Cybersecurity Program Essentials for Investment Funds: Policies, Training, and Technical Controls

Investment funds store precisely what cybercriminals want most: wire instructions, bank account numbers, tax identification numbers, and detailed investor data. Yet many emerging managers launch with generic policies borrowed from templates, minimal employee awareness, and technical controls that exist only on paper.

What Policies Does a Fund Actually Need?

Most institutional investors and regulators expect a core set of documented policies:

• Written Information Security Policy (WISP) - establishes governance structure, roles, and baseline controls

• Incident Response Plan - defines investigation steps, notification procedures, and escalation paths

• Business Continuity and Disaster Recovery Plan - addresses data backup, system restoration, and communication protocols

• Acceptable Use Policy - covers personal devices, remote access, and data handling expectations

• Vendor Management Policy - outlines due diligence requirements for service providers handling fund or investor data

Under the SEC's amended Regulation S-P, registered investment advisers with $1.5 billion or more in AUM faced a December 2025 compliance deadline requiring documented incident response programs and 30-day breach notification procedures. Smaller advisers have until June 2026.

How Should Funds Approach Employee Training?

Employee error remains the primary entry point for cyberattacks, industry research suggests over 90% of successful cyberattacks begin with a phishing email. Effective training programs typically include:

• Annual baseline training covering phishing recognition, password hygiene, and data handling

• Role-specific modules for investor relations staff handling sensitive documents versus investment professionals

• Simulated phishing tests to measure and reinforce awareness

• Clear reporting procedures so employees know exactly whom to contact when something looks suspicious

Training frequency matters. Funds that conduct awareness sessions two to three times per year, with updated content reflecting current threat patterns, often see better results than those treating it as an annual checkbox exercise.

What Technical Controls Do Institutional LPs Expect?

During operational due diligence, allocators commonly review whether funds have implemented:

• Multi-factor authentication across all critical systems

• Endpoint detection and response tools

• Encrypted communications and data storage

• Network segmentation and access controls based on job function

• Automated patch management and regular vulnerability assessments

• Documented backup procedures with tested restoration capabilities

Vendor oversight increasingly draws scrutiny. Funds typically require service providers (administrators, IT vendors, cloud platforms) to notify them within 72 hours of any security incident affecting fund data.

How Does This Affect Smaller Managers?

Launching funds sometimes assume cybersecurity infrastructure is a "scale later" problem. In practice, institutional allocators can screen out managers lacking documented programs regardless of AUM. The cost of basic controls and annual training has decreased substantially, making cybersecurity hygiene achievable even for lean operations.

Strong cybersecurity practices increasingly function as table stakes for capital raising, demonstrating that a manager takes investor data protection seriously before an incident occurs rather than after.