Cybersecurity has become the top operational concern for investors during fundraising due diligence, according to the latest Core Alternative Managers’ Mood Index (CAMMI) report by private capital fund administrator Gen II Fund Services.
The report indicates that 27% of investors now prioritise cybersecurity in operational due diligence conversations, reflecting heightened awareness of digital threats in the private capital industry.
Gen II Fund Services surveyed over 120 UK and European asset management firms between September and October 2024 for the report.
Alex Di Santo, Head of Private Equity, Europe, for Gen II said: “Cybersecurity has risen to become one of the most important operational topics in due diligence processes, reflecting growing concerns about digital threats. The CAMMI survey shows that the rapid pace of technological innovation and development of artificial intelligence have exposed concerns around cyber risks, including data breaches, ransomware attacks and phishing scams.”
Investment funds, which hold vast amounts of financial data, have become prime targets for hackers seeking financial gain. This has raised alarm among investors about the potential financial and reputational damage that could arise from cyber-attacks on fund managers.
Regulators worldwide have acknowledged these vulnerabilities and implemented various regulations to enhance cybersecurity within the asset management industry
Di Santo continued: “By virtue of their resources, larger fund managers are better able to defend themselves from and educate their staff around cyberthreats, but smaller managers may not be sufficiently scaled to do so to the same degree. We see smaller managers in the space seeking increased support from their outsourced partners who can offer robust measures to safeguard their data and who invest in cutting edge technologies to safeguard against emerging threats.”
