Why cyber due diligence is crucial for investors

      In the investment management industry, building trust with investors has always been paramount. Traditionally, this meant showcasing strong financial performance and a compelling growth trajectory. Today, a new factor has emerged as a critical piece of the investment puzzle – cyber security.

      Investors in the financial services sector are increasingly demanding a deep dive into a company’s cyber posture. This isn’t just about protecting sensitive customer data – it’s about safeguarding the entire financial ecosystem.

      Why cyber due diligence matters

      A cyber attack on a financial institution can have catastrophic consequences.

      Breaches can expose sensitive client information, disrupt critical operations, and erode public trust. These incidents not only damage a company’s reputation but also trigger hefty regulatory fines and potential lawsuits.

      Investors, particularly in the financial services industry, understand this risk all too well. They want to be confident that their capital is invested in companies that take cyber security seriously. We have set out below some of the key areas that today’s investors will be scrutinizing:

      • Cyber security maturity – does the company have a robust cyber security program with well-defined policies, procedures, and controls in place? Is there a dedicated security team with the resources and expertise to effectively manage cyber risks?
      • Third-party risk management – the financial services sector relies heavily on third-party vendors. However, a data breach at a key supplier can have a domino effect, impacting the entire industry. Investors want to understand how the company assesses and mitigates cyber risks associated with its vendors and partners.
      • Data breach history – transparency is paramount. Have there been any data breaches at the company or at its vendors? If so, what measures were taken to address the incident, learn from it, and improve security posture?
      • Regulatory compliance – in today’s complex financial landscape, navigating regulations is crucial. Investors seek companies with strong regulatory compliance programs. This demonstrates a commitment to operating within the legal and ethical frameworks that underpin a stable financial system. A robust compliance program minimizes the risk of regulatory fines, reputational damage, and ultimately protects investor capital from unforeseen consequences.

      Safeguarding investments: from acquisitions to long-term stability

      Cyber security due diligence isn’t just about protecting existing investments. For financial services firms looking to expand through acquisitions or strategic partnerships, a thorough assessment of a target company’s cyber program is crucial. A weak cyber posture can derail a promising deal by introducing integration complexities and unforeseen security costs.

      Building a secure future together

      By prioritizing comprehensive cyber due diligence, investors in the financial services sector can make informed decisions, mitigate risk, and protect their capital. Companies, for their part, benefit from demonstrating a commitment to data security and building trust with their stakeholders.

      Cyber security is becoming an essential part of financial well-being. In our digital age, strong cyber defenses aren’t just a good business decision – they’re a core responsibility for everyone in the financial services industry.

      Waystone Compliance Solutions is a leading provider of cyber security consulting and compliance services to the financial services industry. We offer the strongest, independent cyber security and data protection services globally and work with our clients to embed a security culture within an organization, assessing information security threats, identifying weaknesses and implementing a sustainable and pragmatic program of information security improvements.

      If you would like to find out more about how we can help you to assess your current cyber security measures, please reach out to your usual Waystone representative or contact us below.

      Contact us

       Next post
      Share

      More like this

      Data privacy in the digital age - best practices for individuals and businesses

      Our digital lives are constantly evolving, and with them, the question of data privacy. In an age where information is…
      Read more

      Biometrics and beyond - the future of identity verification

      As we embark on the second quarter of 2024, our focus here shifts to a critical theme – ‘Securing Digital…
      Read more

      Understanding cyber threats - a deep dive into common attacks

      Cyber threats are everywhere in the online world, targeting individuals, businesses, and even entire critical infrastructures. Navigating this digital landscape…
      Read more

      New year, stronger security - essential cyber security resolutions

      As the calendar turns to 2024, we’ll be approaching our blogs with a quarterly theme, starting with Q1’s ‘Foundations of…
      Read more

      Cyber security in 2023 - key trends and future considerations for the financial services sector

      2023 presented a continued surge in cyber attacks, ranging from sophisticated ransomware campaigns to supply chain compromises. These threats pose…
      Read more

      LinkedIn Account Takeovers and Ransom Demands - A Threat Extending to Business Accounts

      In the ever-evolving landscape of cyber security, new threats are constantly emerging, targeting our personal and professional digital spaces.
      Read more