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By CohnReznick's Emerging Managers Resource Guide.

With well-publicized breaches and ransomware attacks looming large in everyone's minds, cybersecurity is an area of heightened concern for investment firms, the SEC, the investor base, and other regulatory organizations. Investment funds have become a more common target for cyberattacks, as stolen investor data is highly valuable and can be re-monetized. As cyber threats become more sophisticated with advancements in AI and other technology, many are treating cyber incidents as a question of "when" rather than "if."

It's vitally important to have the proper infrastructure in place to promptly detect, address, report, and recover from a cyber incident. In addition to protecting your fund and reputation, you'll need robust cybersecurity to attract investors, who nearly always include cybersecurity as part of their due diligence questionnaires (DDQs). Likewise, insurance providers will require adequate cybersecurity measures to be implemented as part of their due diligence before they will issue a policy to cover against cybersecurity threats and disruptions.

Remember that cybersecurity should be seen as an investment rather than an expense. The worldwide average cost of a data breach in 2024(Opens a new window)(Opens a new window) was $4.88 million, while the average cost in the U.S. was $9.36 million. While it may be a sizeable upfront cost, taking the proper measures now wil......................

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