Cybersecurity threats are on the rise—and the financial sector is experiencing a dramatic surge in the volume and severity of ransomware attacks, AI threats, and data breaches.
The risk to investment businesses is particularly serious because hedge funds, asset managers, and private equity firms all depend on uninterrupted access to trading applications and mission-critical data—and because they succeed or fail on the strength of their reputations. A ransomware attack that knocks an investment firm offline for days can cause catastrophic financial losses. Exposing sensitive client information in a data breach can have a devastating effect on investor confidence.
Cyber resiliency—defined as the ability to protect IT systems and data and ensure continuity of business operations during an ongoing cyberattack—is thus crucial for investment businesses to mitigate the risk and impact of cybersecurity incidents.
Firms that do not have a robust cyber resilience strategy in place face an existential threat without even realizing it. Cyber-resilient investment businesses, by contrast, can lower the overall risk of a successful attack, reduce downtime, and minimize losses if a cyber incident occurs. They can also feel confident that they are meeting regulatory compliance requirements and client expectations.
Mitigating Cybersecurity Risk in 2025: The Importance of Cyber Resiliency
As we head into 2025, investment businesses face three key cyber resiliency challenges:
1. Regulatory requirements are increasing
In 2024, the US Security and Exchange Commission (SEC) introduced new rules regarding cyber incident disclosure, requiring public companies to disclose material cyber incidents quickly. The rule also requires companies to provide an annual report on their cyber risk management, strategy, and governance processes, of which cyber resilience planning forms an important part.
The SEC rule change signals a growing trend of regulatory bodies taking cyber incidents and cybersecurity more seriously. Going forward, investment businesses should expect a greater regulatory burden and more stringent compliance requirements.
Building a cyber-resilient organization will simultaneously be more important and more challenging than ever before.
2. AI is giving bad actors an advantage
A good cyber resiliency plan must address ransomware attacks, as few things threaten business continuity like losing access to or control over one’s data and systems. Unfortunately, the rise of AI tools is helping threat actors perpetrate cyber-attacks more effectively.
AI voice cloning technology can be used to impersonate colleagues over the phone and trick employees into giving bad actors network access or transferring large sums of money to the attackers’ accounts. AI can also be used to spread ransomware more effectively than ever before. For example, Generative AI tools like ChatGPT can be used to create convincing phishing emails that are free of the telltale grammatical errors and misspellings that made them easy to spot in years past. Investment businesses will thus need to factor AI-enhanced ransomware threats into their cyber resilience strategy.
3. Attackers will pivot to softer targets
The financial services sector is a popular target for ransomware threat actors, who tend to “go where the money is.” However, attackers also tend to follow the path of least resistance, which could spell trouble for investment firms.
For example, over the past years, large banks have invested heavily in cyber resilience, improving ransomware prevention and developing strategies that let them operate while under attack. This makes it more difficult for ransomware groups to carry out successful attacks. Because of this, ransomware attack patterns have shifted. Bad actors have begun to target insurance companies since these businesses have not invested nearly as much in cyber resiliency as the banking sector.
Looking to the future, we anticipate that investment businesses such as hedge funds, private equity firms, and asset managers will become attractive targets for bad actors. These businesses deal with significant amounts of money every day—but still lag far behind banks and other enterprises in investment in cyber resiliency and cybersecurity.
In short, firms are faced with a grave threat landscape that’s only likely to worsen in coming year—and a regulatory environment that will be far less forgiving than in the past.
To become cyber-resilient, investment businesses must harden their systems and networks against next-generation attacks, be prepared to respond to and recover from attacks quickly, and be able to maintain business continuity even while under attack.
How a Cyber-Focused MSP can Help Buy-Side Businesses
Very large enterprises may have the internal cybersecurity and IT resources to develop an effective cyber resiliency strategy. However, most firms will need third-party assistance. The challenge lies in determining which service provider is best equipped to help.
Generalist managed service providers (MSPs) can assist with the backup and recovery aspects of cyber resiliency, but usually lack the cybersecurity focus required for optimal security.
Specialist cybersecurity firms have the tools and expertise to help with threat prevention—but may not understand the operational needs of investment businesses well enough to ensure continuity of service and rapid recovery. Beyond this, many cybersecurity solutions providers are essentially software vendors, and will not offer the level of ongoing support and service that a business requires.
A cyber-focused MSP, by contrast, offers a more balanced approach. It combines the strengths of an MSP with those of a security specialist to deliver robust, comprehensive cyber resiliency. These service providers work with a unified toolset that supports cybersecurity, data protection, and operational continuity. And unlike security solution vendors, they aren’t offering a product as much as they are a long-term partnership—one that includes employee training, testing and monitoring, and strategic planning.
For investment businesses looking to build cyber resiliency, Linedata is the technical partner of choice for several reasons:
We are a cybersecurity-focused MSP devoted entirely to the financial services sector. We understand the operational and technical needs of investment businesses because we’ve worked with them for the past 25 years. Recognized as a leading MSP in our industry, we’ve received numerous awards and accolades for cybersecurity and technical services, including Cyber Security Firm of the Year (Private Equity Wire US Credit Awards 2024), Best IT Consultancy (HFM US Services Awards 2024), and Best Outsourced Operations / Finance Services (HFM US Services Awards 2024).
We’ve developed a toolset and service offering tailored to meet the cyber resiliency needs of investment businesses. Linedata Protect is a comprehensive Managed Detection, Response and Remediation (MDRR) offering for financial services businesses. It includes Endpoint Detection and Response (EDR) with AI and ML features, Security Incident Event Management (SIEM), and Security Orchestration Automation and Response (SOAR) capabilities, proactive threat hunting, and a 24/7/365 Security Operations Center (SOC) and Network Operations Center (NOC). In addition, because we are an experienced IT provider, we will ensure these security tools integrate seamlessly with the rest of your IT environment.
We are a full-spectrum managed services provider. We, therefore, take a holistic approach to improving organizational cyber resiliency—one that goes far beyond simple prevention and backup. This includes cybersecurity awareness and training for staff and executives, vulnerability assessments and penetration testing, security audits, incident response planning, support with compliance and reporting needs, and cyber insurance collaboration.
In addition, we are able to offer our long-term partners much more than just cybersecurity or cyber resilience support. We’ve helped numerous financial organizations complete IT optimization and cost-saving projects, cloud migrations, AI implementations, and digital transformation initiatives.
For a no-obligation conversation about how Linedata can help your organization strengthen its cyber resiliency, contact us today.
About the Authors
Brian Long is Head Cybersecurity Strategist at Linedata Global Services, where he helps fund managers enhance operational efficiency and drive scalable growth with cybersecurity, IT transformation, and outsourcing solutions. He has over 20 years of cyber-related experience, including 13 years at IBM, where he held key roles, including Director of Cybersecurity Sales for US Financial Services; and eight years at RBC, where he was responsible for RBC’s Global Banking, Wealth Management, and Capital Market’s Cybersecurity and Telecom architecture and design teams. Brian holds an MBA from Northwestern University's Kellogg School of Management. He is an avid golfer, hockey, and squash player, and a dedicated member of the 5 AM Club.
Girish Khilnani co-heads Linedata’s Technology Services business, which includes Public and Private Cloud, Cybersecurity, and Managed Services. He’s spent nearly two decades managing IT infrastructure, cloud, and global service delivery teams to provide leading-edge solutions for financial institutions. Girish is passionate about enabling operational excellence that supports the specific requirements of hedge funds, private equity, and asset managers.
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