For private equity (PE) firms, the cyber resilience of portfolio companies directly impacts the overall value and exit potential of their investments. Yet, many firms still lack a standardised way to evaluate and enforce cybersecurity controls across their portfolio.
In this blog post, we’ll explore why PE firms must take a proactive role in cyber security, what steps they can take to mandate baseline requirements, and how they can use a scorecard system to benchmark cyber maturity across all investments.
Why Cyber Security Must Be a PE Priority
Cyber attacks don’t just affect one business they ripple through entire investment portfolios. A data breach or ransomware attack on a portfolio company can lead to:
- Regulatory fines and legal liabilities
- Brand and reputation damage
- Disrupted operations and loss of customer trust
- Reduced enterprise value or deal scuttling
For PE firms focused on operational efficiency, risk reduction, and strong returns, cyber security is a critical component of good governance.
The PE Firm’s Role in Cyber Governance
Private equity firms are uniquely positioned to drive cyber security improvements. By embedding cyber standards from due diligence through to exit, they can mitigate risks and create a culture of cyber resilience.
Key actions include:
- Establishing a Cyber Security Policy Mandate Introduce a baseline security policy that all portfolio companies must adopt. This could be based on NIST CSF, ISO 27001, or the NCSC CAF, depending on risk profile and geography.
- Incorporating Cyber into Due Diligence Cyber maturity should be a standard part of pre-acquisition assessments. Identify technical debt, legacy systems, and past incidents early.
- Assigning Responsibility Each portfolio company should have a designated cyber security lead or virtual CISO. The PE firm may also offer centralised resources or shared services to support implementation.
- Creating Accountability Through KPIs Track performance with clear metrics across the portfolio. This is where a cyber security scorecard becomes essential.
The Cyber Security Scorecard for Portfolio Companies
A scorecard offers a consistent and objective way to benchmark cyber security across all investments. It helps leadership and boards understand relative strengths, weaknesses, and priorities.
Here is a basic Cyber Security Scorecard Framework that PE firms can tailor:
| Domain | Control Area | Score (0-5) | Notes / Findings |
| Governance | Cyber security policies & ownership | ||
| Risk Management | Risk assessments & third-party risk | ||
| Access Management | MFA, privilege access controls | ||
| Asset Management | Asset inventory, classification | ||
| Vulnerability Management | Patch management, scanning routines | ||
| Security Monitoring | SIEM, alerting, logging | ||
| Incident Response | IR plan, testing, RACI model | ||
| Backup & Recovery | Offline backups, restoration testing | ||
| User Awareness & Training | Phishing simulation, training logs | ||
| Compliance & Standards | GDPR, ISO, or sector-specific regs |
Scoring Guidance:
- 0 = Not implemented
- 1 = Initial/Ad hoc
- 2 = Developing
- 3 = Defined and repeatable
- 4 = Managed and measurable
- 5 = Optimised and embedded
This data can be visualised in dashboards for quarterly reviews, board packs, or risk committees. Firms may also use it to prioritise investment in higher-risk companies or allocate resources where most needed.
Here is a tailored set of assessment questions that map directly to each domain in your Cyber Security Scorecard. These questions can be used during onboarding, due diligence, or regular reviews with your portfolio companies to score their maturity (0–5):
🧩 Governance
Control Area: Cyber Security policies & ownership
- Do you have a documented cyber security policy that is reviewed annually?
- Who is responsible for cyber security at board/executive level?
- Are roles and responsibilities for cyber risk clearly defined?
📉 Risk Management
Control Area: Risk assessments & third-party risk
- When was your last formal cyber risk assessment completed?
- Do you assess vendors and partners for cyber risk before engagement?
- Are third-party risks tracked and remediated?
🔐 Access Management
Control Area: MFA, privilege access controls
- Is Multi-Factor Authentication (MFA) enforced for all remote and admin access?
- Are privileged accounts regularly reviewed and limited by role?
- Are access rights removed immediately when staff leave?
🧾 Asset Management
Control Area: Asset inventory, classification
- Do you maintain a regularly updated inventory of all devices, servers, and software?
- Are data assets classified based on sensitivity or regulatory requirements?
- Is there a process to track and decommission legacy assets?
🛠 Vulnerability Management
Control Area: Patch management, scanning routines
- How often do you perform internal and external vulnerability scans?
- What is your typical patch deployment timeline for critical updates?
- Are unsupported systems or software still in use?
👁 Security Monitoring
Control Area: SIEM, alerting, logging
- Do you have centralised log management and alerting in place?
- Are logs reviewed regularly for suspicious activity?
- Do you use a SIEM or MDR/XDR platform to detect threats?
🚨 Incident Response
Control Area: IR plan, testing, RACI model
- Is there a documented incident response plan in place?
- Has the IR plan been tested (e.g., tabletop exercise) in the last 12 months?
- Are key contacts and escalation paths clearly defined?
💾 Backup & Recovery
Control Area: Offline backups, restoration testing
- Are backups encrypted and stored offline or in immutable storage?
- Are backups tested for restoration at least quarterly?
- Is your recovery time objective (RTO) documented and achievable?
📚 User Awareness & Training
Control Area: Phishing simulation, training logs
- Do employees receive annual cyber security awareness training?
- Are phishing simulations conducted, and are results tracked?
- Is training tailored by role (e.g., finance, execs, tech teams)?
⚖ Compliance & Standards
Control Area: GDPR, ISO, or sector-specific regulations
- Are you compliant with GDPR or other applicable regulations?
- Are you aligned with or certified against standards like ISO 27001 or Cyber Essentials?
- Do you regularly audit or assess compliance posture?
Next Steps for PE Firms
- Pilot the Scorecard on 2–3 companies to refine and align expectations.
- Train portfolio leadership on the importance of cyber and their role.
- Standardise cyber audits during onboarding and at regular intervals.
- Offer support tools, such as shared security solutions or frameworks.
- Make cyber a board-level topic across all investments.
Conclusion
Private equity firms have the influence and incentive to raise the cyber security bar across their portfolios. By mandating security standards, embedding cyber into governance, and using a simple scorecard for benchmarking, they can protect investments, reduce risk, and ultimately enhance value.