Hedge Funds Urged to Rethink IT and Cyber Security Provider “Conflict” Myth

Hedge Funds Urged to Rethink IT and Cyber Security Provider “Conflict” Myth

Hedge funds face mounting regulatory pressure to boost resilience, yet many still believe using one provider for IT and cybersecurity creates a conflict. Abacus Group challenges this, calling it a perception issue, not a rule. Integrated teams, it argues, improve threat response, compliance, and control, while fragmented vendor stacks may actually increase security risks.

Hedge Funds Urged to Rethink IT and Cyber Security Provider “Conflict” Myth
Hedge Funds Urged to Rethink IT and Cyber Security Provider “Conflict” Myth

Hedge funds are facing increasing regulatory scrutiny and pressure to strengthen operational resilience. Yet, according to industry experts, a persistent misconception may be steering some firms towards inefficient strategies.

A belief still held by many hedge funds is that using the same provider for both IT and cyber security creates a conflict of interest. Abacus Group, a managed services provider to more than 850 alternative investment firms worldwide, is challenging this assumption, arguing that the notion is outdated and potentially harmful.

The Origins of the Perception

The idea that a provider offering both IT and cyber security services is “marking its own homework” has shaped decisions across the industry for years. While this concern may have been relevant in the past, experts note that it no longer reflects today’s regulatory environment.

“The so-called ‘conflict’ is a perception problem, not a regulatory requirement,” says Abacus Group.

Regulation and Oversight

Regulators, including the US Securities and Exchange Commission (SEC) and the European Union’s Digital Operational Resilience Act (DORA), are pushing firms to adopt stronger vendor oversight and due diligence processes. In this context, experts warn that expanding the vendor stack unnecessarily can create fresh risks rather than reducing them.

By increasing the number of providers with access to sensitive systems, hedge funds could inadvertently weaken security. Abacus Group stresses that complexity itself can undermine compliance and operational control.

Integrated Security Advantages

The firm highlights that integrated IT and cyber security teams are often better equipped to detect, respond to and contain threats effectively. A consolidated partner model enables faster communication, streamlined incident response, and a holistic view of vulnerabilities across the IT environment.

“Why integrated IT and cyber security teams are often better positioned to detect, respond to and contain threats” is a core theme explored in the company’s new article.

Future Trends and Compliance

Far from prohibiting IT and cyber security consolidation, upcoming regulations may actually encourage it. With regulatory bodies focusing on accountability and oversight rather than arbitrary separation of functions, hedge funds could find that a streamlined partner approach aligns more closely with compliance goals.

Abacus Group argues that reducing the number of third parties with access to systems not only strengthens security but also improves governance and regulatory alignment.