Investors view private equity cybersecurity as a fundamental aspect of value preservation.
Translating PE cybersecurity expectations into operational improvements requires collaboration.
A fund’s cybersecurity program should address the maturity level of each portfolio company.
As investors in private equity funds, limited partners have a vested interest in protecting their investments against cybersecurity threats, including data breaches. As a result, PE fund chief financial officers and deal teams face increasing pressure from LPs to implement strong cybersecurity protocols and oversight. Based on recent data, RSM expects this trend to continue, underscoring the imperative for funds to prioritize PE cybersecurity risk management.
According to the Private Funds CFO Insights Survey 2025—commissioned by PEI Group in collaboration with RSM US LLP to poll over 120 finance leaders—LPs view cybersecurity as a fundamental aspect of risk management and value preservation.
said investor questions about cybersecurity have increased in the past 12 months.
noted LPs are asking very detailed or somewhat detailed questions about cybersecurity during due diligence.
said that LPs are always or sometimes asking questions about cyberattack readiness policies during due diligence.
These trends emphasize the need for proactive strategies such as robust risk assessments, business continuity plans, effective governance and protections against malware and ransomware. In response, fund CFOs are doubling down on their investments in PE cybersecurity resources, both human and technological.
indicated that strong cybersecurity protocols are “to a great extent” considered “must-haves” by investors.
said their investment in cybersecurity resources has increased over the past 12 months.
said they plan to increase cybersecurity outsourcing over the next 12 months.
A collaborative approach between CFOs and operating partners is crucial in translating PE cybersecurity expectations into operational improvements across the fund’s portfolio. Working in tandem, CFOs and operating partners can satisfy LP requirements while driving long-term value creation.
Cybersecurity challenges are often rooted in three main areas: a lack of visibility, insufficient resources and the inability to keep up with a fast-changing threat landscape.
One of the most significant issues facing PE funds is the lack of visibility into cybersecurity practices across their portfolio companies. PE funds may conduct an initial risk assessment, but without ongoing oversight, they lack assurance that identified risks are being managed appropriately. Without consistent visibility into portfolio companies’ cybersecurity status, PE firms are often blindsided by vulnerabilities that may lead to costly breaches.
To protect their assets, PE funds need a comprehensive and sustainable cybersecurity program that considers the unique needs and maturity level of each portfolio company. The potential risk of a cybersecurity breach during a fund’s holding period is millions of dollars per day in lost productivity, remediation costs and increased insurance premiums.
The first step in building an effective cybersecurity program is aligning with the portfolio’s diverse cybersecurity needs. Some portfolio companies may be highly advanced, while others are less mature, so a one-size-fits-all approach rarely works. The right solution will balance cost with effectiveness and be scalable across companies with varying cybersecurity postures. This is a job for highly skilled and focused workers, not a time for cost-cutting or overburdening in-house staff.
Given the challenges associated with managing cybersecurity in-house, many PE funds consider outsourcing a practical alternative to managing in-house. Outsourcing allows PE funds to leverage specialized skill sets and industry knowledge, ensuring their portfolio companies have access to the latest security technology and risk management insights without the burden of recruiting and retaining cybersecurity talent.
When outsourcing cybersecurity, selecting the right third-party provider is crucial. Not all providers offer the same level of service or align with the strategic needs of PE funds. Key considerations include:
A qualified provider should perform thorough, industry-standard risk assessments to accurately identify security gaps within each portfolio company. A valuable assessment should include benchmarking capabilities and the ability to provide a consistent risk profile across companies to ensure that all portfolio companies are assessed against the same metrics.
For PE funds, cybersecurity is a multifaceted challenge that takes long-term commitment, strategic oversight and hands-on management across portfolio companies. Developing an effective and sustainable cybersecurity program requires ongoing vigilance across the portfolio by highly skilled talent leveraging the latest technology.
By choosing the right solutions and focusing on long-term sustainability, PE funds can build a cybersecurity program that protects their investments and drives value for portfolio companies amid an ever-evolving threat landscape.
