By ECI | Tuesday, October 18, 2022
Across the board, alternative investment institutions are increasing their budgets for cybersecurity initiatives related to digital transformation. In a recent IDC survey of 400 such institutions, nearly half said they plan to increase spend by more than 10%. Digital transformation offers myriad benefits, but innovation must be balanced with risk. Indeed, nearly half of survey respondents cited security and privacy as leading concerns about the process.
During the recent IDC webinar, Cybersecurity and Digital Transformation: A Critical Pairing, the relationship between digital transformation and cybersecurity, including trends within the financial services industry, was discussed in detail. The conversation offered alternative investment institutions several key insights:
1. Be strategic.
Sufficient and strategic planning is a crucial part of digital transformation, particularly when it comes to cybersecurity. If you’re not aligning security priorities with business priorities, you run the risk of handcuffing yourself. Instead of worrying about which widgets you will buy, zoom out and look at the big picture. Consider how everything fits together architecturally—and how your infrastructure can serve as an enabler.
For example, cybersecurity services can enable turnkey modernization. Over half of the survey respondents indicated they are looking to establish discrete security programs, while 44% said they are interested in emerging cybersecurity tools and controls. Such efforts are only possible with the right foundation—and that foundation must be laid strategically.
To craft your cybersecurity strategy, start with a self-evaluation. Some questions to ask in this evaluation include: Who are our investors? Who are our competitors? Can we commit to a long-term digital transformation project? Can we overcome long-established cultural norms? Are we willing to think beyond our current alternative investment business model?
Once these questions are addressed, you’re ready to make a roadmap. As you do so, be sure to consider how you will measure ROI from your cybersecurity efforts. ROI can be difficult to measure, especially in the early stages of a project. It’s useful to start small and build from there.
2. Be dynamic.
Security, including risk assessment and management, is not static. It’s not a box you check and move on. Instead, it requires constant monitoring and response. Many institutions realize this but lack the expertise and manpower to monitor cybersecurity around-the-clock. In fact, over half of respondents cited the need for a 24/7 Security Operations Center (SOC). Outsourcing is one way to ensure your cybersecurity is a dynamic, ongoing effort.
Cybersecurity issues always seem to arise at the worst possible times. Additionally, once you implement new cybersecurity solutions like Managed Detection and Response (MDR), you’ll begin detecting more issues than ever before. You need a team of people who can react to those concerns quickly and holistically. A managed security services provider (MSSP) can help ensure your cybersecurity posture remains up to par. MSSPs have an easier time attracting and retaining talent and can ensure proper configuration on an ongoing basis, including patches and fixes. As new indicators of compromise arise, they can be woven into the alerting framework immediately.
Outsourcing also ensures your organization can stick to its core competencies, whatever they are. If cyber isn’t one of them—as is usually the case at alternative investment institutions—it pays to work with someone who brings that expertise to the table. No wonder about 70% of alternative investment institutions surveyed said they plan to leverage cybersecurity consulting services for specific projects, while two-thirds said they will use it for staff augmentation.
3. Prioritize communication.
Internally and externally, communication must be a key part of your cybersecurity and digital transformation efforts. Business leaders should be looped into your decision process, as they know where the greatest risks and opportunities lie. Ideally, ongoing communication will also help business leaders see the value of cyber. They can start leveraging it as a marketing capability, which can help build trust with investors.
Your organization must also communicate on an ongoing basis with trusted partners. In coming years, we expect to see more investment institutions turn to MSSPs, particularly as the volume of cyberthreats continues to grow. According to the survey, the use of MSSPs will double in the next two years. Once again, MSSPs can aid financial institutions with a laundry list of cybersecurity concerns: risk and compliance; strategy development; program establishment; security operations management; and more. But ongoing communication is still required to ensure your cyber efforts and business efforts stay aligned.
The bottom line is that security must be a foundational part of any digital transformation efforts. Laying a strong foundation of security today will pay off tomorrow—particularly if you have the right partners by your side. Innovation often seems risky, but it doesn’t have to be. Alternative investment institutions must consider cybersecurity a key ingredient of digital transformation.