Market Research Finds More Investment Firms are Outsourcing Cybersecurity. Here’s Why.
Maintaining a good cybersecurity posture is a big undertaking—too big for many alternative investment firms to do by themselves. It’s not just the technology needed to implement effective security measures; it’s also building the strategy around those measures, continuously monitoring for potential breaches, and ensuring compliance with changing rules and regulations.
Digital transformation (DX) efforts add another layer of complexity to firms’ cybersecurity challenges. Organizations understand that modernizing legacy technologies can improve their security postures, resulting in greater ROI and less chance for financial and reputational damage. But they also fear that making the wrong move as they undergo DX could expose them to even greater vulnerabilities.
New market research reveals that many organizations are addressing this fear by outsourcing cybersecurity and DX efforts to third-party consulting partners. For Cybersecurity and Digital Transformation of the Global Asset Industry: A Critical Pairing, executives at 400 global alternative investment institutions in the U.S., Canada, France, the U.K., and Germany were polled. The results showed that while most respondents (89%) plan to increase their DX and cybersecurity budgets in 2022, many do not have the internal staff to effectively create and manage 24/7/365 cybersecurity programs.
As such, many organizations are turning to outside consultants to help them create, manage, and maintain their cybersecurity programs.
Firms turn to outsourcing to compensate for turnkey cybersecurity modernization
When asked about the key reasons to leverage a third party for cybersecurity consulting, 67% of respondents cited “staff augmentation,” second only to “specific projects” (68%), and just above “technology management” (63%). Their internal staff may not be big enough or have the expertise required to adequately handle their cybersecurity needs. Even well-staffed organizations suffer from their teams being pulled in different directions, having to manage daily operations and modernization efforts on top of cybersecurity.
That’s why many respondents are looking for partners who can help with turnkey cybersecurity modernization services. They want outsourced security monitoring, managed threat detection and response, incident management, remediation, and support services. They are also looking to outsource risk and compliance assessments, cybersecurity strategy and development, and cybersecurity program establishment.
According to respondents, their top attributes when looking for an outsourcing partner include:
24/7 System and Organization Controls (SOC) coverage and management (51%)
Advanced threat detection and response technologies (50%)
Robust data security (49%)
Cybersecurity services/managed security services (46%)
Vertical industry expertise (46%)
Emerging area skills and knowledge (41%)
Ease of security tool implementation and integration (39%)
The benefits of using an outsourced cybersecurity partner
Organizations could attempt to address staffing challenges and the need for modern security solutions by luring talent from other companies or implementing tools themselves. But competition for cybersecurity professionals is fierce and has resulted in a market shortage and skyrocketing salaries. This makes hiring new talent yet another challenge for firms to overcome.
Outsourcing is an easier and more cost-effective alternative that can drive a good ROI. Firms can turn their cybersecurity projects over to a trusted cybersecurity partner, allowing firms to focus internal resources on the other aspects of their DX efforts, as well as everyday operations. Instead of trying to chase down and manage every potential security threat, they can focus on tasks that add long-term value to their businesses and clients.
Firms can also benefit from leveraging the latest cybersecurity tools and threat knowledge—without having to purchase new solutions and train their teams on those platforms. The ideal partner will already come prepared with the latest tooling designed to identify, prevent, and mitigate all threats.
The case for cybersecurity outsourcing
Most alternative investment firms would not name cybersecurity as a core competency. And yet, they can no longer afford to consider cybersecurity as an afterthought to DX. Today, cybersecurity must be incorporated into modernization planning right from the start.
For many organizations, this will mean looking outside to partners whose core competency is cybersecurity. That’s why 29% of the respondents to our survey plan to “heavily outsource” their cybersecurity initiatives to a managed security service provider over the next two years.
Will your firm do the same?