Enhancing cybersecurity in private equity

As the private equity industry becomes more sophisticated, the challenges it faces also evolve, especially in data privacy and cybersecurity. With rising threats and stricter regulations, private equity firms are navigating a complex landscape. One of the keys to overcoming these challenges is partnering with a fund administrator. By identifying, assessing, and mitigating operational risks, fund administrators safeguard assets and ensure long-term stability. Embrace their expertise and secure your fund’s future.

The growing threat landscape

Private equity firms handle vast amounts of sensitive data, making them attractive to cybercriminals. A breach could expose financials and strategies, or damage client trust, potentially derailing deals and causing significant financial and reputational harm.

Partnering with a fund administrator offers significant advantages, as they implement comprehensive security protocols to protect sensitive data. These include advanced encryption techniques, intrusion detection systems, and continuous monitoring. By leveraging their robust understanding of cybersecurity and partners, private equity firms can work to shield themselves from the increasing threat of cyberattacks while remaining focused on their core investment strategies.

Data privacy regulations and compliance

Navigating data privacy laws demands vigilance, especially as regulations evolve.

By outsourcing these responsibilities, firms reduce the administrative burden on internal teams and minimize the risk of data privacy breaches. This allows firms to focus on deal sourcing and value creation, knowing experts are handling data privacy concerns. Administrators provide oversight, ensuring each portfolio entity complies with relevant laws. Here are some of the top advantages:

Comprehensive security infrastructure: Fund administrators invest heavily in advanced cybersecurity technologies. This encompasses encryption, firewalls, multi-factor authentication, and continuous monitoring to defend against unauthorized access and cyber threats. They uphold rigorous encryption standards to protect sensitive client and investor information, ensuring data security during both transmission and storage.

Regulatory compliance: Administrators are well-versed in financial regulations and data privacy laws such as GDPR, CCPA, and industry-specific rules like the SEC’s cybersecurity requirements. They ensure your fund complies with these laws, avoiding fines and legal risks.

Regular audits and monitoring: Fund administrators perform continuous risk assessments, vulnerability tests, and security audits. This ensures timely detection of threats and enhances the system’s resilience against breaches.

Business continuity and disaster recovery: Fund administrators employ specialized cybersecurity teams, providing you access to professionals who are experienced in identifying, mitigating, and responding to cyber threats. In case of a breach or technical failure, they often have advanced disaster recovery plans to maintain data integrity and ensure smooth operations with minimal downtime.

Cost efficiency: Investing in an in-house cybersecurity team can be costly. Fund administrators provide the same or higher levels of protection without the need to allocate additional resources for staffing and technology upgrades.

Investor confidence: Having a third-party fund administrator with strong cybersecurity measures boosts investor confidence, as it demonstrates a commitment to protecting sensitive information and maintaining high operational standards.

Through a strong relationship with your fund administrator, firms can not only safeguard sensitive information but also ensure compliance with evolving data privacy regulations. This partnership ultimately enhances the value of their portfolio companies and mitigates risks, positioning them for successful exits. Fund administrators offer private equity firms the expertise and infrastructure needed to navigate these challenges, allowing them to focus on their core mission: creating value for their investors.

About
Jason Stevens oversees technology at Ultimus LeverPoint, including infrastructure, security, application development, and data. He previously led a large service provider’s global securities and fund services application team, managing over 50 tech professionals and supporting multiple global business lines. Throughout his career in financial services, Jason has held various roles in fund accounting and IT at major service providers.

_{This article originally appeared in Preqin 2025 Global Report: Private Equity. The opinions and facts included in the above do not constitute investment advice. Professional advice should be sought before making any investment or other decisions. Preqin and Ultimus LeverPoint accept no liability for any decisions taken in relation to the above.}