Recent surveys have highlighted a concerning trend – family offices are increasingly becoming targets for cybercriminals. According to a survey by Dentons, a global law firm, 79% of North American family offices believe that the likelihood of a cyberattack has significantly increased in recent years. What’s even more alarming is that a quarter of family offices surveyed reported being victims of cyberattacks in 2023, a significant increase from 17% in 2020. This rise in cyber threats poses a serious risk to the financial security and privacy of high-net-worth families.
One of the main reasons why family offices are attractive targets for hackers is their combination of large wealth and limited staff. These offices often have minimal employees who have access to highly sensitive financial information and data about private companies owned by wealthy families. Edward Marshall, the global head of family office and high net worth at Dentons, pointed out that family offices prioritize efficiency and speed over risk management, leading to a lack of adequate technology and planning to combat cyber threats. The reliance on in-house security teams can be costly, while using third-party vendors can expose them to risks from sophisticated cybercriminals.
Despite the growing awareness of cyber threats, family offices seem to lag behind in implementing robust cybersecurity measures. The survey revealed that less than a third of family offices have well-developed cyber risk management processes. Only 29% believe that their staff and cyber-training programs are sufficient, and less than half have invested in updating staff training programs or regularly refreshing cyber policies. This lack of preparedness leaves family offices vulnerable to potential cyberattacks and data breaches.
To address the cybersecurity challenges faced by family offices, experts suggest a comprehensive approach that covers hardware, software, and applications. The report from EY U.S. and the Wharton Global Family Alliance advises family offices to shift from using emails for sharing financial and personal information to utilizing secure websites or intranet sites. Additionally, the report emphasizes the importance of password vaults and thorough vetting of tech vendors for security measures. Family offices need to adopt a proactive attitude towards cybersecurity, focusing on overall risk assessment to anticipate and prevent cyber threats.
The findings of recent surveys underscore the urgent need for family offices to ramp up their cybersecurity defenses. The increasing frequency and sophistication of cyberattacks demand a proactive and comprehensive approach to safeguarding sensitive data and financial assets. By investing in robust cybersecurity measures, family offices can protect themselves and their clients from the growing threat of cybercrime. It is imperative for family offices to prioritize cybersecurity as a fundamental aspect of their operations to ensure long-term resilience and security in an increasingly digital world.