By NeilJones, Director of CyberSecurity Evangelism at Egnyte
It’s easy to see why private equity firms are a prime target for cyber threats. The shift to remote and hybrid work models during the pandemic has made these high-value organizations more vulnerable to data breaches. From early 2020 to April 2021, financial sector cyberattacks increased by approximately 238%and data breach costs have also skyrocketed, with the average total cost of a data breach now estimated at $4.2 millionaccording to IBM.
And, the estimated value of global private equity assets under management (AUM) makes it a very attractive target for cyber attackers, with assets expected to reach $5.8 trillion by 2025 according to a recent report by Deloitte. Cybersecurity ranks among the top five priorities on the agenda of CFOs of private funds, as detailed in a recent Intertrust Group investigation.
With cyberattacks becoming increasingly sophisticated, powered by artificial intelligence (AI) and self-learning malware, financial organizations don’t always know where to start to proactively tackle this growing problem. But data governance is a vital tactic to mitigate risk, thanks to its set of strategic practices which can be used to organize and manage data throughout its lifecycle.
Investing in data governance should be part of a broader cultural safety education within an organization that filters through all layers of the business. The right technology partner can help implement it to deliver five key benefits for private equity firms:
1. Minimize the risk of insider threats
It may seem absurd that there are threats lurking within the company, but a 2021 Verizon Data Breach Investigation Report revealed that insiders make up 44% of threat actors in the finance and insurance industries. This group can include disgruntled employees who steal data when they change jobs, contacts who sell compromised data, or end users who fall victim to negligent security attacks.
With medium-sized private equity firms including seven active portfolio companiesthis offers generous attack potential, with sensitive information widely accessible in these holding companies.
It is important to choose a data governance solution that effectively monitors unusual user behavior, such as unusual high-volume downloads of sensitive corporate files. A feature that enforces secure file sharing best practices only allows information to be shared on a need-to-know basis.
2. Secure remote devices
With employees work from anywhere style of work, the addition of applications and devices into networks introduces a new danger to traditional security systems. With IT “out of sight, out of mind” in a work-from-home environment, security and compliance training is less formalized and important security protocols are frequently bypassed.
With the deployment of a cloud-based data governance solution, users can securely collaborate on sensitive data in the cloud. Their content is always accessible from anywhere through their favorite devices. Free management and editing of documents and contracts is not infringed, enabling business continuity. Integration of collaborative business apps such as Microsoft Teams, Slack, and DocuSign helps boost productivity.
Content governance works best for private equity firms that insist users follow security processes for cybersecurity. Regularly changing Wi-Fi passwords and not sharing work devices with family members are important safety habits for workers.
3. Fight against ransomware attacks
It’s important for private equity firms to understand that ransomware attacks are a widespread and crippling security issue for businesses. A Performance Improvement Partners A study reports that 94% of cyberattacks against private equity firms use social engineering techniques to trick employees into sharing information or installing malware. Ransomware spreads throughout the network to encrypt sensitive files and prevent workers from accessing critical data.
An effective ransomware detection solution combines machine learning-based behavioral analysis with signature-based protection to identify suspicious activity such as file renaming and file entropy changes. To support this, educating users about the importance of not clicking on potential phishing emails or visiting suspicious websites is key to improving vigilance. Users need regular reminders about secure storage methodology and file sharing on agreed platforms.
4. Meeting Compliance Requirements
In a rapidly changing compliance environment, data privacy regulations are on the rise. Organizations need to keep abreast of new compliance rules and automation is the most convenient method to ensure portfolio companies are compliant, staying compliant without hampering their productivity.
It’s important to choose a solution that automatically identifies and inventories sensitive data wherever it resides using hundreds of built-in data models and proprietary AI. A solution with an easy-to-use dashboard proactively alerts users to any potential risk, in order to prioritize dealing with any threat as soon as it arises.
A solution that offers automated content classification and compliance policies that respect data privacy and industry mandates is recommended, including GDPR, UK GDPR, CCPA, DSS, NYDFS Cybersecurity Regulation and Sarbanes-Oxley.
Educating technology users in your organization is essential to complement all technology-enabled compliance activities to reinforce their role in storing and sharing data securely.
5. Maximize operational efficiency
A fully hybrid platform will allow you to modernize your data governance capabilities, while maintaining your company’s existing hardware. Specifying a predictable SaaS-based deployment model will maximize end-user collaboration capabilities.
Combined Data Governance and Worker Vigilance
Data governance is one of the most effective ways to secure investment data and mitigate risk, by applying strategic practices to organize and manage data throughout its lifecycle. Finding a security-accredited technology partner to deliver it, in conjunction with improving user awareness, is the optimal route to keeping the bad guys at bay.