How Private Equity Firms Can Prepare Portfolio Companies for AI Cyber Threats

Cybersecurity is not a new issue for boards. What is changing now is the pace, scale, and economics of the threat environment. AI is making it easier and cheaper for attackers to identify weak spots, tailor attacks, and operate more continuously across environments.

For CEOs and private equity sponsors, the question is no longer just whether a company could face a cyber incident. It is whether a cyber issue that once might have been contained as an IT problem could now escalate faster, disrupt operations more broadly, and create more cost, customer, and supplier pressure than the business is prepared to absorb.

West Monroe works with private equity sponsors and portfolio company leadership teams across strategy, operations, technology, and cyber readiness. The questions below are designed to help leadership teams pressure-test whether the company is prepared for a threat environment that is moving faster and becoming more demanding.

Jump In: The 6 Questions

1. Can we detect, decide, and contain AI-driven cyber threats fast enough?
2. How do we know our security approach actually works in the age of AI, and how do we prove it?
3. Where are our cybersecurity blind spots?
4. Where does cyber become a business, financial, and cost-management problem?
5. Are roles, responsibilities, third-party accountabilities, and stakeholder communications clear?
6. What should management bring back to the board in the next 90 days to protect from AI-accelerated cyber threats?

1. Can we detect, decide, and contain AI-driven cyber threats fast enough?

The first question for management is not whether the company has tools. It is whether the organization can actually recognize a credible threat, make the right decision, and contain it before the situation meaningfully escalates. In many companies, manual approvals, ambiguous escalation paths, or overreliance on individual judgment still sit in the middle of the response process. That may be manageable when threat activity is intermittent. It becomes far more problematic when activity is faster and more frequent due to threat actors empowered with AI. 

• How fast can we detect and contain a credible threat in practice, not just in theory? Can we quantify our Mean-Time-to-Detect (MTTD) and Mean-Time-to-Contain (MTTC)? 
• Which actions are pre-authorized, and which still require human approval at the point of crisis? 
• Have we tested whether containment still works under sustained pressure, outside normal business hours, or when key personnel are unavailable? 
• If a serious issue emerged tomorrow, who has clear authority to act immediately? 

2. How do we know our security approach actually works in the age of AI, and how do we prove it? 

For a CEO, CFO, or board member, reassurance is not enough. Management should be able to point to evidence that the environment has been meaningfully tested and that the results were translated into timely remediation. This is where the conversation should move beyond broad claims of compliance or general maturity and toward proof that the company has subjected its controls, teams, and workflows to realistic scrutiny.

• When was our last meaningful penetration test, and was it a narrow test, or did it cover business-critical applications and workflows? 
• Did that testing include the assets and workflows that matter most to the business - such as proprietary applications, identity controls, cloud environments, custom integrations, field operations, plant systems, or critical vendors, as applicable? 
• What were the most important findings, which issues remain unresolved, and where is management least confident today? 
• Have we tested backup recovery, ransomware response, administrative-access compromise, and third-party escalation paths - not just individual technical controls in isolation?  
• Are our incident response and recovery plans well-practiced and do they enable us to maintain continuity of operations in the event of a disruptive security incident? 
• Have we trained and tested our people on relevant social-engineering threats, including more sophisticated techniques made commonplace by AI (e.g., voice cloning, deepfakes)?

3. Where are our cybersecurity blind spots?

As threat activity accelerates via AI, the biggest risk is often not the weakness you already know about. It is the gap you do not see: the unmanaged asset, the stale credential, the acquired environment that was never fully hardened or integrated, or the third party everyone assumes is covering more than it actually is.

• Do we have complete visibility across computing endpoints, identities, network segments, cloud platforms, collaboration tools, proprietary applications, data stores, and critical third-party connections?
• Where do we still rely on periodic reviews or point-in-time checks instead of continuous visibility?
• What exposure sits in acquired entities, branch locations, plants, business-unit systems, or legacy technologies, or shadow IT? Have we ignored any technical debt that could be exploited to cause a security incident?
• What controls are in place to detect or control the spread of shadow IT?
• If we use an MSP, MSSP, MDR provider, or other external partner, what is actually covered versus assumed to be covered? Where are the escalation paths and hand-offs between parties? Are there gaps in detection or containment across the environment?

4. Where does cyber become a business, financial, and cost-management problem?

For sponsors and CFOs, the issue is not simply whether a cyber event is possible. The question is how that risk translates into operational disruption, financial impact, and a potentially different cost curve for security. If attack volume rises, costs may not remain static. Some elements of the security budget may be fixed, but others may be tied to endpoints, data ingestion, log volume, alert volume, usage, outside responders, or incident frequency. Management should be able to articulate both the downside exposure of a major event and the elasticity of the security spend required to keep pace with a more demanding environment.

• What would a material cyber event within the organization, or at a critical supplier or partner, do to revenue, margin, cash flow, customer commitments, and management attention? Are our cyber liability insurance policy limits aligned with our potential exposure?
• Which business processes would feel the greatest pain if disrupted - production, fulfillment, sales operations, finance close, customer support, product delivery, or field service?
• Which elements of our cybersecurity spend are fixed, and which are variable or volume-based?
• If threat activity increased materially over the next 12 to 24 months, where would spend rise first?
• Would our current security model become meaningfully more expensive to maintain, and if so, what would drive that change?

5. Are roles, responsibilities, third-party accountabilities, and stakeholder communications clear? 

Many companies operate with a blend of internal IT, internal security leadership, legal/compliance, outside service providers, software vendors, cyber insurance requirements, and specialist responders. In that environment, uncertainty around ownership is itself a risk. One of the most practical questions leadership can ask is whether the company has absolute clarity on who owns what before, during, and after a cyber event. 

• Who owns detection, containment, recovery, internal business communications, customer communications, and board escalation? 
• What do we expect from internal teams, and what do we expect from our MSP, MSSP, MDR provider, cloud partners, cyber insurance provider, and incident-response firms? Where are the handoffs, and have those handoffs been tested? 
• Are service definitions, escalation paths, and contractual expectations clear enough to hold under pressure? 
• When did we last run a tabletop test that included our different providers and stakeholders? What were the results of that test? 
• Which customers, suppliers, and partners would expect proactive communication from us if our posture changes, or if an incident affects shared operations? 
• Who owns that communication, and do we already know what we would say? 

6. What should management and the board do in the next 90 days to protect from AI-accelerated cyber threats? 

The next step is not to launch a sweeping transformation program. It is to tighten the company's understanding of current readiness and close the most decision-relevant gaps. 

Management should provide the board with a practical, decision-oriented view of how the company’s cyber risk profile is changing and where leadership attention is most needed.

• Confirmed scope of cyber controls and visibility gaps—across the environment and third-party ecosystem 
• Results of recent testing and unresolved issues—including what management is least confident in today
• Business interruption and cost exposure—under a material cyber event or meaningfully higher threat volume 
• 3 to 5 priority actions—requiring management attention, investment, or board support 

Don’t panic; move with confidence

The most important move right now is not to overreact to hype. It is to ask better questions, demand better evidence, and make sure the company's leadership team, operating model, and key partners are ready for a threat environment that may become more demanding much faster than many businesses are used to managing.

Companies that can answer these questions with clarity will be in a better position to protect operations, manage costs, communicate confidently with stakeholders, and preserve value. Companies that cannot should treat that uncertainty as a priority issue for the next board cycle.

A practical next step: A working session to address the 6 questions

For sponsors and management teams that want to move from discussion to action, a useful next step is a focused working session that answers the six questions. West Monroe works with private equity sponsors and portfolio company leadership teams to help assess cyber readiness, clarify management and third-party accountabilities, and translate cyber exposure into board-ready operational and financial priorities.

This can include:

• Facilitating a sponsor and management discussion around these six questions 
• Reviewing current cybersecurity coverage, testing, and accountability gaps 
• Helping management define the operational, financial, and governance priorities that should be elevated to the board

Authors: Fred Purdue, Christina Powers, or Anthony Cheung