‘It’s a cat-and-mouse game’: The head of technology at $60 billion hedge fund Two Sigma explains why cybersecurity is a bigger challenge than AI

Alfred Spector, Two Sigma’s chief technology officer for the past three years, said computer security is a harder problem to solve than artificial intelligence.
In an interview with Business Insider, he said that he thinks about the subject constantly, including "nation-state attacks" on US infrastructure.
Despite ever present concerns about security, Spector is excited to find "the safe limits" of what machine-learning can do in the financial industry and how efficient the quant fund can become with the vast amounts of data it brings in.
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A big part of Alfred Spector’s job is to think about the future.

Spector, the chief technology officer at Two Sigma and head of engineering, runs a team of 600 engineers at the $60 billion hedge fund and has to balance expanding into the latest and greatest tech innovations with protecting the precious algorithms and data that has made Two Sigma one of the biggest hedge funds in the world.

While the firm has moved massive amounts of its operations into Google’s cloud computing system, Spector said in an interview with Business Insider that he still spends a lot of time thinking about security — including the biggest of threats: cybersecurity attacks by "nation-states."

"I think there needs to be an understood security risk model, just as citizens, that explains what are acts of war and how it applies to these type of attacks," Spector said.

"That’s something people like me worry about, we are clearly a network-based business."

See more: Hedge-fund investors are getting excited about the possibilities of machine learning. There’s a good chance they don’t understand it.

A one-time academic and senior executive at IBM and Google, Spector says clients are not yet worried about this potential risk to the business but that it’s a part of his role to do so.

"If there were an outright attack on US infrastructure, I don’t think I could resist that," he said.

"Whether anyone can resist those attacks, whether it’s Google or anyone else, I think it’s an interesting question."

Chief technology and chief information officers in any industry are always thinking about security. A study by CIO magazine at the beginning of the year found that CIOs are spending roughly half of their time on security management, and 40% said it was the reason IT spending has increased at their organization.

Google, which provides the cloud services TwoSigma uses, has several sub-oceanic cables connecting their global data centers powering the cloud technology, and Spector said he almost asked if the company had a submarine fleet to protect them.

"It would be very hard to believe that a nation-state that wanted to look at the US financial system doesn’t know where all those cables are," he said. Google’s head of financials services for its cloud business Ulku Rowe told Business Insider that the underwater cables, which are clad in armor, are occasionally attacked by sharks.

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Two Sigma, run by billionaires and D.E. Shaw alums John Overdeck and David Siegel, invests a third or more of its tech budget into future developments, with the rest going to day-to-day operations.

"We are way more on the invest-in-the-future side than probably the very large financial institutions, which somehow seem to not be able to do that," Spector says.

Still, while he thinks financial firms are being "very, very careful," Spector called security a harder problem to solve than artificial intelligence.

"It’s a cat-and-mouse game."

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