Asset managers have a new tool to help them avoid making investments in companies that are prone to costly cyber breaches.
The cyber governance indices, which launch on Monday, rank 5,000 companies worldwide by the strength of their defences. The company behind the benchmarks plans to roll out three exchange traded funds that would allow asset managers to incorporate cyber risk management into their investment strategy.
“Investors have realised over the past year that the material impact of cyber risk is real — they no longer roll their eyes when you bring it up,” said Ryan Dodd, chief executive of Cyberhedge, the risk analysis company behind the indices.
Mr Dodd said he expected to work with a provider to launch three ETFs based on the indices in the second half of the year, focused on US, UK and EU companies. He said investors had shown interest in a version of the funds that would amp up returns from the best-defended companies and bet against the most vulnerable.
Fund managers are under pressure to take more interest in cyber security, both in their own businesses and in investee companies.
A review of asset managers by the Financial Conduct Authority, the UK…
