Enhancing cyber-resilience: safeguarding financial firms against cyber-threats and data breaches

Cyber-security threats are on the rise – and the financial sector is experiencing a significant increase in the volume and severity of ransomware attacks, AI threats and data breaches.

 

The risk to investment management entities is particularly serious, because asset managers, hedge funds and private equity firms depend on uninterrupted access to trading applications and mission-critical data – and because they succeed or fail on the strength of their reputations. A ransomware attack that renders an organisation inoperative for days can cause substantial financial damage. Exposing sensitive client information in a data breach can have a devastating effect on investor confidence.

 

Cyber resilience – defined as the ability to protect IT systems and data and ensure continuity of business operations during an ongoing cyber-attack – is therefore crucial if investment businesses are to mitigate the risk and impact of cyber-security incidents.

 

Firms without a robust cyber-resilience strategy face an existential threat. Cyber-resilient investment managers, by contrast, can lower the risk of a successful attack, reduce downtime, and minimise losses if a cyber-incident occurs. Moreover, they can be confident they meet regulatory compliance requirements and client expectations.

 

Mitigating cyber-security risk in 2025: the importance of cyber-resilience

 

As 2025 unfolds, investment management businesses face three key cyber-resilience challenges:

 

1. Regulatory requirements are increasing

The UK’s regulatory landscape includes a growing emphasis on cyber-resilience and security across the financial services industry. The UK government’s new Cyber Resilience and Security Bill, set to be introduced to Parliament in 2025, aims to strengthen the UK’s cyber-resilience framework. The Bank of England has joined the Financial Conduct Authority (FCA) and the Prudential Regulatory Authority in highlighting cyber-resilience as a top regulatory priority.

 

In addition, the European Union’s Digital Operational Resilience Act (DORA), while not directly applicable in the UK, will impact UK-based financial institutions that have EU operations or offer cross-border services to EU countries.

 

As cyber-threats continue to evolve, particularly with the rise of AI-powered attacks, investment firms must proactively enhance their cyber-resilience capabilities to meet regulatory expectations and the challenges posed by an increasingly sophisticated threat landscape. Building a cyber-resilient organisation will simultaneously be more important and more challenging than ever before.

 

2. AI is giving malicious entities actors an advantage

A good cyber-resilience plan must address ransomware attacks, as few things threaten business continuity like losing access to or control over one’s data and systems. Unfortunately, the rise of AI tools is helping threat actors perpetrate cyber-attacks more effectively.

 

AI voice cloning technology can be used to impersonate colleagues over the phone and trick employees into giving malicious actors network access or transferring large sums of money to the attackers’ accounts. In addition, AI can be used to spread ransomware more effectively. For example, generative AI tools such as ChatGPT can be used to create convincing phishing emails that are free of the telltale grammatical errors and misspellings that made them easy to spot in years past. Asset managers must factor AI-enhanced ransomware threats into their cyber-resilience strategy.

 

3. Attackers will pivot to softer targets

The financial services sector is a popular target for ransomware threat actors, who tend to target financially lucrative sectors. Moreover, attackers also tend to follow the line of least resistance, which could spell trouble for investment firms.

 

In recent years, large banks have invested heavily in cyber-resilience, improving ransomware prevention and developing strategies that keep them operational if attacked. This makes it more difficult for ransomware groups to carry out successful breaches, and ransomware patterns have shifted.

 

Looking to the future, we anticipate that investment management businesses will become attractive targets for cyber-criminals. These businesses deal with significant amounts of money daily, but lag far behind banks and other enterprises in terms of investment in cyber-resilience and cyber-security.

 

To become cyber-resilient, such firms must harden their systems and networks against next-generation attacks, be prepared to respond to and recover from attacks quickly and be able to maintain business continuity even while under attack.

 

How cyber-focused managed services providers can help investment firms

 

Because of limited internal resources, investment businesses often struggle to develop effective cyber-resilience strategies. Investment firms should consider working with a provider that combines IT expertise with security specialism to deliver robust, comprehensive cyber-resilience. Such service providers work with a unified toolset that supports cyber-security, data protection and operational continuity. They should offer a long-term partnership – one that includes employee training, testing and monitoring, and strategic planning.

 

For investment businesses that need to strengthen cyber-resilience, Linedata is a reliable partner for several reasons. We are a cyber-security-focused managed services provider devoted entirely to the financial services sector. With 25 years of experience in this sector, Linedata has developed a deep understanding of the operational and technical needs of investment businesses. Our cyber-security and technology services have been recognised by industry bodies for their effectiveness in addressing the unique challenges faced by financial services firms.

 

Our service offering is tailored to the cyber-resilience needs of investment businesses. Linedata Protect offers a comprehensive managed detection, response and remediation (MDRR) service tailored for financial services businesses. This includes:

• Endpoint detection and response (EDR) with AI and ML features
• Security incident event management (SIEM)
• Security orchestration automation and response (SOAR) capabilities
• Proactive threat hunting
• 24/7 security operations and network operations centres.  
  

We are a full-spectrum managed services provider. Therefore, we take a holistic approach to improving organisational cyber-resiliency – one that goes far beyond simple prevention and backup to include cyber-security awareness and training for staff and executives, vulnerability assessments, penetration testing, security audits, incident response planning, support with compliance and reporting, and cyber-insurance collaboration.

 

In addition, we can offer our long-term partners much more than just cyber-security or cyber-resilience support. We have helped numerous financial organisations complete IT optimisation and cost-saving projects, cloud migrations, and digital transformation initiatives.

 

For more information about our cyber-resilience services or to arrange a consultative discussion without obligation, we invite you to contact us today.

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Brian Long, Head Cybersecurity Strategist and Girish Khilnani, Head of Technology Services, Linedata Global Services.