Family offices are increasingly becoming targets for cybercriminals, with a significant 79% of North American family offices acknowledging the heightened likelihood of a cyberattack in recent years. This vulnerability is further highlighted by the fact that a quarter of family offices surveyed reported experiencing a cyberattack in 2023, a notable increase from 17% in 2020. With the combination of substantial wealth and limited staff, family offices have become prime targets for hackers seeking to exploit their access to sensitive financial information.
Despite the growing threat of cyberattacks, many family offices lack the necessary resources and technology to effectively mitigate these risks. Edward Marshall, global head of family office and high net worth at Dentons, points out that family offices often prioritize efficiency and speed over comprehensive risk management, leading to gaps in their cybersecurity defenses. This emphasis on service delivery can leave them ill-equipped to address the evolving tactics of cybercriminals.
The survey revealed that less than a third of family offices have well-developed cyber risk management processes in place. Additionally, only 29% believe that their staff and cyber-training programs are sufficient, with less than half regularly updating their cyber policies. This lack of investment in cybersecurity training and protocols underscores a concerning gap between awareness of cyber risks and proactive measures to prevent and respond to attacks.
Experts suggest that family offices should adopt a holistic approach to cybersecurity by addressing key components of tech risk such as hardware, software, and applications. One recommendation is to utilize secure platforms like websites or intranet sites for sharing sensitive information, rather than relying on potentially vulnerable email communication. Implementing password vaults, conducting thorough vendor screenings, and enhancing staff training programs are additional steps that family offices can take to bolster their defenses against cyber threats.
Marshall emphasizes the importance of adopting a proactive mindset when it comes to cybersecurity, urging family offices to shift from merely accepting the unexpected to anticipating and preparing for potential threats. By taking a comprehensive and proactive approach to risk assessment, family offices can strengthen their resilience against cyberattacks and safeguard the sensitive data entrusted to them.
The escalating frequency and sophistication of cyberattacks pose a significant challenge to family offices, necessitating a more vigilant and strategic approach to cybersecurity. By prioritizing robust risk management practices, investing in staff training, and implementing enhanced security measures, family offices can better protect themselves and their clients from the growing threat of cybercrime.
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