In a world where a single compromised Slack account can bring trading operations to a halt - and where regulators are cracking down on the casual use of WhatsApp for sensitive discussions - hedge funds are facing a hard truth in 2025: secure, resilient communication was never optional.
Out-of-Band (OOB) communication refers to secure channels that exist separately from your organisation’s primary IT and communications infrastructure. These platforms are designed for worst case scenarios - major cyber incidents, infrastructure failures, and insider threats - where traditional systems are either unavailable or untrustworthy.
With regulatory pressure increasing and threat actors growing more sophisticated, CTOs, CISOs, and COOs must recognise that resilience isn’t just about system uptime or backup generators. It’s about ensuring leadership and crisis teams can communicate securely when it matters most.
Traditional Communication Channels Are No Longer Sufficient
The communication stack in most hedge funds typically includes collaboration tools like Microsoft Teams or Slack, corporate email systems, mobile messaging, and possibly encrypted apps like Signal or WhatsApp for sensitive discussions.
But all of these channels are increasingly viewed by regulators and attackers alike as points of weakness:
- Teams and Slack: If the corporate network is compromised, these platforms can become inaccessible - or worse, infiltrated and manipulated by an attacker.
- Email: Still the most common form of business communication, email is slow, easily spoofed, and often used for phishing.
- WhatsApp, Signal, Telegram: These tools are largely unmonitored, unarchived, and fall outside established regulatory frameworks.
Since 2021, the SEC fined dozens of financial institutions more than $2.5 billion in total for failing to maintain records of off-channel communications. Similar enforcement actions are underway in the UK and EU. Regulators no longer accept the “informality” of encrypted consumer apps when it comes to material business decisions.
Put simply: hedge funds must ensure they can communicate in ways that are secure, resilient, and provable. And that’s where Out-of-Band comes in.
Understanding the 2025 Threat Landscape for Hedge Funds
Hedge funds are among the most lucrative targets for cybercriminals. The combination of valuable intellectual property, lean operational teams, and fast-moving capital makes them uniquely exposed to digital threats.
In 2025, the most pressing threat vectors include:
- Insider threats and social engineering: A well-timed phishing message or manipulated insider can sabotage trading strategies, leak position data, or trigger regulatory breaches.
- Secrets exposure in codebases: According to GitGuardian, many hedge funds still fail to protect credentials embedded in infrastructure or DevOps pipelines—leaving keys, tokens, and passwords exposed.
- Supply chain risks: A compromised IT provider or vendor can act as a vector for ransomware or surveillance.
- Nation-state-level actors (APT): Particularly for funds involved in global commodities, ESG activism, or geopolitical sectors, advanced persistent threats are now a credible concern.
These risks are amplified by the fact that in a crisis scenario, core communications infrastructure may be inaccessible, untrusted, or actively compromised.
Regulatory and Compliance Drivers: Global Rules, Global Consequences
One of the most overlooked aspects of communications risk is the cross-jurisdictional reach of regulatory frameworks.
In 2025, regulators don’t just expect firms to manage communications securely - they expect them to do so with demonstrable controls, and they don’t care where your headquarters is located.
If you operate in a regulated market - whether the UK, US, or EU - you are subject to that region’s rules:
- UK (FCA): The Financial Conduct Authority has issued repeated guidance highlighting poor cybersecurity as a systemic risk to financial stability. Under the Senior Managers & Certification Regime (SM&CR), individual accountability applies - CISOs and COOs can no longer rely on shared responsibility.
- EU (DORA): The Digital Operational Resilience Act, entering enforcement in 2025, places strict expectations on financial entities to maintain communications and control in the event of cyber incidents or third-party failures. Audit trails, secure workflows, and rapid recovery are not optional.
- US (SEC): The Securities and Exchange Commission has aggressively pursued enforcement against unmonitored communications platforms. All firms managing US assets or operating with US counterparties are expected to maintain comprehensive record-keeping of business communications—including during outages or crises.
In all jurisdictions, the message is clear: ad-hoc messaging apps and undocumented workarounds are no longer defensible. Hedge funds must build robust, policy-aligned communication channels that hold up under forensic scrutiny.
The Role of Out-of-Band in Incident Response and Resilience
Out-of-Band communication isn’t just a cybersecurity tool box - it’s a resilience enabler.
When your primary systems go down - or worse, when you suspect they’ve been compromised - OOB platforms act as a digital war room. They allow crisis teams to coordinate, access critical documents, initiate action plans, and communicate externally, all while preserving security and auditability.
Use cases include:
- Cyber breach coordination: Continue executive decision-making even if endpoints or networks are infected.
- Ransomware and extortion: Discuss strategy and coordinate with law enforcement without tipping off the attacker.
- Trading disruption: Maintain command and control when market data feeds or OMS systems are affected.
- Operational outage or DR scenario: Ensure team availability even if VPN or cloud access is interrupted.
An effective OOB platform is far more than a simple messaging app. It must be separate, secure, auditable, and rapidly accessible - ideally from smartphones, tablets, and personal devices with built-in security controls.
Key Features Hedge Funds Should Look for in an OOB Platform
When evaluating OOB solutions, hedge funds should ensure the platform aligns with technical needs and regulatory expectations. Key features to prioritise:
- End-to-end encryption with device and user-level access controls
- Two-factor authentication and role-based permissions
- Offline access to critical documents, contact lists, and response plans
- Integration with compliance tools for audit trails and records
- Scalable onboarding for external advisors or third parties
- Secure escalation paths: from chat to voice to video, with screen sharing
- Locked rooms for restricted access conversations
- Recording and archival features where necessary
OOB is not about reinventing your daily workflow - it’s about giving you a secure fallback that can function when everything else fails.
Integrating OOB into Your Hedge Fund’s Operating Mode
To be effective, OOB communications cannot live in isolation or only be tested once a year. They must be integrated into day-to-day resilience planning, security architecture, and governance frameworks.
- For the COO: Embed OOB into your business continuity plan (BCP), run tabletop simulations, and ensure staff know when and how to switch channels during an incident.
- For the CTO: Ensure OOB channels can operate independently of cloud systems or SSO providers - especially if those are compromised.
- For the CISO: Formalise OOB as part of your incident response plan, with playbooks, pre-defined rooms, and ongoing training.
OOB isn’t a last resort. It’s a first-class tool in maintaining continuity, control, and compliance under pressure.
Conclusion: In 2025, Resilience is Communication
The regulatory landscape has changed. The threat landscape has evolved. And hedge funds - often agile, fast-moving, and reliant on lean digital infrastructure - are under growing pressure to show they can weather disruption without exposing clients, strategies, or compliance posture.
Out-of-Band communication is no longer a luxury for hedge funds. It is a critical pillar of resilience and a visible marker of maturity.
In 2025, the question is not “do you have a backup channel?” It’s “is your backup channel ready when the regulators, attackers - or both - come knocking?”
