Nearly 90 percent of investment advisors point to "cybersecurity, privacy and identity theft" as the hottest compliance topic of 2015 -- up from 75 percent last year. Moreover, heightened concerns about cybersecurity are now universal -- regardless of an investment firm's size, number of employees or types of accounts under management, according to the 2015 Management Compliance Testing Survey.

The annual survey -- organized since 2006 by the Investment Adviser Association (IAA), the ACA Compliance Group and OMAM since 2006 -- also revealed:

  • 43 percent having a formal, written, standalone cybersecurity program, while another 42 percent have formal cybersecurity policies and procedures that are incorporated into broader programs.
  • 15 percent reported being the victim of a cybersecurity breach in the past 18 months, up from 11 percent last year.
  • 52 percent conduct mock exams, either through internal staff or a third party.
  • Firms say they increased the amount of compliance testing in the following areas: cybersecurity/privacy/identity theft (67.9 percent); advertising/marketing (42.95 percent); personal trading/code of ethics (34 percent); disaster recovery planning (35 percent), and best execution (32 percent). 
  • 89 percent have formal written policies and procedures to govern the use of social media by employees – up from 83 percent in 2013.
  • 65 percent review email and electronic communications for all employees, focusing on such areas as violations of firm policies and procedures, insider trading, fraudulent activity and use of non-approved marketing materials.

As a whole, growing concern about cybersecurity across the financial community isn't surprising. Earlier this year, Wall Street was shaken when Kaspersky Lab said international hackers stole as much as $1 billion from more than 100 banks across 30 countries since 2013.
More recently, the massive Office of Personnel Management hack has triggered a fresh round of privacy and security concerns across all vertical markets.

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