Tue, Jul 25, 2017
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Hedge funds test their response to three cyber attack simulations

Tuesday, January 19, 2016
Opalesque Industry Update - The Hedge Fund Standards Board (HFSB), the standard-setting body for the hedge fund industry, has held its first table top cyber-attack simulation for hedge fund managers in London. The HFSB is custodian of the Hedge Fund Standards, and is supported by more than 120 hedge fund managers with $700 billion in aggregate assets.

The objective of the simulation was to explore the response of hedge fund managers to three realistic cyber-attack scenarios:

·Data theft and leakage of internal sensitive data

·Financial infrastructure attack

·Crypto ransomware

These scenarios were chosen to provide simple illustrations of key challenges for hedge fund cyber security professionals. The cyber-attack simulation event was attended by cyber security/IT experts, hedge fund COOs and compliance staff, and institutional investor due diligence staff.

The key insights on cyber security arising from the simulation were:

·Confusion over responsibilities can prevent an effective response. Managers should not consider cyber security as just an “IT” issue, given the legal, compliance, investor relations and reputational issues involved.

·Certain types of cyber-attacks may exceed a manager’s internal response capabilities. Managers should be prepared to quickly access external legal and IT expertise.

·Preparation in advance, through a cyber security incident response plan, is important. This planning establishes responsibilities, pre-identifies external resources and speeds decisions should there be an actual incident.

This is the second large-scale initiative by the HFSB in the area of cyber security, following the publication of the cyber security memo in September 2015 in the HFSB Toolbox . The HFSB Toolbox is designed to complement the HFSB’s standard-setting activities, providing additional guidance to managers, investors and fund directors on practical issues.

Bill Trent, Managing Director at Stroz Friedberg, who was one of the speakers, noted: “This attack simulation exercise has shown that dealing with the technical aspects of cyber-attacks is often only a small part of the overall response, and that the senior management of the firm needs to be well-prepared to manage the aftermath of an incident. Therefore, it is crucial that firms have an incident response plan in place that is understood at a senior level and across the entire firm. It is also important that firms do not overestimate their own capabilities and seek external help when a serious breach occurs.”

The panel also discussed the legal considerations to be taken into account when a breach occurs. This was particularly relevant in the data breach scenario, where material non-public/market moving information was inadvertently leaked.

One hedge fund manager, who attended the event noted: “This event has been an eye-opener regarding the complexity when dealing with the fallout from a cyber-attack, and very timely in light of the heightened regulatory focus, including the SEC’s intention to test firms’ implementation of cyber security procedures and controls. We will revisit our own approach based on the lessons learned.”

Thomas Deinet, Executive Director of the HFSB stated: “This is the second large-scale initiative by the HFSB in the area of cyber security, following the publication of the cyber security memo in September 2015. Simulation exercises are a very powerful approach to sharpen one’s understanding about how incidents can unfold. We encourage managers to revisit the HFSB Cyber Security Memo for helpful guidance.”

The roundtable was hosted by Stroz Friedberg who shared their “war stories” and moderated the attack scenarios. The HFSB is planning to hold a similar event in New York for its North American stakeholders in March 2016.

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Launches - Crypto boom: 15 new hedge funds want in on 84,000% returns, Crypto madness is striking VCs as Union Square analyst leaves to start new fund[more]

    Crypto boom: 15 new hedge funds want in on 84,000% returns From Forbes.com: With 43 projects raising $1.2 billion in initial coin offerings since May 1, according to Nick Tomaino's The Control, and with stratospheric returns for so many ICOs -- 82,000% for Ethereum, 56,000% for IOTA, 44,

  2. FinTech - The machines are coming... Elon Musk's grim warning, Tezos' $232 million ICO may just be the beginning, A gentle introduction to Initial Coin Offerings (ICOs), Billion dollar tokens, ICOS & crazy market swings WTF is going on!?, How AI is changing the way we invest, How the tech revolution is bringing flip-flops and beanbags to Wall Street, A 'machine-learning' approach to venture capital[more]

    The machines are coming... Elon Musk's grim warning From Tenplay.com.au: Tesla chief Elon Musk has called on US Governors to take 'decisive' action to curtail "the greatest risk we face as a civilization": Artificial Intelligence, or AI. Speaking at a meeting of the National Governor Ass

  3. News Briefs – Sears inks $200 million credit line from CEO Eddie Lampert's hedge fund, shares jump 9%, Rwanda: Global hedge fund to increase investments[more]

    Sears inks $200 million credit line from CEO Eddie Lampert's hedge fund, shares jump 9% Sears Holdings has landed a fresh line of credit, valued at $200 million, from its CEO Eddie Lampert's hedge fund, the retailer said Monday. Sears' stock climbed about 9 percent higher Monda

  4. Despite current limits, robo-advisors will be preferred investment solution for retail, gain importance for affluent and high net worth[more]

    Matthias Knab, Opalesque: Flynt, a Swiss FinTech focusing on proprietary technology platform for private and institutional clients, has published a brief paper on "Investing in the world of robo-advice and passive instruments". As investors will become more reluctant to pay for investment advi

  5. Investing - Hedge fund CQS favors structured credit, Direct lending funds' fading all-weather appeal, Funds hunt for cracks in most-prized US shopping malls[more]

    Hedge fund CQS favors structured credit From BArrons.com: A hedge fund manager that can invest across the investment landscape says in his latest semi annual report this week that he's finding opportunities in structured credit -- particularly the shorter term, floating rate kind. Exampl