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4 Common IT Challenges for Alternative Investment Firms

By Olivia Munro,
Thursday, November 1st, 2018

For alternative investment firms, there a number of business and operational challenges to navigate on a daily basis. With the evolving IT landscape and new technologies and best practices emerging, it can be difficult to stay up to speed. Here, we’ll outline four common IT challenges for alternative investment firms.

1.) Cybersecurity

With the security landscape becoming more complicated, it can be a challenge for alternative investment firms to stay up to date with the latest and greatest trends and technologies in security. Hackers are becoming more sophisticated, and social engineering attacks are on the rise, so it is crucial to ensure that your firm has the right protections and level of security to keep your confidential information safe.

To decipher which means of security are right for your firm, you need to look at your company size and risk profile. Suffering a breach or a cybersecurity incident can be harmful to your organization’s reputation, which in turn is harmful to your bottom line. You can use our Cybersecurity Checklist to see the technologies and safeguards Eze Castle offers based on which tier you choose, Standard or Advanced.

2.) Adopting New Technology

Technology adoption is a common challenge for firms of all sizes. Smaller firms may not have the budget or resources to dedicate to the adoption of new technology, while larger firms face their own set of challenges, with more end-users, and potentially bandwidth restrictions of their own.

Whether adopting new applications or migrating to the cloud, having a trusted third-party vendor to guide you through the selection and implementation process can be invaluable. Using these vendors as consultants can help your firm navigate IT and technology decisions and choosing the best fit for your firm. When choosing a vendor for your technology needs, be sure to choose a firm with industry leading, best-of-breed solutions and 24x7x365 support.

3.) Managing Third Party and Vendor Risk

That brings us to our next challenge, managing third party and vendor risk. Of course, bringing any external parties to work with your firm presents an element of risk. Alternative investment firms often choose to outsource technology to a managed service provider to oversee and manage the infrastructures, consult and assist on technology projects, and assist firms’ internal IT department. However, the risk firms undertake when outsourcing can be significant, as your firm is responsible for managing an additional company, in addition to your firm.

When looking to mitigate some of this risk, you must have a thorough understanding of who your outsourced providers are, what services and functions they provide and what level of access they have to your firm’s data and systems. Completing a service provider risk assessment for each third party engagement will provide insight into the level of access each provider has and hence, any potential vulnerabilities that may arise. Of course, vetting any potential vendors and service providers before you have a contractual agreement is key, as this is the best time to expose any of the potential risks.

Firms should consider sending requests for proposals (RFPs) and assessment documentation to any third parties they are evaluating as a means of gathering as much information as possible. Lastly, conduct due diligence over the course of the relationship, as sometimes, vendor policies and practices change.

4.) Ensuring Technology Compliance

If your firm is registered with the SEC, you’ll be legally required to meet certain technology specifications to ensure compliance. Though, even if your firm isn’t yet registered, it may make sense to build complaint technology practices from the get go, as you may someday choose to register down the line. The SEC requires the following compliance policies around technology:

  • Record Retention and Messaging Archiving

  • Email Security, including outbound email encryption, spam filtering and anti-virus protection, and data loss prevention

  • Mobile Device Management

Again, this is a crucial time to have a managed service provider who is familiar with the alternative investment industry, and the rules and regulations firms must follow to be complaint.

For more information, or to speak to someone at Eze Castle, click here.

Categorized under: Trends We're Seeing  Cloud Computing  Security  Operational Due Diligence  Outsourcing  Hedge Fund Operations  Hedge Fund Regulation 



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