customer information protection and incident readiness for advisers. Compliance deadlines are tiered: December 3, 2025 for firms with $1.5B+ AUM, and June 3, 2026 for all other covered firms.
What’s important is that Reg S-P is not “a vendor rule”. The responsibility sits squarely with the regulated firm – including hedge funds, private equity firms and RIAs – to implement safeguards, maintain readiness, and demonstrate evidence of oversight.
This is where many firms feel the strain: preparedness is no longer judged by intent or documentation alone, but by whether you can prove controls work in practice.
Vendor risk is now contractual, operational and auditable
Reg S-P explicitly increases expectations in several areas that touch third parties:
● Vendor breach notification: contracts must require vendors that process customer information (investor personal data) to notify the firm within 72 hours of discovering a breach.
● Ongoing vendor oversight: firms must document oversight and demonstrate continuous monitoring of key vendors handling customer information.
That matters because incident response timelines now have real consequences. Reg S-P introduces a 30-day deadline to notify affected customers/investors after confirming unauthorized access. If a vendor can’t detect, escalate and evidence events quickly, the firm inherits that delay – and the risk.
Why passive vendor reviews no longer hold up
Traditional vendor reviews often rely on questionnaires, certifications or automated ratings. Those tools have a place, but they rarely answer the questions that matter during an exam, an ODD review, or a live incident:
● How quickly can this provider identify a customer information event?
● What does escalation look like in the first 24 hours?
● Have response plans been tested, and are outcomes documented?
● Do we have the evidence trail to satisfy five-year retention expectations?
Effective vendor risk oversight must be independent, consistent and qualitative – focused on how controls operate, not just whether they exist.
How Drawbridge helps firms move from oversight to evidence
Drawbridge Vendor Risk Assessments are designed to go beyond automated scoring. We provide a clear view of your vendor landscape and severity of risk, supported by qualitative findings and remediation guidance tailored to your operating model.
Just as importantly, the output is compliance-ready documentation designed for audits, ODD and board reporting – and aligned with Reg S-P’s wider requirements around WISP, IRP maintenance and testing (for example, tabletop exercises), and five-year evidence retention.
This is what turns compliance from a periodic exercise into operational control: fewer assumptions, clearer accountability and faster decisions when it matters.
Looking ahead
Third-party cyber risk will keep growing as operating models become more distributed. Reg S-P reflects that shift by requiring proof, not promises. Firms that operationalize vendor oversight now – contractually, technically and procedurally – will be better positioned for examinations, investor scrutiny and real incidents.
If you’d like to learn more about Drawbridge Vendor Risk Assessments and Reg S-P readiness support, explore our Vendor Risk Assessment services or speak with our team about strengthening your vendor oversight and incident readiness.
