13 Key Elements for Successful Cybersecurity Portfolio Oversight

ACA Aponix has identified 13 elements of successful programmatic cybersecurity portfolio oversight. This approach to portfolio oversight draws on years of experience working alongside more than 100 sponsors to help stand up cyber oversight programs, as well as working with their portfolio companies directly. While there is no one-size fits all solution to oversight, these thirteen elements are shared features that should be present in any cyber oversight program. By adopting these elements, firms can avoid value destruction, meet investor expectations, and increase valuations of their portfolio, while still retaining the flexibility to customize the oversight program to align with the investment strategy.

The 13 Elements of Successful Programmatic Cyber Portfolio Oversight

Cyber Risk Management

Ensure detection of risk and design proportional response plans.

1. Security Baseline: Create an established minimum cybersecurity baseline and expectations for cyber insurance for all portfolio companies.

2. Risk Framework: A risk or control framework (describing areas to be assessed and the assessment methodology) is used consistently across the portfolio to ensure a comprehensive approach to measuring, managing, reporting, and setting expectations for cybersecurity risk.

3. Risk Assessment: Mechanisms are in place to maintain a robust understanding of the cybersecurity risk at each portfolio company and the action steps needed to improve their cybersecurity posture. These mechanisms account for individual portfolio company characteristics and our investment context to allow apples-to-apples comparisons of our risk across the portfolio.

4. Response Readiness: Capabilities are in place to quickly assess the impact of new threats, vulnerabilities, and changes in business context, such as entry into new markets, for each portfolio company and to recommend action steps at all affected portfolio companies.

Value Creation

Evolving cybersecurity oversight from a cost center to a driver of value creation.

5. Improving Valuations: The program creates and documents a track record of success, and otherwise meets diligence expectations, in a way calculated to improve valuation at exit.

6. Economies Of Scale: Economies of scale are leveraged to lower costs when acquiring cybersecurity services and sharing cybersecurity resources across the portfolio.

7. Portfolio Company Support: Data, insights, benchmarks, and other resources are shared with portfolio companies in a way that helps them right-size their cybersecurity investments.

8. Leadership Support: The connection between cyber and portfolio valuation is socialized with managing partners and the board to ensure ongoing support for cybersecurity oversight activities.

Cyber Oversight Governance

Ensure cybersecurity oversight strategy is based on investor and firm needs.

9. Accountability: There are designated role(s) empowered and accountable for portfolio cyber oversight.

10. LP Relations: Mechanisms are in place to understand the desires and expectations of limited partners/investor community around cybersecurity oversight.

11. Reporting: There are established processes for reporting portfolio companies’ cybersecurity to managing partners, the board, investors, regulators, and other stakeholders.

12. Rightsized Oversight: The level of oversight intensity is based on investment level, inherent risk, and lifecycle of portfolio companies.

13. Integrated Oversight: Cyber oversight is integrated into broader oversight and value-creation activities (financial, ESG, etc.).

Download our white paper 

In our most recent white paper, we debunk four of the most common myths we come across when working with firms to create an effective cyber portfolio oversight program. We also provide a path forward to build a successful cyber oversight program that can avoid value destruction, meet investor expectations, and increase valuations of your portfolio while retaining the flexibility to customize your oversight program to align with your investment strategy. 

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How we help

ACA’s new portfolio oversight solution, ACA Vantage for Cyber, can provide ongoing visibility to monitor and oversee your portfolio companies’ cyber health, giving you control to navigate risk, add value, and gain a competitive advantage.

Powered by ACA Aponix^®, ACA Vantage for Cyber combines our renowned advisory service with our award-winning regulatory technology, ComplianceAlpha^®, and our exclusive "RealRisk" risk assessment methodology. 

ACA Vantage for Cyber will help you to:

• Align your cybersecurity oversight program to investor needs by leveraging best practices developed working with over 100 PM firms on oversight 
• Save time with instant access to assessment results and the status of related remediation efforts 
• Keep stakeholders informed and direct resources where they are needed most 
• Uncover your firm’s risk from your investments from the fund level all the way down to individual cyber capabilities at individual portfolio companies. 

Contact us to find out how we can help you protect your portfolio. 

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Watch our on-demand webcast

Our on-demand webcast discusses best practices for cybersecurity oversight as well as the value-add it brings to sponsors. Watch our webcast to understand: 

• Elements of a world-class cybersecurity oversight program 
• The value-add of establishing an effective cybersecurity oversight program 
• Action steps your firm can take to build an effective cybersecurity oversight program