Family offices, which manage the finances and investments of high net worth individuals, are facing an increasing risk of cyberattacks. According to a recent 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. The survey also found that a quarter of family offices experienced a cyberattack in 2023, up from 17% in 2020.
Despite the growing threat, many family offices are ill-prepared to defend against cybercriminals. With their substantial wealth and small staffs, family offices have become attractive targets for hackers. Edward Marshall, global head of family office and high net worth at Dentons, noted that family offices often lack the necessary technology and planning to prevent cyberattacks. Due to their focus on efficiency and speed, many family offices prioritize service delivery over security 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 updated training programs or regularly reviewed cyber policies. This gap between awareness of cybersecurity risks and actual defense mechanisms is concerning and leaves family offices vulnerable to potential attacks.
Experts suggest that family offices address the three main components of tech risk: hardware, software, and applications. Instead of relying on email for sensitive financial information, it is recommended that family offices utilize secure websites or intranet sites. Implementing password vaults and conducting thorough screenings of tech vendors can also enhance cybersecurity measures. Marshall emphasized the need for family offices to adopt a proactive approach to assessing risks and preparing for unexpected cyber threats.
The threat of cyberattacks on family offices is a pressing issue that requires immediate attention. With the increasing frequency of attacks and the high-stakes nature of the information at risk, family offices must prioritize cybersecurity measures to safeguard their clients’ assets and data. By investing in robust technology, training programs, and risk management processes, family offices can mitigate the risks posed by cybercriminals and protect their interests in an increasingly digital world.
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