Contact us anytime to know more — Amit A., Founder & COO CISIN
Hackers have increasingly targeted asset and wealth management firms as hackers seek out ransomware variants like SolarWinds and Sodinokibi ransomware variants to lock away funds; payroll fraud and invoice fraud are two examples of ways hackers impersonate people, while spear phishing and voice phishing are additional forms of attack that add more threats into an already evolving threat landscape.
This threat landscape will only continue expanding. Mutual fund directors must navigate an increasingly sophisticated cybercrime environment as cyberattacks increase in frequency, complexity and sophistication.
Furthermore, this changing regulatory environment makes regulating cybersecurity difficult - yet under pressure to safeguard their fund companies against financial, regulatory and brand implications of attacks from cybercriminals. This paper, issued jointly by Mutual Fund Directors Forum (MFDF) and Deloitte, details how boards can educate themselves regarding appropriate cyber risk oversight as part of risk mitigation processes.
Cybercriminals motivated by money often target asset and wealth management companies (AWM). AWM companies, like banks, deal with valuable financial data; unlike banks, however, AWM firms usually lack security teams, budgets, or employees dedicated to protecting infrastructure; cybercriminals know this, so AWM firms become more vulnerable.
Most fund managers are familiar with ransomware, malware that causes massive data losses. Other threats, including impersonation threats related to payroll scams or invoice fraud, spear phishing, and voice phishing, are among many more in our ever-evolving threat landscape.
Conventional wisdom suggests that investment risk depends solely on whether a financial product succeeds or fails; higher risk appetites can yield higher returns, yet their value could quickly vanish - however, not many investors know about other risks that their funds face; many investment firms fail to recognize cyber risk as one such investment risk, so in this article, I discuss why cyber risk poses such a serious vulnerability to firms as an investor and steps they should take to enhance security.
The Threat From Expanding Attack Surfaces Is A Sign Of Rising Danger.
Assuring the security of connected devices and their data requires taking proactive measures. Ransomware attacks could happen at any moment.
Unfortunately, network outages in today's digital environment can cost even more; an outage during Cyber Monday or Black Friday alone may cost your online retailer as much as $250,000. Furthermore, negative customer reviews could cause as many as 80% of its customers to leave your company altogether.
Unbeknownst to them, businesses unwittingly increase the size and scope of attacks when they allow Internet of Things (IoT) devices to connect online.
Hackers have used IoT vulnerabilities in devices ranging from baby monitors and cardiac pacemakers to even Jeeps; Bombardier's data breach reminds us how software vulnerabilities could have catastrophic results for businesses. Cyberpion's study revealed that you aren't the only one putting their assets at risk, with 83% of top U.S. retail chains linked to vulnerable third-party services and 43% posing security threats.
Hackers can quickly exploit any web service lacking updated security standards; it must already exist first to secure any service!
Cyber threats against mutual funds have increased exponentially as mutual fund distribution channels fully embrace technology.
Distribution channels that use digital apps may be susceptible to distributed denial-of-service (DDoS), an attack type. Organizations also face ransomware threats and data theft attacks for both client data as well as intellectual properties that must be safeguarded against theft - threats may include;
- Front office operations such as proprietary trading algorithms, investment strategies, robo-advisers and portfolio management and middle office functions such as compliance reporting and payment and settlement models
- Back-office operations comprise fund accounting, reporting, HR, finance, and marketing functions.
Fraud is an increasingly dangerous cyber risk perpetrated internally by individuals and external actors. Unauthorized access to settlement and finance systems and data transmission protocols like SWIFT or FIX in financial industry environments such as SWIFT/FIX can be exploited.
Cyber vulnerabilities may become vulnerable through the increased use of robotics, artificial intelligence and machine learning without proper controls. Outsourcing to third parties or cloud service providers for digital transformation or hiring remote employees for the COVID-19 epidemic creates an increased attack surface that increases cyber risk.
Proactive approaches must be employed to defend devices, systems and data against cyber attacks.
According to a study, network downtime costs an organization approximately $5,600/minute or nearly $300k/hour in operational losses.
Online retailers who experience outages on major sale days such as Black Friday or Cyber Monday could incur losses of up to $25-50K in damages. In contrast, an outage could lead to negative reviews, resulting in as many as 80% of prospective customers leaving them entirely.
Companies also contribute to expanding the attack surface by releasing billions of IoT devices online, opening themselves up for hacking attacks that affect almost every connected device. Hacking attacks like those seen during Bombardier's data breach were yet another reminder of how dangerous software vulnerabilities can be to businesses.
Cyberpion research indicates that threats extend well beyond individual assets. According to its findings, 83% of top American retailers are connected with vulnerable third-party assets; and 43% had immediate security risks due to vulnerabilities - such as failing to upgrade internet interface services with security patches regularly.
This makes these retailers extremely susceptible to attack from hackers or individuals looking for an opening to penetrate.
Asset Management: Risks And Challenges
Cyber attacks against financial firms are more frequent than in any other industry. A recent European Banking Authority and European Supervisory Authorities report highlighted how cyber criminals invented novel ways to exploit industry vulnerabilities.
Hackers have increasingly targeted asset management firms. Authorities have warned companies to increase security measures.
Recent fines issued by the U.S. Securities and Exchange Commission show it has taken measures to remedy security flaws within firms; recently, it issued fines against firms failing to establish disclosure committees for reporting cybersecurity incidents and their business impact reports; transparency within SEC processes is essential in protecting companies against such cybercrimes; strong cybersecurity systems need to be identified and assessed, along with any reported incidents even before fully understanding them is achieved.
The financial sector has been one of the primary targets of cyberattacks. A recently published report from European Banking Authority and Supervisory Authorities detailed how cybercriminals had developed new techniques to exploit vulnerabilities within industry sectors like finance.
Asset management has emerged as a prime target of cybercriminals, and authorities have warned businesses about improving their cyber hygiene.
Recent fines by the American Securities and Exchange Commission demonstrate their growing concern with firms' vulnerabilities to cyber attacks; they recommend companies establish a disclosure panel so they may report incidents, risks and any associated business impacts when requested by regulators. The SEC requires more transparency in processes, forensic analyses of cyber security systems used by companies and the ability to detect weaknesses before incidents become fully understood.
Impact Of An Attack
Cyberattacks have devastating repercussions for organizations' finances and operational performance, which are often underestimated.
Furthermore, attacks can severely harm an organization's image; HSBC estimates that full recovery could take two years after a data breach incident. Fund managers often feel pressure from these impacts on fund performance. We have witnessed positive shifts within this industry as regulators take measures to verify sufficient security risks; asset and wealth management firms understand that cyber threats cannot be ignored.
Ransomware attacks against retail fund managers, private investors, venture capitalists and venture capital investors are rising, creating future acquisition risks that cannot be ignored.
Preventative technologies and policies combined can make protecting assets from malicious threats easier, while creating resilient security measures requires understanding your vulnerabilities and weaknesses to create resilient security practices. Cyber-attacks have become more sophisticated and widespread, forcing fund managers to face this reality head-on. Cyber attacks threaten company finances and reputational concerns; boardrooms should also remain aware of compliance and risk issues.
Cyber attacks can cause significant commercial and operational harm for any organization. Yet, their potential reputational damage often goes underappreciated or disregarded altogether.
HSBC estimates that it takes roughly two years for any given company's reputation following a data breach to recover - something fund managers might find frightening. Positive changes have been noted within the industry as regulators now require evidence of adequate security to fulfill their duties, and asset and wealth managers realize they cannot ignore cyber security risks.
Do not underestimate the risks of future acquisitions in today's digital environment, where increasing ransomware threats target private equity, retail fund managers and venture capitalists.
A combination of preventative technologies with policies and procedures will make protecting assets against malicious threats easier - understanding your vulnerabilities is the first step toward building and maintaining a resilient cybersecurity posture. Regulators around the globe now mandate that companies take all steps possible to safeguard against cyber attacks that threaten their reputations and finances.
The Role Of The Fund Board
Fund directors face the complex task of overseeing cybersecurity measures - often something unprecedented or unfamiliar to their industry.
- Understanding Key Cyber Threats and Risks
- Securing Fund Complex: Establishing Key Cyber Risks outlined and managed (Cyber risks to Fund Complex.
- Understanding key cyber threats (Cyber Risks to the Fund Complex:)
Implement a reliable cybersecurity governance and oversight program to address cyber risks and threats effectively.
Build A Sustainable Cyber Security Program
Fund directors are not responsible for creating or overseeing cybersecurity programs; that responsibility falls to their board, which monitors management's and adviser's efforts in this arena.
Nonetheless, directors must remain alert and pose key questions regarding proposed programs.
Advisors and key service providers can use different frameworks to develop client cybersecurity programs. Directors may not have enough time or understanding of each program to comprehend them fully, but having some sense of what's involved can help facilitate effective oversight.
The Association of International Certified Professional Accountants has designed a five-step framework that can assist complexes in funding, detecting and mitigating cyber incidents.
Furthermore, this outline can serve as an outline for board understanding and oversight. These steps include:
What needs to be protected? Role classification and assessment, prioritizing process development and response procedures and enforcement, learning from enforcement actions taken as necessary and continually growing and expanding as necessary are essential security ingredients.
Cybersecurity: Emerging Fields
Cyber evolution is part of digital transformation. Advisers and mutual funds alike are experiencing extensive business changes due to both market needs and the pandemic.
Boards need to stay apprised as advisers work toward managing risks associated with their cyber efforts while taking into consideration any cyber impact associated with those efforts; initial questions that board should pose are:
Are automated solutions more risky? Likewise, how safe are cloud technology and virtual work with its associated risks?
Read More: Utilize Asset Management Solutions To Track IT Assets
Top Challenges And Solutions
Cyber asset management is essential to creating and maintaining resilient digital infrastructures. Still, it can pose its own unique set of obstacles and hurdles for organizations.
In this article, we will address three primary roadblocks organizations face when managing cyber assets and effective solutions to overcome them.
Inventory Visibility Is Poor
Cyber asset management presents many unique challenges. Lacking visibility of assets and an exhaustive inventory are major hurdles, especially with cloud services, endpoints and networks increasing at such an incredible speed, it becomes harder than ever to keep tabs on all assets - this issue being compounded further in dynamic environments with distributed management structures.
Companies looking to overcome this difficulty should invest in an automated discovery and inventory system that uses sophisticated scanning techniques to catalog assets such as hardware, software, virtual machines, and cloud instances or IoT devices.
Regular scans should ensure an accurate view of assets for increased security and risk management.
Asset Classification And Risk Priority Are Not Adequate
Effective cyber asset management depends on in-depth knowledge of asset classification and prioritization. Organizations often struggle to allocate resources effectively without an asset categorization system - this may cause security gaps and lead to missed measures being put in place.
An asset classification framework tailored specifically for every organization should consider factors like asset type, criticality and sensitivity, and potential impacts on business operations.
Categorizing assets according to these parameters enables an organization to allocate its resources better and prioritize efforts while at the same time implementing targeted controls to mitigate risk more efficiently. A Cyber Assets Report reviews organizations' cyber assets. It categorizes them utilizing Sounil Yu's Cyber Defense Matrix for better asset classification within enterprises.
With such classification, enterprises may better make sense of the growing cyber landscape.
Siloed And Inefficient Workflows
Cyber asset management in many organizations can be hindered by siloed workflows and inefficiency, including disjointed teams and tools that don't work together well, manual procedures that obstruct communication between teams, delayed responses to security incidents and disjointed asset management approaches.
Organizations need to address this challenge by automating and unifying asset management workflows. A central platform connecting teams, tools and processes will facilitate collaboration and real-time data sharing - improving asset management efficiency while cutting manual work by up to 25% and improving accuracy while offering proactive monitoring to detect threats or vulnerabilities that threaten assets.
Building Cyber Resilience By Implementing Effective Cyber Asset Management
Effective cyber asset management is vital for organizations looking to maintain resilient and secure digital infrastructures, with benefits including better classification of assets and prioritizing risks more appropriately, as well as siloed workflows that limit visibility.
To stay secure and resilient, organizations must implement robust asset management practices. Assets may include computers and servers used by staff. Establishing asset classification frameworks, automating workflows and deploying automated discovery and inventory technologies will create a reliable practice, improving cyber resilience while protecting digital assets for organizations.
To resolve these cybersecurity asset challenges, it's necessary to collect data, identify which devices aren't managed effectively and maintain an accurate inventory regarding compliance issues for every asset in your possession.
All the data necessary is readily accessible, whether using an asset management platform or managing them yourself; all it requires is gathering everything together, understanding each asset's relationship to security controls, and documenting any changes as they happen.
Cyber Risk Reduction For Asset Management Companies
Asset management companies can reduce cyber risk across their offices by prioritizing security among the C-Suite.
Find Out Who Your Third And Fourth Party Is
According to a research, 51% of organizations have suffered a data breach caused by third parties such as software vendors or fund administrators; transfer agents, third-party management companies, and distributors can all pose threats of cyber attack and data breach; in addition, fourth parties such as any provider used by your providers pose yet another potential security threat that is often underestimated and overlooked; companies should keep a list of indirect exposures as well as providers they use and closely track all activities associated with them to keep a proper watch over this risk area as this risk could become much greater over time than anticipated!
Include Cyber Risk In Investment Due Diligence
Cyber risk should be included as part of your investment due diligence Cyber due diligence is becoming an ever-more essential element of investment due diligence, with initial checks and monitoring of investment portfolios treated like AML/KYC: You would never work directly or indirectly with terrorists financiers; so why expose clients unnecessarily to cyber risks? Venture Capital firms and Private Equity companies with tech-enabled businesses in their portfolio should take note.
This is particularly relevant if there are only one or two such firms.
Investing In IT Security Solutions And Teams
Some asset managers have historically seen IT as an administrative function that falls outside their immediate perception; however, IT security has taken on greater significance across an investment company's front, middle, and back offices; without sufficiently funded and competent teams, this area suffers greatly.
A Data Aggregate
Data must come from multiple sources to accurately represent your environment. However, this task may prove challenging, with an average of 108 security instruments.
Step one is still essential - establishing the framework to address future difficulties and concerns.
Regarding data aggregation, almost every tool that knows about an asset has an API available for integration.
Find Unmanaged Devices
Device discovery plays an integral part in asset management. Unmanaged devices refer to any electronic equipment that does not fall within a management system or has no designated security agent.
Unmanaged devices range in scale from simple webcams to Raspberry Pis that have not been connected and secured within production systems.
Data must come from both networks (using solutions like network management consoles, VA scanners and agent-based solutions) and agent-based software to ascertain which devices cannot be managed.
Your network and devices managed by agents will become visible, while any unmanaged but present devices will also become clear.
Inventorying At Scale
Inventorying assets can be an immense headache for enterprises. Even standard device inventories, let alone those of more recent assets like cloud instances and IoT devices, are difficult to manage.
Your first two cybersecurity asset-management challenges come together when collecting information on all managed and unmanaged devices - it takes over 80 hours of work just for that! - and can quickly become outdated as time progresses.
Adjust the data aggregation frequency per source to address scale issues and performance concerns. Asking Active Directory for real-time updates would not be recommended when considering performance implications; taking account of each asset source when scaling an inventory must also be factored into scaling strategies.
Testing Compliance
Without an inventory, it's impossible to know whether assets comply or not; point-in-time checks of compliance no longer work due to constant environmental change and monitoring requirements.
An effective compliance solution requires understanding each compliance requirement and being able to map each device, user and security control against what has been mandated, all while knowing their relationships.
Organizations with large public cloud footprints might use benchmarks such as CIS Benchmarks to measure whether their cloud instances comply with industry standards; for evaluating end-user devices, organizations can utilize industry regulations like HIPAA PCI or NIST assessments as means for compliance assessment.
Conclusion
Our Company is a cyber security service provider with years of investigative and defense security solutions experience under their belts and an ethical hacker team equipped to protect the internet operations of businesses.
Current cyber threats can be managed effectively using technology solutions, thus enabling your corporate life without fear. With their best cybersecurity team and design expertise, Our Company can deliver security services tailored to suit the unique needs of each business they protect.
Cybersecurity services may include cyber strategy and simulation; organizational training courses may also be provided, with directors empowered to exercise their business judgment when making cybersecurity-related decisions.
Effective boards require accessing and providing all relevant data and asking the relevant questions. Senior management, technology executives and directors should have an in-depth knowledge of how complex technical issues impact business-critical risks within value chains - including advisers, fund complexes and third-party providers - along with detection methods and governance protocols such as escalation protocols, communication channels and reporting structures.
