Many of the goods, services, and products we use everyday are a result of private equity-backed companies. Popping into Michael’s for some craft supplies? You have private equity to thank for that. While we’re enjoying the fruits of private equity, there are looming threats looking to spoil it. We’re not referring to the accelerated growth of assets under management (AUM) in the past ten years which has resulted in greater regulatory oversight and increased competition for investment dollars. It’s worse and much more destructive than that. We’re referring to cybersecurity threats aimed at private equity firms.
Cybersecurity threats sound scary – and they are – but they’re also avoidable. That’s why we sat down with Jessica Dore, principal of Risk Advisory Services and Erik Schumacher, principal of advisory and tax Services, to understand the cybersecurity risks private equity firms are facing and how you can plan to avoid them.
What to look out for
Private equity firms work with high-net-worth institutional investors and hold a lot of sensitive financial data. This makes them an enticing target to hackers and threat actors. Ransomware is a common cybersecurity threat for private equity firms. Often, ransomware is introduced via phishing emails that look real and entice the person opening them to click on a link. Once the user clicks, the hackers can get into the environment, plant the ransomware, and begin encrypting your data. Phishing emails aren’t new, but they’re becoming more sophisticated every day.
Compromised credentials and weak passwords are another way hackers enter your organization. If you don’t have multifactor authentication put in place, it’s much easier for hackers to get into your users accounts and begin wreaking havoc.
When you’re buying into a business, you’ll likely have a due diligence period. During the due diligence process, consider a cybersecurity assessment to understand what cybersecurity practices and infrastructure you’re inheriting. The assessment will help you understand what needs to be addressed pre-closing, at closing, and post-closing. A cybersecurity assessment isn’t a cumbersome process but can save you a lot of trouble down the road.
Plan don’t predict
The good news in all of this? There are steps you can start taking today to mitigate cybersecurity risks!
- Cybersecurity awareness training. Cybersecurity isn’t an IT issue, it’s a business issue. Everyone in your business has a role to play in cybersecurity. Make sure your employees understand that role and what part they can play keeping the business safe. Staying up to date on trainings is crucial.
- Multifactor authentication. This is another control you can put in place to block hackers. It’s simple, but impactful. Also, avoid easy passwords used across multiple platforms. Consider implementing a password policy. Unsure of where to start? We have an Empowered Chat about password policies too!
- Access controls. Make sure you have access for your users appropriately configured and regularly review access controls. Users shouldn’t have more access than they need to perform their job and administrative access should be extremely restrictive.
- Backup and recovery. Backups are a great way to recover from a ransomware attack. Make sure your back strategy is properly structured. Have a copy of the backups disconnected from your network so hackers can’t encrypt the back up. Test your backup strategy regularly.
The fight against hackers is a marathon, not a sprint. Understanding your risks and staying diligent are the best bet for reaching the finish line. Start by implementing some of the suggested steps outlined above but remember this isn’t a race you have to run alone. Working with a partner like Rehmann can help lighten the burden and give you peace of mind. Contact us today to begin the journey towards a more secure cybersecurity environment today!