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Should Answering Security Questions Really Be Considered Two-Factor Authentication?

By Katelyn Orrok,
Thursday, August 18th, 2016

In another airline-hedge fund technology parallel, United Airlines recently introduced a new two-factor authentication system for MileagePlus frequent flier program members. Great, right? Well, maybe. Maybe not. The system has been receiving criticism of late from those who don’t consider United’s security practices as true two-factor authentication (2FA).

Here’s how it works.

When a member attempts to log into their account from a device that is not recognized by the airline, a user will be asked to answer two security questions. During account setup, the flyer’s answers must be chosen from a provided dropdown list, meaning the answers are predefined and, hence, not unique to each customer.

To dispel some of the concern, Ben Vaughn, United's director of IT security intelligence, has stated that the dropdown menu options stop hackers from being able to do keystroke logging and automated attacks to gain access to accounts.

Time will tell if United’s 2FA system is successful in preventing security breaches for airline customers, but in the meantime, let’s review the common types of two-factor authentication, since the kind United is using is actually the weakest:

Categorized under: Security  Trends We're Seeing 



How Cyber Security Vulnerability Assessments Work for Investment Advisers

By Kaleigh Alessandro,
Tuesday, August 16th, 2016

The SEC and other financial regulatory bodies have increased transparency demands with regard to cybersecurity in recent years, and as such, registered investment advisers face a long list of requirements to meet on the technology and operational front. In each of its cybersecurity guidance updates, the SEC has called out the need for hedge funds and private equity firms to "indicate whether they conduct periodic risk assessments to identify cybersecurity threats, vulnerabilities and potential business consequences", and if so, who conducts them and how often. 

Risk and vulnerability assessments have not only become must-haves for financial firms due to these regulatory initiatives, but also as a result of growing investor calls for transparency. Side note: If you missed the news, Eze Castle Integration has expanded its cybersecurity consulting services to deliver comprehensive vulnerability assessments (as well as penetration testing and third party due diligence audits) across both internal and external networks. Click here to read more about Eze Vulnerability Assessments

We field a lot of questions about what exactly a security vulnerability assessment is, so we thought it best to review what such a test entails.
 
Here’s a quick overview.
 
The type of risk assessment typically associated with information technology/security is an external vulnerability assessment. Essentially, this is the process of identifying and categorizing vulnerabilities related to a system or infrastructure. Typical steps associated with a vulnerability scan or assessment include:

  • Identifying all appropriate systems, networks and infrastructures;

  • Scanning networks to assess susceptibility to external hacks and threats;

  • Classifying vulnerabilities based on severity; and

  • Making tactical recommendations around how to eliminate or remediate threats at all levels.

Categorized under: Security  Cloud Computing  Disaster Recovery  Private Equity  Hedge Fund Due Diligence  Hedge Fund Operations  Hedge Fund Regulation  Outsourcing  Infrastructure  Trends We're Seeing 



What Hedge Fund Tech Can Learn from the Delta Airlines IT Outage

By Mary Beth Hamilton,
Thursday, August 11th, 2016

Earlier this week Delta Airlines suffered a major system outage that resulted in more than 740 flight cancellations and thousands of flight delays.

Delta’s Chief Operating Officer Gil West explained that “Monday morning a critical power control module at [Delta’s] Technology Command Center malfunctioned, causing a surge to the transformer and a loss of power. The universal power was stabilized and power was restored quickly. But when this happened, critical systems and network equipment didn’t switch over to backups. Other systems did. [As a result, Delta saw] instability in these systems.”

As with any major “uh oh” moment, there are lessons that can be learned. So let’s take a look at what hedge funds can learn from Delta’s IT mishap.

1. Outdated technology can hurt in a big way. Airlines are saddled with legacy IT systems, complicated by mergers and acquisitions requiring complex integrations. Unlike airlines however, most asset management firms are not relying on technology from 80s or 90s. But that doesn’t give firms a pass when it comes to staying current with technology.

Outdated IT systems insert instability into a firm’s operations and provide holes for cyber hackers to exploit. The reality is that outdated systems will only continue to fall behind in the race of technology, trouble shooting will take longer, future applications will fail to run, or crash the server altogether, and the cost to migrate increases concurrently as the pool of experts shrinks.

2. You can’t ignore the IT industry’s transition to cloud computing. As noted in a ZDNet article, “the big question is why in 2016 airlines are being brought down by single points of failure when cloud services offer resiliency zones, backup options, and redundancy to keep critical systems running.”

Enterprise-grade clouds deliver significant resiliency in both the hardware and data centers, with cloud infrastructures spanning geographically diverse facilities. Beyond hardware, top tier cloud providers (Eze!) have teams of senior engineers managing and monitoring the infrastructure. Additionally systems are upgraded on a regular frequency.

In the investment management industry, it is common to hear investors state they are more comfortable with fund managers utilizing a private cloud rather than keeping IT on premise. At larger funds, the prevalence of cloud-based solutions provides Chief Technology Officers (CTOs) the opportunity to execute more strategic technology initiatives and focus on risk mitigation.

 

Categorized under: Cloud Computing  Hedge Fund Insiders  Disaster Recovery  Hedge Fund Operations  Trends We're Seeing 



Business Continuity Tip for Investment Management: Communication is Vital

By Eze Castle Integration,
Tuesday, August 9th, 2016

There's a lot to learn about business continuity planning for investment managers. To help, you might want to watch our recent webinar highlighting the SEC's June 2016 business continuity guidance update. You can watch the full webinar replay here. The SEC not only highlights the importance of being able to access critical systems and applications during a disruption, but also the importance of effective communication. 

Employee communication during a disaster is keyIt is vital to communicate with your employees about the procedures of your business continuity plan before, during and after an incident. By doing so, you set the wheels in motion by creating the guidelines for the firm’s recovery.

Effective communication should include, but not be limited to:

  1. Accounting for employees;

  2. Setting workload expectations; and

  3. Providing employees with recovery status updates.

Let’s take a deeper look into those strategies.

Categorized under: Business Continuity Planning  Launching A Hedge Fund  Disaster Recovery  Hedge Fund Operations  Trends We're Seeing 



Employee Termination Checklist for IT: An Investment Firm’s Starting Place

By Mary Beth Hamilton,
Thursday, August 4th, 2016

Whether it is your summer interns heading back to school or a full-time employee moving on, an investment firm must have a detailed employee termination checklist for information technology (IT) that is diligently followed.

But what are the key items that must be on your employee termination checklist?

Here’s An Employee Termination Checklist Foundation:

  • Contact IT Department or IT Provider to terminate or change network or application logins 

  • Ensure subscriptions are either cancelled or changed

  • Collect employee equipment such as laptops, monitors, mobile devices, etc.

  • Ensure employee has documented transition procedures

  • Reset user password and disabled account

Categorized under: Security  Launching A Hedge Fund  Hedge Fund Operations  Business Continuity Planning 



Cloud, Cyber Security and Managed Services: Putting Eze Castle Over the Top in Waters Rankings (Video)

By Katelyn Orrok,
Tuesday, August 2nd, 2016

We're thrilled to share that Eze Castle Integration has won the coveted awards for Best Cloud Infrastructure Provider and Best Cyber-Security Provider in the 2016 Waters Rankings. Vinod Paul, Managing Director of Eze Castle Integration, spoke with Dan DeFrancesco, Deputy Editor of Sell-Side Technology and Waters Technology about how Eze Castle Integration differentiates itself from other cloud and security providers. 

Watch Vinod's video interview below or scroll down for some quick takeaways.

 

 

Categorized under: Cloud Computing  Security  Outsourcing  Videos And Infographics  Eze Castle Milestones 



The Threat Within: Mitigating insider risk

By Katie Sloane,
Thursday, July 28th, 2016

The following article first appeared in Hedgeweek's special report: Cybersecurity for Fund Managers 2016.

Mitigating insider risk is one of the biggest challenges that organisations face when it comes to remaining cyber secure.

One thing we've seen a lot of with clients is their need for consulting support," says Mark Coriaty (pictured), Senior Vice President Strategy & Partnerships, Eze Castle Integration. "They don't necessarily have the biggest IT teams and/or might have been more focused on the engineering side than the cyber side. Consequently, they are spending more time learning about the business, as opposed to just putting a solution in place.Mark Coriaty Headshot

"Cybersecurity comes down to operational and procedural policies as well as employee training, which is by far one of the biggest threats to any firm."

Many of the reasons for internal breaches come down purely to human error, but on occasion it may be the actions of a rogue employee that lead to data misappropriation. To limit the impact, fund managers can put in place permission controls as a way to manage their policies and procedures, this might allow them to shut off a USB drive, protect different file sets on the back-end etc.

"It is important for whomever is managing the overall IT infrastructure to ensure that people only have access to data that they need for their day-to-day responsibilities, and block them from accessing data in other parts of the organisation," says Coriaty, adding that employee training has to be an ongoing process. "For larger firms who hire new employees regularly, managing the process of training them is crucial to maintaining good security. Most hackers target smaller investment managers not to collect credit card numbers, or investor details, but for extortion purposes using the likes of CryptoLocker to pay ransoms.

Categorized under: Security  Hedge Fund Due Diligence  Hedge Fund Operations  Hedge Fund Regulation 



Three Ways Your Cloud Provider Can De-Stress Your Life

By Kaleigh Alessandro,
Tuesday, July 26th, 2016

As a hedge fund or investment management firm, you’re juggling a lot. Hedging bets, pitching investors, running day-to-day operations – there’s a lot on your plate. That’s why working with an experienced cloud services provider can offer benefits beyond just infrastructure.

Let’s take a look at three different ways your cloud services provider can de-stress your busy life and provide you with much needed value.

Moving to the cloud benefits1. Free up your space.

One of the beauties of a cloud computing environment is the near elimination of physical hardware and equipment on-site at your office. When managing your own server room or Communications (Comm.) room, you are responsible for housing a variety of equipment such as servers, UPS units, networking equipment and cables, spare parts, etc. Not to mention you need the real estate for it all. And don’t forget – much of this equipment runs on a three-year refresh cycle, which means you’ll have to upgrade everything in the near future.
 

Categorized under: Cloud Computing  Outsourcing 



Five Takeaways from the SEC’s 2016 Business Continuity Guidance Update

By Katelyn Orrok,
Thursday, July 21st, 2016

Last month, the SEC issued a guidance update for registered advisers regarding how funds (and their service providers) plan for potential business disruptions. Eze Castle Integration’s Certified BCP Planners have reviewed the guidance and recently shared their thoughts on how hedge funds and private equity firms can meet the SEC’s growing expectations and standards with regard to business continuity practices.

Read on for five takeaways from the SEC’s business continuity guidance update or scroll down to watch our full, 30-minute webinar replay.

Include all All Key Components of Your Firm

When writing a BCP, firms undoubtedly remember to create plans for their physical office facilities and technology systems, but it is important that you don’t overlook other important components that drive the well-being of your firm. This includes data/colocation centers, employees, activities and dependencies on critical third parties. You could face an array of issues affecting one or more factors within your firm, so it is important to implement a business continuity plan that not only addresses potential risks but also outlines comprehensive protection methods. 

A BCP is a Living Document

Internal participation is a fundamental driver for a successful BCP. From senior management executives to representatives from Human Resources and Compliance, internal business continuity contributors need to be informed of and up-to-date on policies and procedures. The BCP should also take into consideration the ideas, recommendations and changes brought forward from other departments within the firm.

Remember: A business continuity plan is dynamic, therefore changes and challenges faced need to be transparent with all parts of the company. 

Categorized under: Business Continuity Planning  Disaster Recovery  Hedge Fund Due Diligence  Hedge Fund Operations  Hedge Fund Regulation  Outsourcing  Trends We're Seeing 



How Today's Private Equity Firms are Managing and Mitigating Risk

By Kaleigh Alessandro,
Tuesday, July 19th, 2016

Today’s private equity funds are increasingly being compared to their hedge fund counterparts and, as a result, are also facing more scrutiny. When it comes to managing and mitigating risk, PE fund managers are wrestling with growing threats on the security front and beyond and mounting pressures from the likes of the SEC and other industry best practice standards.

Security and Business Threats for Private Equity

Security threats abound for financial services firms, and private equity firms are not immune. From the inside out, the risks to PE firms grow daily, with savvy and experienced hackers looking to target financial firms – and perhaps more concerning – untrained and unaware employees blindly putting their firm’s operational standing in danger.
 
Beyond cybersecurity, however, there are also business threats to consider. Non-security incidents – everything from minor, incidental business disruptions to large-scale, regional impact events – can also wreak havoc for private equity firms otherwise unprepared to resume business functions. Downtime may prove to be less concerning for a PE manager than his hedge fund counterpart, but that does little to calm uneasy clients and investors who expect operations to run smoothly at all times.

PE Firms Feeling the Regulatory Pressure

The above security and business threats pose a serious challenge for private equity firms today. But beyond managing those risks to satisfy a fund manager’s own inherent desire to protect his/her firm, private equity firms also face significant and growing pressure from external bodies to meet operational excellence standards that continue to develop and evolve. 

Categorized under: Security  Disaster Recovery  Private Equity  Outsourcing  Business Continuity Planning  Trends We're Seeing 



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