Znodes do not hold any funds. They merely hold a Znode private key (not the same as your actual private key) which allows you to start and stop the Znode. There is a marker in your Znode configuration that links the Znode to your 1000 XZC deposit. In the event of a Znode being hacked, all that will happen is that your Znode will go offline and you will lose your position in the payment queue.
Your local Zcoin wallet still holds the 1000 XZC so it is that wallet that will need to be secured. Ensure that your wallet is frequently backed up and encrypt your wallet.
If you go with a Znode provider, all he requires is your Znode private key and the transaction ID of your 1000 XZC deposit. The Znode provider does not need your private key to the funds. You also do not need to send any funds to him.