Family offices are increasingly reliant on digital tools to manage wealth. While these tools offer efficiencies in the way of financial automation and real-time portfolio visibility, they also introduce new cybersecurity risks.
In a recent presentation from Biovell ’s Cameron Over, Partner, Integrated Risk Management, and Kevin Alvezi, Director, Sage Intacct, the duo discussed some of the most prominent cyber threats family offices should be defending against as well as best practices to implement.
View the video below for key insights.
The Allure and Vulnerability of Family Offices
Family offices manage significant amounts of sensitive data – financial records, personal information, client information – making them prime targets for cybercriminals.
This data is subject to strict regulations, yet many family offices are highly exposed to various threats like social engineering, phishing scams, ransomware, and other internal/external attacks. Without the right kinds of cybersecurity investments, the damage from a cyberattack goes beyond just financial losses.
Built on a foundation of trust accumulated over generations, family offices are more than just financial institutions – there’s a human, emotional connection to what the family office represents. A successful cyberattack can erode this trust within the family and damage the office’s reputation, and ultimately the legacy of the family business.
In the last decade or so, social media has added another layer of complexity. Family members – young and old alike – sharing personal information online can be exploited in social engineering attacks. And more recently, the rise of artificial intelligence (AI) has enabled bad actors to quickly compile personal family information from across the web to make social engineering attacks more effective and at greater scale. Plus, AI deepfake technology makes it easier to impersonate voices over email or phone call, creating a false sense of trust.
So how can family offices avoid and mitigate evolving risks?
Building a Resilient Cybersecurity Posture
There are several key steps family offices can take to improve their cybersecurity:
- Cybersecurity education: Educate family members and staff about cybersecurity best practices. This includes security awareness training to recognize phishing scams and social engineering tactics.
- Strong, unique passwords: A simple, relatively low-cost password management tool can ensure personal and business passwords are separated.
- Multi-factor authentication: Add an extra layer of security with multi-factor authentication (MFA), which requires a second verification step beyond just a password.
- Encryption: Utilize virtual private networks (VPNs) to encrypt internet traffic, especially when using public Wi-Fi networks and home networks shared with family.
- Incident response plan: Develop a clear plan outlining how to respond to a cyberattack. This should address steps to contain the attack, minimize damage, and notify legal teams, insurance providers, forensics teams, and if necessary, the authorities.
- Cybersecurity insurance: Consider cyber insurance to help offset the financial burden of a cyberattack. Talk to an insurance broker about gaps in any existing insurance plans and where supplemental insurance can be leveraged for optimal coverage.
Technology-Enabled Cyber Expertise
Cybersecurity is an ongoing process and a top business risk, not a single action or investment. Staying informed about the latest threats and updating defenses accordingly is crucial for protecting your wealth and your family’s legacy. To better understand your cyber risk profile and strategize practical cyber solutions designed for family offices, contact Biovell .