02 March 2020

Financial Times: Cyber security: are fund managers keeping up with regulators?

Watchdogs are stepping in as financial institutions remain vulnerable, writes Ben Watford. It is no secret that there is money in asset management and corresponding incentives for those willing to test an institution’s cyber defences.

A new generation of attacks is anticipated to have a fundamental and systemic impact on financial markets and their infrastructure. Leaving aside the risk of financial loss or system failure, fund managers can ill-afford the press coverage that comes with a breach of their control systems. Managers trade on their reputation for competence and an ability to inspire trust in investors — poor cyber security calls both into question.

These risks have been apparent for some time, but as financial institutions struggle to keep up with the pace of change, regulators are stepping in. In the UK, the Financial Conduct Authority covers its requirements in its principles for businesses, with further information set out in the Senior Management Arrangements, Systems and Controls Sourcebook.
Cyber security is not something that can be fixed once and continual improvement is fast evolving from best practice, to minimum requirement. Fund managers have long been fighting to keep pace with the cyber attackers. They now need to do so under an increasingly watchful regulatory eye.

Full article on Financial Times (subscription required)

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