How the Cyberspace Policy Review Impacts Hedge Funds

President Barack Obama’s second term in office is coming to a close, and debates about his legacy are about to escalate in earnest. One topic generating lots of discussion is the impact his administration has had on cyber security.

This topic inarguably has been important to the Obama administration’s political platform. Upon taking office for his initial term, the president emphasized cyber defense as a top priority and promptly ordered a review of national cyberspace policy.

This mandate was the first of its kind from the White House, and it resulted in a report, published in May 2009, with a clear message: We, as a nation, were unprepared for the increased vulnerability we had taken on by increasing our dependence on networking technologies. Both the public and private sectors, the report asserted, would need to significantly increase efforts to secure their networks.

Among the cyberspace policy review’s most important recommendations was a call for partnership between the federal government and private firms to share cyber security information and bolster intelligence efforts. In the same vein, reviewers suggested a stronger framework for communicating breach activities and reporting incidents.

In 2014, the federal government took steps forward in implementing recommendations, creating a legislative proposal to begin public- and private-sector info sharing through the Department of Homeland Security’s National Cybersecurity and Communications Integration Center (NCCIC). This proposal strongly encouraged private companies to participate in sharing information and establishing a private-led foundation for these efforts.

This year, President Obama requested $19 billion to support cyber security initiatives in 2017. This budget, representing a large increase over previous years, has been considered a “make-or-break” item for federal cyber programs. In short, companies should anticipate strong pressure from the government to take improvement measures in cyber security.

Hedge funds and private investment firms should expect to brace for increasing pressure in the coming years. Already, the U.S. Securities and Exchange Commission (SEC) is under pressure to enforce security regulations for these firms, and the agency’s chair, Mary Jo White, has called hackers the greatest threat to the global financial system.

For hedge funds and financial firms that have not prioritized cyber security, 2017 could present challenges, as SEC compliance and participation in cyber defense programs will be in the spotlight, and the government will have its say. If you’re in that camp, prepare for the coming year by achieving compliance with SEC-mandated National Initiative for Cybersecurity Education (NICE) standards. This will provide a foundation for effective cyber security.

Compliance, however, is not the complete picture for bringing firms’ networks up to speed with the present needs in cyber security. Considering that regulations are often two years old or worse, firms will want to go beyond these standards to maximize their investment. Gotham Security specializes in helping financial organizations bolster proactive cyber defense and can work with your firm to build an SEC-compliant program that’s future-ready.

Gotham Security is well equipped to meet your hedge fund’s specific cyber security needs. Find out how by contacting us at 917.734.4120 or