How Hedge Funds Solve Cyber Security Issues with Software

In the technical world we live in today, cyber crime tops the list of biggest threats faced by the investment industry despite the protections against them.

---

The institutions offering financial services are 300 times more exposed to the threat of cyber criminals. According to the latest survey of KPMG Business Instincts, many C-suites are always at the risk of some form of cyber-attack due to low technology investment. If the companies continue overlooking the pressing and rising concern surrounding cyber security, they are at risk of losing everything.

These financial institutions have a lot at stake, reputation, clients, and huge profits. Owing to this, the need for cyber security has become all the more imperative. Now, one in three senior-level executives agree that an investment in cyber skills is the need of the hour. When newspapers are flooded with shocking information about unprecedented cyber-attacks, vulnerabilities, and incidents, it is now the time to act.

Understanding cyber security

Living in this modern world of business, cyber security is about having the ability to gauge the risks involved in conducting business during its life cycle. With our economy going digital, crimes have also followed the same route. The attackers now use sophisticated methods to get closer to their old objectives, theft, subversion, sabotage etc.

Cyber security for hedge funds

For hedge fund managers, cyber security is a matter of grave concern since issues like spear-phishing and phishing are on the rise. These financial managers have both investor’s money and other employees in the company to look after.

The role of managers, nowadays, isn’t limited to merely curating investment strategies. Instead, they also need to hone their protection strategies to keep sensitive business information safe. The digital assets of hedge funds, including personal and financial information of clients, trading models and business strategies, portfolio positions, and other confidential information need to be guarded against cyber-attacks.

Cyber security challenges involved in hedge funds

Hedge funds are mostly attacked to pocket any financial gains. However, they can also be targeted for corporate espionage. There are also some dissatisfied employees looking for ways to attack. Some of the most common types of cyber security challenges are:

1. Business Email Compromise

Also known as Business email compromise (BEC) is the most common threat leading to data leakage. It is a scam where attackers spoof company website or email accounts to show themselves as a legitimate business.

Cyber criminals easily do so by conducting in-depth research about the company’s corporate hierarchy, payment patterns etc. The visitors to these fool-proof websites or recipients of fake emails feel persuaded to share confidential information like social security numbers, login IDs, passwords, etc. Even fake emails can also lead to malicious acts through which the attackers can get access to networks and catch hold of the data.

This data is further misused for identity thefts or wiring money. The financial world is at a greater risk of facing the repercussions of phishing attempts since they preserve sensitive information.

Due to any mishap, if the data gets leaked, the loss can go in millions of dollars.

Tips to protect against BEC:

• Never fall into the trap of suspicious emails. Instead, the users can play smart and contact the said person over a phone call or can meet them in person. Any emails that ask for an urgency or request sensitive information, documents, or money, are generally a scam.
• Always ensure to turn on double verification in case of money transfers.
• Exercise adequate diligence while comprehending communications via email. Always ensure that the reply email address is the same as the signature email address.
• Make sure that your employees don’t use social media platforms to reveal sensitive information that could be attacked for phishing.
• The MetaTrader 5 hedge funds platform can be customized according to your business requirements since the platform supports multiple sets of configuration and parameters. All the configurations and settings are easy-to-use with a variety of business automation tools to reduce costs and maximize operational opportunities. With its maximum mobility, it allows the employees to manage and access assets even during times they’re stuck. Also, the investors can see the performance and apply for investment anytime.
• Another benefit MetaTrader 5 allows you to follow in the footsteps of a successful trader by subscribing to his actions. You get to choose from hundreds of free and paid signals available with risk levels of your choice and profitability. This gives you relief from the pain of doing manual trading all by yourself. Instead, the platform performs the trade for you.
• Learn to identify fraudulent emails or websites from normal ones. Some obvious emails saying that you’ve won a lottery are most likely scams.

All these methods are not 100% secure and safe. Hence, to ensure safety, it is a must to install protection software. All the employees should have anti-phishing detection installed on their browsers and the security system should be up-to-date.

2. Phishing

Another form of cyber attack is phishing that takes various forms. Spear-phishing, for instance, is another small part of phishing where the hackers use a technique to trick a victim’s personal information like personally identifiable information (PII), passwords, details of credit cards by impersonating as an internal entity. According to KnowBe4 reports, approximately 91% of successful data breaches occur due to a spear-phishing attack. It is different from CEO Fraud in the sense as here the emails can give the look of a company newsletter, IT specialist, a national bank, and more.

Tips to protect from phishing:

• Keep a close check on the latest techniques of phishing.
• Never open or click on the links, or download files or open attachments from suspicious sources.
• Update the IT department if you sense an email as fake or spoofing.
• Never use email communications to share personal or financial information.
• If you come across pop-ups on screens, refrain from disclosing personal information.
• Update your browser security time-to-time.
• Download an anti-phishing toolbar on your software.
• Educate employees about cyber-security.

3. Ransomware

Ransomware is the most common type of threat in the world of hedge funds. It is a malicious tactic where attackers use software to attack a system and in return demand a ransom to restore access to the data. In simple words, it means taking a computer system as captive.

Since funds being digital assets can’t operate on their own, that results in critical losses. The financial industry is more likely under the threat of ransomware because victims mostly end up paying the ransom. This attack is the most prevalent in hedge funds with a rate as high as 90%. However, with a strong cybersecurity system, you can spare your system or funds from ransomware attacks. By being aware about the different types of ransomware attacks that can be injected into the computer, one can take the needy steps when wanted. Locker, Doxware, Popcorn Time ransomware, Crypto/Encrypt or malware and Scareware are just a few examples.

Tips to protect from Ransomware

• The investment firms have proactively taken measures to guard themselves against malware and ransomware. Some of the security measures suggested include:
• Educate yourself about cybersecurity by enrolling in a training program on cyber security.
• Make sure that the latest antivirus software is installed.
• Take advice from the cyber security experts to curate a resilience plan to let your critical operations from coming to a halt even when under a ransomware attack.
• Software which can help to manage risk in hedge funds is MetaTrader 5. It’s a full-cycle Hedge Funds software that is all-in-one software for hedge fund managers. It includes all the necessary elements that fulfills all the needs required to operate a comprehensive funding service and eliminates the need for other software. As far as risk management in hedge funding is concerned, MetaTrader 5 has been seen to cover that factor efficiently.

The MetaTrader 5 platform can be customized according to your business requirements since the platform supports multiple sets of configuration and parameters. All the configurations and settings are quite easy to operate with a variety of business automation tools to reduce costs and maximize operational opportunities.

With its maximum mobility, it allows the employees to manage and access assets even during times they’re stuck. Also, for the investors, they can see the performance and apply for investment anytime.

Conclusion

If you’re someone who’s planning to start up a hedge fund or is in the business already, then implementing a comprehensive risk management strategy should be of paramount importance to you. In the technical world we live in today, cyber crime tops the list of biggest threats faced by the investment industry despite the protections against them.