Family offices are facing a significant increase in cyberattacks, with 79% of North American family offices acknowledging that the likelihood of a cyberattack has escalated in recent years. This data comes from a survey conducted by Dentons, a global law firm, which also revealed that a quarter of family offices experienced a cyberattack in 2023, up from 17% in 2020.
Due to their substantial wealth and limited staff, family offices are prime targets for hackers and cybercriminals. With minimal personnel holding access to highly confidential information about a family’s assets and businesses, the susceptibility of family offices to cyber threats is heightened. Edward Marshall, the global head of family office and high net worth at Dentons, compares this situation to the infamous bank robber Willie Sutton, who targeted banks due to their monetary resources.
Despite the growing concerns about cyberattacks, many family offices are ill-equipped to defend against such threats. Less than a third of family offices have well-developed cyber risk management processes, with only 29% considering their staff and cyber-training programs to be sufficient. Inadequate technology and planning, coupled with a preference for efficiency over security, leave family offices vulnerable to cyber incidents.
To enhance cybersecurity measures, family offices should focus on addressing hardware, software, and application risks. Instead of relying on insecure communication channels like email, family offices are advised to utilize secure websites or intranet sites for sharing sensitive information. Implementing password vaults, vetting tech vendors for security, and conducting regular staff training programs are also crucial steps to fortify defenses against cyber threats.
Marshall emphasizes the importance of family offices adopting a proactive mindset towards cybersecurity. Rather than passively reacting to cyber incidents, family offices should anticipate and prepare for unforeseen threats. Embracing a comprehensive risk assessment strategy that encompasses all potential risks, including cyberattacks, is essential for safeguarding the interests of high net worth individuals and families.
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