Cybersecurity is a differentiator for asset management

By Michael Patanella; Matthew Tierney; John Pearce and Johnny Lee, Grant Thornton

Strong controls can lead to insurance cost reductions

In the asset management industry, cybersecurity is a way for funds and managers to differentiate themselves from their competitors when attracting investors while protecting themselves from a cyber breach.

It’s often difficult for investors to discern between opportunities, whether they’re planning to work with hedge funds, registered investment advisers, private equity funds or asset management companies. They’re all typically managed by professionals with sterling credentials who were educated at the most prominent universities and have outstanding track records.

 “But if you ask a question about risk and cyber and someone says, ‘Here’s how I increased my controls over the last two years and five years, here’s the insurance policy we have with a well-known insurance company, and here’s how we do our testing and the documentation around the testing’…I think that is definitely going to be a differentiator,” said Michael Patanella, National Managing Partner, Asset Management, for Grant Thornton LLP.

Nonetheless, this is a difficult time for managers and funds in the asset management industry to take a leading role in cybersecurity. Cyber insurance premiums are rising and the demand for new controls is increasing at the same time that the industry is taking a large revenue hit.