Cybersecurity grows in significance
Data is becoming more significant in the investment industry. Investment organizations must develop extremely strong confidence in the security with which data, particularly personal data, are handled. This confidence will be hard to achieve with increased use of mobile technology. But organizations that commit to paying assiduous attention to security and the associated investment in preventive technology will have the best chance of avoiding issues.
- Cybersecurity is already important, and it will become even more significant for investment firms and regulators in the future. Investment professionals describe cybersecurity increasingly as a pre-eminent risk relative to others faced by corporations (see PRI 2017; CFA Institute 2018). The central challenge for investment firms is in their increasing wish to use personal data, which leads to the need to balance security with customer convenience and experience.
- Regulatory and corporate governance matters are also important in this scenario because regulators are keenly interested in the new tech-driven products that transcend international boundaries and introduce obstacles to their wider adoption.
- Among the most important cybersecurity vulnerabilities are exposure to third-party vendors; exposure to complex technologies; increased use of mobile technologies in the investment user interface; and cross-border data exchanges.
- In this narrative, cyber problems likely become a much bigger dimension of investment firm performance than in the past. Cybersecurity must carry a much bigger commitment of resources in the future by each firm and by the industry as a whole to prevent issues.
- No system is completely immune to cyber-attacks. Organizations need to prepare for situations and mobilize the requisite resources to manage situations as they arise. Organizations need to commit considerable attention to communication strategies to help contain situations.
- Only 24% of survey respondents say cybersecurity is their top tech priority, but it is a top priority for clients. In The Next Generation of Trust (CFA Institute 2018), 82% of institutional investors and 84% of retail investors said that having reliable security measures to protect personal data was important in creating a trusted relationship. Notably, this result was slightly higher than the importance of generating returns similar to, or better than, a target benchmark (78% for both investor types).