As many CTOs, CFOs, and fund managers are aware, the threat of cybercrime and data breaches has been growing over the past few years. Hedge funds and private equity firms have to be able to handle sensitive data, monetary assets, and proprietary information without fears of it being leaked to outside parties.
Oftentimes, conducting an in-house audit of IT and security operations is not enough. In fact, many firms miss the fact that vendors can be a risk of a data breach, which is why the second most common way for a hack to occur is through a vendor. An effective DDQ should account for all possible attack vectors from malicious parties, but simply taking preventative measures is not enough.
Agio’s Cybersecurity DDQ in Alternative Investments:
It is almost inevitable that an alternative investment firm will face some type of breach. A DDQ also needs to address (and potentially help create) procedures in place to lock down sensitive information to prevent further data leakage in the event of a breach. A DDQ should not just be focused on preventative measures, but also reactionary procedures.
The growing cybersecurity threats are not lost on potential investors, either. Many investors are now requesting to see an alternative investment firm’s due diligence questionnaire, also known as a DDQ, to get an inkling of how robust their security and compliance practices are. However, a DDQ is more than just a marketing tool – it’s the center of a standardized vetting process that guarantees a firm’s cybersecurity safety.
Agio is a managed IT and cybersecurity provider that offers a wide range of services focused on the needs of hedge funds, private equity firms, and other complex financial organizations. For Agio, its approach to alternative investment cybersecurity revolves around both preventative and reactive measures to the inevitable threat of a hack.
A centerpiece of Agio’s comprehensive cybersecurity strategy is its DDQ, which creates a solid foundation for a firm to execute its due diligence process. An effective DDQ should cover a wide range of topics, from a firm’s IT policies to its compliance procedures. Agio frequently assists their clients in completing cybersecurity-focused DDQ questions, especially since Agio is intimately familiar with the types of queries that potential investors are interested in.
While Agio offers a fantastic starting point for firms to develop their DDQs, it may not always be feasible for a firm to conduct the process on their own. That’s why Agio can help create bespoke operational DDQs on behalf of firms too. In addition, Agio’s deep experience across many different types of alternative investment funds gives the firm perspective on vulnerabilities that an investment firm may miss on their own.
Leveraging the knowledge and experience of experts not only helps guarantee more robust procedures and a better vetting process, but it allows fund managers to focus more of their attention on their fund.