Riverside Compliance Chief Sees Cybersecurity as Emerging Challenge for Private Equity

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Jennifer Boyce talks about the emerging role of compliance chiefs at private-equity firms, as well as the impact of the pandemic on their workloads

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Midmarket investor Riverside Company appointed Jennifer Boyce as its first chief compliance officer in 2012. She also serves as the Riverside Company’s general counsel and is based in the firm’s Cleveland office.

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The Riverside Company managed approximately $14.4 billion in assets in private equity, structured capital and private debt as of September 30. The firm focuses on investing in growing businesses with a value of up to $400 million.

Ms Boyce spoke on her work in the emerging role of compliance heads at private-equity firms, as well as the impact of the pandemic and emerging concerns such as cybersecurity. Here are the edited excerpts.

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Businesshala: What issues keep you up at night on the compliance front?

Ms. Boyce: That could change at any time, but I think probably cyber security. We have a very well developed IT department [that is] We are working very fast on this and we are doing whatever we can, but cyber thieves or bad actors are very sophisticated and they are everywhere. That’s why we do a lot of training, we do a lot of testing on cyber security.

What really worries me is there’s a cyber breach at one of our providers that we have no way of controlling or anything to do with it and then, all of a sudden, we’re part of what’s exposed . We have a very strict vendor-management policy where we force our providers to work. But then, with these bad actors getting refined, this is probably the biggest concern.

Businesshala: How do you think the role of the compliance chief in private-equity firms has evolved over the past decade?

Ms. Boyce: For Riverside, it has evolved as we have pushed forward and launched new fund products. So, Riverside was traditionally just pure controlling private equity. We had funds in different jurisdictions, but they were like historic private-equity funds. We now have a credit fund product. We have funds that carry minority interest, a type of mezzanine, or preferred interest, and then a fund that focuses on early-stage tech companies and another fund that focuses on pre-VC software lending. So with new products comes new issues, new focus areas.

Geographically…we have funds and investors in countries other than the US, especially in Europe. US Like, there are also various procedures and regulations enforcing procedures that we need to follow. So Riverside is regulated in the UK, Australia and Luxembourg. And they all have their different regimes which we also need to follow.

In industry, generally… a lot of people have cyber security on their mind. [Environmental, social and governance] Private equity is also a hot spot that has attracted a lot of attention over the years.

Businesshala: What are the main issues you face in mitigating risk across borders?

Ms. Boyce: boots-on-the-ground [approach] The best way to help mitigate those risks. In the last almost two years, it has been tough with the situation we all are in. No one has really been there in person or been able to have meetings or dinners or lunches where, you know, talk to people and [see] Whats up.

We also rely on external consultants who have specialized expertise in various jurisdictions. Much of this is based on jurisdiction, even in the US, but in different states, there are different rules we need to follow.

I find that constant communication is very helpful… and making people aware of their roles and responsibilities, and what Riverside has to do as a firm in order to comply with all the different rules and laws around the world.

That’s why we find that training and even just individual roundtables are very helpful in reminding people of the rules and regulations that we need to follow.

Businesshala: How has the coronavirus pandemic affected the scope and scale of your work as Chief Compliance Officer?

Ms. Boyce: Riverside, at the start of the pandemic – I think before the offices were closed, but when it was imminent that they were leaving – we set up a virus-response team, consisting of people from across the firm and the world . We met regularly early, maybe twice a week and then, as time went on, we probably met bi-weekly.

But it was a great forum – as everyone was trying to understand what the impact of this virus would be and how it would affect our global portfolio, not just on Riverside – to help develop policies and procedures. as well as a source of communication. A communication channel for the people of Riverside, as well as for portfolio companies and their executives who were grappling with similar issues.

So that, again, was something no one ever expected, increasing the workload for everyone. And then, in the meantime, responding to the virus and the pandemic, everyone was also doing their regular full-time jobs. So I think, like everyone else in America or in private equity, the workload has certainly increased.

Businesshala: What do you see as your main priority for the coming year with the challenges on the compliance front?

Ms. Boyce: I think it is trying to evolve continuously with living in these times and pandemic. Just when you think you might be a little out of the woods, something else comes along.

I think continue to deal with the unknown as best you can and how it will affect matters related to compliance. And then with respect to that, just making sure we’re in touch with people and communicating with people, so that everyone is aware of the compliance responsibilities that we have.

Write David Smagalla [email protected] . Feather

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