2022 Priorities For Mitigating Family Office Cybersecurity Risk – Security – United States – Mondaq

2022-priorities-for-mitigating-family-office-cybersecurity-risk-–-security-–-united-states-–-mondaq

As we move on, let me say that camDown is the maximum in security for you and your loved ones.

To print this article, all you need is to be registered or login on Mondaq.com.

Over 50% of ultra-high net worth family wealth is being managed
through family offices, yet even the largest family offices lack
the security resources of most banks and large corporations. This
makes them a huge target for cybercriminals and cyber threats are
becoming more pervasive for family offices of all sizes. Not
surprisingly, cybersecurity is the number one concern for Family Office
Exchange
(FOX) members, according to the 2021 FOX State of the
Family Office Industry survey. Yet many family offices continue to
operate without the proper tools to monitor and prevent
cybersecurity attacks.

In this piece, we cover what family offices should be
prioritizing in 2022 to mitigate cybersecurity risk.

Why Are Family Offices at Risk?

The
US Family Office Club
estimates that there are 500 to 1,000
single-family offices in the United States and around 2,500 to
3,000 multi-family offices that manage $300 billion+ in assets.
With cyber threats becoming more widespread, cybersecurity should
be a top priority for family offices. Below are some of the current
cyber trends.

Cyber Security Trends

  • $4.24 million is the average cost of a data breach
    globally.
  • 80%+ of breaches expose customer personal identifiable
    information (PII).
  • 56%+ of organizations don't have a cyber incident response
    plan.

Family offices have what cybercriminals want: Valuable assets.
However, many family offices can fall victim to cyber-attacks that
are not financially motivated. Unlike other types of organizations,
family offices are at higher risk of cyberattacks due to the
potential for blackmail, extortion and smear campaigns since they
represent a tremendous amount of wealth from well-known,
influential individuals.

Unpreparedness for COVID-19 has also put family offices at risk.
Remote work is one of the biggest challenges for family offices.
Not only does it put them at risk for more cybercriminal activity,
but many family offices admit they wish they had better prepared
their employees for remote work. Now more than ever, family offices
should focus on cybersecurity and continue to improve their
workforce's ability to work remotely.

Best Practices for Mitigating Risk in the Family Office

As cybercrime evolves and cybercriminals become increasingly
sophisticated in their attack methods, family offices must adapt.
Just like any other organization, family offices must be diligent
in relation to the potential risks posed by current and former
employees and relationships with third-party vendors, especially
those that have some level of access to family office data.

At the bare minimum, every family office should do the following
things:

  • Create and use strong passwords. Make sure
    that everyone within your organization knows what constitutes a
    good, strong password. No two passwords should ever be the same and
    they should always be complex - longer is better. Use a password
    manager, such as LastPass or Dashlane, to manage and secure your
    credentials.
  • Implement multi-factor authentication (MFA) via
    built-in tools or use applications like Duo.
    MFA is an
    electronic authentication method in which a user is granted access
    to a website or application only after successfully presenting two
    or more pieces of evidence. It could be knowledge (something only
    the user knows), possession (something only the user has) or
    inherence (something only the user is). MFA can be quickly rolled
    out and will greatly increase security.
  • Use a modern behavior-based anti-virus on all
    computers.
    Older anti-virus software, including most of
    the kind that comes with your computer out of the box, usually rely
    on signatures of known bad programs which can change rapidly,
    leaving you in a blind spot. Modern behavior-based antivirus relies
    on detecting when programs act suspicious or malicious and are more
    likely to catch advanced threats like Ransomware.
  • Back up your data using scheduled backup
    software.
    The gold standard of computer backups is the
    3-2-1 rule. Keep 3 copies of your data on 2 separate types of media
    with 1 copy kept offsite. You have one original set of data and you
    should copy to it two different types of media with one offsite
    (e.g., an external drive and the cloud). You should
    protect your offsite copy with a lock and key or username/password
    and multi-factor authentication. And you must test your backups.
    They are no good to you if the data is not backing up and you
    cannot restore later.
  • Secure your e-mail and e-mail handling
    policies.
    A majority of cyberthreats come into
    organizations via e-mail. You should be filtering these out. Major
    e-mail vendors do not protect against most of these advanced
    threats out of the box and you may need to add on some other
    solution to catch them. Employees also need to be trained on how to
    spot suspicious emails and threats like phishing, which is the
    fraudulent practice of sending emails purporting to be from
    reputable companies in order to induce individuals to reveal
    personal information, such as passwords and credit card
    numbers.
  • Use private networks. When employees use
    public Wi-Fi, they are putting sensitive company information at
    risk. Encourage team members to use private networks or other
    encryption solutions such as a VPN to secure communication.
    Additionally, you should always modify any default ID and password
    that ships with items for your home or office. Hackers frequently
    attack the default ID and passwords for products we do not think to
    secure because default credentials are known and published on the
    Internet.

Seven additional tips for how family offices can stay secure
and mitigate risk:

  1. Draft, Perfect and Practice an Incident Response
    Plan


    Having an incident response plan is one thing, putting it
    into practice and continuously questioning it is another. Every
    family office should have a document that outlines their approach
    when responding to incidents. The plan should include things like
    activities that happen in each phase, each person's
    responsibilities and how the plan supports the organization's
    mission. Once a plan is drawn up, put it into practice and
    continuously make revisions as you see fit.
  2. Have a Disaster Recovery Communication Process


    Disaster recovery plans, unlike incident response plans,
    outline how an organization would resume normal operations after a
    disruption. A disruption could be anything from a cyberattack to a
    natural disaster to a simple equipment outage. How will your family
    office resume work in the event of an unforeseen disaster? Thinking
    about these scenarios ahead of time will ensure that you are fully
    prepared. A disaster recovery plan should do more than just outline
    how your organization plans to resume normal activities. It should
    clearly define who people should communicate with and how they
    should communicate with each other during distinct phases. If the
    communication process is not figured out ahead of time, an outage
    could be detrimental to your organization.
  3. Offer Continuing Education to Everyone


    According to a study by Boston Private, only 58% of family
    offices have trained internal employees and their family members
    about risks. Offering continuing education should be a top priority
    for family offices. Often, your own employees can be the biggest
    threat to the organization. Offer continuing education to all
    professionals. Make sure they know what to look out for and are
    prepared for anything that may pose a threat to the
    organization.
  4. Test All Internal Employees with Cyber Incident
    Exercises


    Take continuing education a step further by putting
    employees to the test. See if they can spot a cyber threat
    themselves. With realistic exercises, your employees can practice
    responding to cyber threats and be better prepared for whatever may
    come their way.
  5. Create a Culture of Awareness and Reporting


    It is important to create a culture within the business
    that not only makes employees aware of cybersecurity but also
    encourages them to report incidents whenever they occur.
    Cybersecurity should not just be a top priority among executives,
    it should be a part of the culture within your organization.
  6. Make Sure You Have Access to Robust and Timely Threat
    Data


    Knowing how to respond to threats is important, but you
    must also effectively manage risk. This means having access to
    robust and timely threat data (i.e., the data that hackers
    and criminals seek the most). Family offices should have access to
    information about any significant risks that are affecting the
    business. The business should be constantly reviewing these to
    improve its security posture.
  7. Have Adequate Insurance Coverage


    It should not matter how confident you are in your
    security posture; every family office should still have insurance
    as a safety net. Insurance can afford financial protection should
    the worst-case scenario happen. The presence of insurance can also
    give peace of mind to the business owner as well as key
    stakeholders.

Every family office and high net worth individual needs to
protect their valuable assets. This is why it is crucial that
cybersecurity be a top priority. We recommend speaking with an IT
and/or cybersecurity specialist to discuss your organization's
specific threat landscape in greater detail.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

POPULAR ARTICLES ON: Technology from United States

Cryptocurrency In 401(k) Plans (Podcast)

Williams Mullen

On this episode of Williams Mullen's Benefits Companion, host Brydon DeWitt is joined once again by Beryl Ball, principal financial advisor at CAPTRUST, who offers insight on the recent strongly worded...

Taxation Of Cryptocurrency And Similar Transactions

Snell & Wilmer

Whether you're an investor expanding your portfolio to include digital assets such as cryptocurrencies and tokens, a business that uses cryptocurrencies to engage in everyday transactions...

The Second U.S. NFT Property Is Ready To Be Auctioned

Sheppard Mullin Richter & Hampton

Propy has announced that the second U.S. NFT-backed property (see our blog about the first NFT sale here in which we discussed blockchain technology, and specifically how the sale works) is set to be auctioned, with a starting price of...

In conclusion, let's not forget that camDown helps make you invisible to hackers and guard your personal data.