Venture Capitalists and Private Equity Firms: Why Data Security Matters


Cybersecurity is a concern for all industries, but some, like venture capital and private equity, are more attractive targets due to the nature of the data they collect and process. Investment firms work with highly sensitive financial data on a daily basis, and their confidentiality is essential to the smooth running of their business operations.

Financial institutions have the second highest data breach costs of any industry. Therefore, data breaches can have a serious impact on the bottom line of a venture capital or private equity firm. Loss of business is the largest cost driver and includes business interruption and loss of system downtown revenue, loss of existing and new customers, and reputational damage.

But venture capitalists and venture capitalists need to worry about their own cybersecurity and that of vendors and holding companies. Venture capitalists and venture capitalists should therefore not only ensure that third-party vendors handling sensitive information can provide an adequate level of cybersecurity before hiring them, but also perform cybersecurity due diligence. to determine the cyber maturity of a target investment and identify potential cyber risks. which could have an impact on the parties involved in the transaction. A company’s stronger cybersecurity infrastructure leads to greater assessed value for the organization.

If due diligence was about assessing the financial health and market potential of a target investment in the past, venture capitalists and private equity firms could no longer ignore the critical role cybersecurity plays in the success of their merger and acquisition transactions.
When it comes to sensitive data, venture capitalists and private equity firms should also be aware of their regulatory obligations. Failure to comply with their requirements can result in hefty fines and penalties that can severely cripple business operations.

The danger of insider threats
When it comes to venture capital and private equity, insider threats can be the most dangerous. Data exfiltration can be especially tempting for employees looking to switch companies or looking to engage in insider trading. A strong cybersecurity framework can protect data from outside threats, but does not protect the data of employees who have direct access to it.

At the same time, due to the sensitivity of the data involved, negligence can be equally disastrous for venture capitalists and private equity firms. Data leaks can destroy months of work and completely derail deals being negotiated.

One way to counter insider threats is to use data loss prevention (DLP) solutions that help define sensitive data based on a business’s needs. DLP tools come with predefined profiles for common types of protected information such as PII and intellectual property, but also allow for customizable policies to meet a company’s needs. Once sensitive data is defined, DLP solutions monitor and control its transfer and use.

By monitoring sensitive data and logging and reporting any attempted policy violations, DLP solutions allow enterprises to identify suspicious user activity. DLP technology can block the transfer of files containing sensitive information to personal email addresses or cloud storage services and even prevent the printing or copying and pasting of confidential information into the body of an email. -mail.

Read also : The cloud, if managed effectively, will enable a smooth transition for BFSI Infra: Raj Srinivasaraghavan, CTO, SecureKloud Technologies

When applied on the endpoint, DLP solutions such as CoSoSys’ Endpoint Protector can also ensure that its policies remain active on a work computer whether it is in the office, being used remotely, or not connected to the Internet.

Controlling the use of removable devices

Removable devices are another common exit point for data. Easy to use, hide or lose, USB drives in particular have long been a blind spot for data security and have been the source of massive data breaches in the past. However, they can also be useful tools for employees to easily take data with them when they go out for meetings or conferences.

Venture capitalists and investment firms can use DLP solutions to control peripheral and USB port usage as well as Bluetooth connections. This way, only company-approved devices can be connected to work computers. Businesses can ensure that employees only use secure, company-provided devices and easily monitor which employees are copying sensitive files.

By applying strong encryption, organizations can ensure that all files copied to removable devices are automatically encrypted with 256-bit AES CBC mode encryption. No one without a decryption key can access it. Passwords can be reset in case they have been compromised and devices can be wiped remotely. Easy to use and very effective, these solutions ensure that any stolen or lost USB key will not be accessible to third parties.

Dealing with data-at-rest risks

On average, an average financial services employee has access to nearly 11 million files. Many of them may contain sensitive company data and information protected by data protection legislation. Venture capital and private equity firms need to ensure that these files, when no longer in use, are not simply stored in unprotected locations where they can easily be stolen in the event of a data breach.

Enterprises can use DLP data discovery tools to identify where data is stored locally. This can be done automatically from the DLP dashboard across the entire corporate network. Some solutions also offer administrators the ability to take remedial action to delete or encrypt sensitive data while it resides in unprotected locations.

DLP content discovery can also be useful for compliance auditing. Venture capital and private equity firms can perform content discovery scans and generate reports proving they are securing sensitive data, reducing the time required for the audit process.

The opinions expressed in this article are the personal opinion of Sir. Philippe CotfasChannel Manager, CoSoSys

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