I love a good Throwback Thursday, and for today's post, I want to throw it back to five years ago this month. It was April 2012, and we were hosting one of our biggest and most ambitious events: a Hedge Fund Cloud Summit. At the time, cloud computing was widely discussed and adoption was certainly growing, but there were still a number of lingering questions heard across the industry with regards to financial and business impacts of the cloud, effects on in-house IT staffs and, of course, security.
We still answer many questions related to these topics today, so I thought it might be fun to take a look back at the four panel topics we addressed back in the 2012 event and examine how much the conversation has really changed - or in some cases, how perhaps it's stayed the same.
Making the Business (and Financial) Case for the Cloud
For hedge fund COOs and CFOs, the business impact of a move to the cloud is still a critical consideration for established firms. But many of the myths and common questions that were prevalent back in 2012 are now pretty easy to explain. How do investors feel about the cloud? In 2017, investors are generally comfortable with the cloud if not in favor of it over legacy, on-premise IT infrastructure setups. Is the cloud really more cost-effective? This question was a long-standing 'myth' that's been debunked; for some firms, yes, costs may be lower depending on their previous infrastructure and personnel situation, but for all, the predictability of cost is what has become a primary driver for cloud adopters.
With the gravitation towards all things cloud, understanding the role a global network plays in all layers of connectivity is crucial, especialy for the financial sector where firms rely on low-latency and seamless access to counterparties across the globe.
So, as we often like to do here on the Hedge IT blog, we turned to the experts.
Mike Abbey is the vice president of network services here at Eze Castle Integration. He joined the company in 1999 and is currently responsible for ECINet, our global carrier class network platform. Mike also provides design consulting and best practice audits on fault tolerance and scalable optical, Ethernet, and IP-based networks, from single and multi-site domestic networks to multi-site, global deployments. He is a graduate of Binghamton University.
Q. Mike, what are you hearing from clients regarding networking and Internet services?
A. To be honest, most hedge fund managers don’t have the time – and don’t necessarily want – to grapple with the complicated intricacies of securing and maintaining an enterprise-class network or Internet service. That’s where my team and I come in. We help simplify this process for our clients using Eze Castle’s ECINet global private network.
When it comes to cybersecurity there are many factors that you need to be conscious of. During a recent webinar, speakers from Eze Castle Integration and Wolf & Company shared 10 of the most common cybersecurity gaps identified during an IT audit/risk assessment. We’ve listed the top 10 below and shared some particulars on a few of the most critical (in our opinion). For more detail on how these gaps are presenting themselves – and also best practices for avoiding them – click here to listen to the full webinar replay.
Top 10 IT Security Gaps
Risk Management and Governance
IT Asset Management
Social Engineering & User Training
Business Continuity Planning
Third Party Vendor Management
User Provisioning and Management
Incident Response Planning/Procedures
Risk Management and Governance
Responsibility and accountability for risk management starts in-house – and at the top. Even for firms that rely on third party outsourced providers, it’s imperative (and often overlooked) to establish governance controls and outline who internally maintains ownership of the firm’s security posture – and more broadly, who owns the firm’s risks.
As April 18th (US) and April 30th (Canada) near, cyber scammers are pulling out all their tax scams to trick consumers and capitalize on the flurry of activity. Our friends over at Proofpoint say that “this year, [they have] tracked malware distribution in addition to the customary phishing schemes among the email threats related to federal taxes.”
The IRS is also urging people to remember that “the IRS doesn't initiate contact with taxpayers by email, text messages or social media channels to request personal or financial information. In addition, IRS does not threaten taxpayers with lawsuits, imprisonment or other enforcement action.”
So to help our clients stay vigilant, we’re highlighting some recent phishing tricks and sharing phishing flags every employee should recognize.
IRS Phishing and Malware Scam Examples
Example 1: Malware Distribution
This article first appeared on Hedgeweek and Private Equity Wire as part of Eze Castle Integration's Technology Resource Center.
Outsourcing has not only become an accepted practice among hedge fund managers, it has become a necessity as funds large and small seek out ways to control their costs, manage their internal resources more effectively, and overcome the ever growing challenge of regulatory compliance.
Perhaps more than ever before, hedge fund managers recognise that as cloud technology makes huge strides forward it makes more sense to focus on their core activities of investing and raising capital, appointing a trusted outsourced provider to manage the raft of non-core activities that investors do not want managers to be preoccupied with.
Indeed, while the thought of hosting IT offsite was once a worry for allocators, today’s investors find comfort in knowing hedge fund and alternative investment firms are focusing on their investment priorities and leaving the technology decisions to the experts.
Mark Coriaty is Chief Strategy Officer at Eze Castle Integration. In his view, a firm’s fee structure as well as the growing complexity of the back-office directly impact the extent to which managers choose to outsource and spend capital over time.
"Today the majority of our clients range anywhere from 20 to 200 users and most of these users sit in the front office; portfolio managers, analysts, traders, says Coriaty. Over time, the back office has had to grow due to the number of counterparties and regulatory obligations that managers have. The growth of counterparties and investor requirements coupled with increased compliance and regulations has introduced more complexity and risk into hedge fund options."
The following article originally appeared in HFMWeek's Cyber Compliance Focus.
It’s not enough to have strong security policies. And it’s not enough to have robust technologies in place to ward off cyber threats. In truth, it’s not even enough to have both of these.
An effective cybersecurity program, rather, can only be achieved through a consistent and comprehensive strategy that touches layers across the entirety of the organization – from perimeter security and access control to policy enforcement and employee training. Without each of these building blocks, the effectiveness of a cyber risk management program is crippled at best.
And today’s standards for cybersecurity are increasing rapidly.
Post-launch, many hedge funds and investment firms struggle to gain ground and attract the institutional capital needed to succeed in today’s competitive market. As firms grow – and bandwidth and budget are less likely to be roadblocks – it can be a challenge to reinvent the wheel and position your firm to capture institutional dollars.
During a recent webinar, speakers from EisnerAmper and Eze Castle Integration explored trends in hedge fund operational due diligence and technology operations and offered advice for asset managers looking to grow out of their startup boots and achieve an institutional grade operation. Some areas they explored during the 40-minute webinar include:
How institutional investor expectations have changed for firms at the pre-launch and post-launch phases;
The importance of (and detriment to not) passing an operational due diligence examination;
How cyber security expectations are evolving to increase standards across both technology infrastructure and policy planning;
If the public cloud is suitable for investment management firms looking to solidify institutional investments; and
Top mistakes emerging managers make that prevent successful ODD exams and institutional evolution.
Scroll down or click here to watch the replay.
As you’re probably aware, the topic of cybersecurity has been splashed prominently across headlines lately. Earlier this year, the former US director of national intelligence, James Clapper, identified cybersecurity as the top global threat.
In his testimony before the Senate Armed Services Committee, Clapper stated “I think the private sector needs to up its game on cyber security and not just wait for the government to provide perfect warning or a magic solution.” So what should you be doing to better protect your firm’s critical systems and data?
The truth is both large, well-established hedge funds and smaller startups are equally at risk of intrusion. Hackers may target large firms because they see an opportunity to profit from their substantial asset pools. Additionally, they might be after the notoriety associated with successfully hacking a well-known fund’s critical systems, especially in cases that will likely garner media attention. For smaller funds, hackers are likely after intellectual property, namely business plans, market forecasts and investment strategies.
Last week, we shared some important questions to include in hedge fund technology RFPs, focusing on Staffing, Client Service Model and User Support. In today’s article, let’s dive back into the RFP process, and look at some questions on Business Continuity & Disaster Recovery Plans, Backup & Retention of Information, Data Security and Intrusion Detection & Incident Response.
Business Continuity & Disaster Recovery Plans
Does your company have a written policy and program in place for business continuity and disaster recovery?
Have your company’s policies and programs for business continuity and disaster recovery been fully implemented? If not fully implemented, please discuss those areas in detail and explain any plans to address them.
We’ve all heard the saying, “there are no stupid questions,” but when it comes to technology it is easy to feel undereducated. Knowing what to ask a hedge fund technology provider not only makes you look smart (or smarter!) but also ensures you get the right solution.hedge fund tech guidebook
In this article we’ll look at questions around Staffing, Client Service Model and User Support for your hedge fund technology Request for Proposal. Next week we’ll give questions for DR Plans, Information Backup & Retention and Data Security.
Staffing and Skills
Provide the total number of employees (current year and past year). Please show numbers for overall staff as well as a breakdown by function (e.g., developers, client service, etc.).
Provide the number of employees gained and lost (current year and past year).
Describe the organizational structure of your company. Please detail the roles specific to your business (e.g., engineers, client managers, trainers, QA, etc.)
How many full-time employees are assigned to these particular roles, by functional and geographic split?
What is the anticipated project resource profile through the stages of the implementation process?