Here is another of the conversations that featured in this news service's recent forum about cybersecurity and other security risks.

At the Family Wealth Report Cybersecurity Forum, held earlier in the summer in New York City,  Ileana van der Linde, head of cyber advisory, JP Morgan Private Bank and Dale Buckner (both pictured below), CEO of Global Guardian, in this “fireside chat” considered the major issues in areas relating to security, both of the cyber and more traditional kinds.  

Ileana van der Linde
 

Dale Buckner

In today's interconnected world, the landscape of risks faced by family offices has evolved dramatically. Understanding and mitigating these risks is crucial to safeguarding the wealth and well-being of your clients.  

Understanding the scale of cyber losses
Cybersecurity remains the top concern for family offices around the globe, as highlighted by JP Morgan’s Private Bank 2024 Family Office Survey. Family offices, tasked with managing financial and reputational risks, are rightfully concerned, as cybercriminals target their wealthy targets. While one in four family offices have already experienced breaches, this number rises to 40 per cent for those managing assets exceeding $1 billion. 

The financial impact of cyber breaches can be staggering, with losses projected to rise to $10 trillion in 2025. This underscores the critical need for family offices to prioritize cybersecurity measures and protect their assets from evolving threats.  

Rapid evolution of cyber risks
With artificial intelligence fueling more sophisticated attacks, cyber risks are evolving at an unprecedented pace. Family offices must remain vigilant against threats like phishing, social engineering, deepfakes, data poisoning, disinformation, and weaponized AI.  

“In their rush to embrace AI, some families may not appreciate how much information is being collected about them via the AI tools and apps. It is so important to implement these tools securely and implementing robust cyber protections across personal and professional domains is essential.” --Ileana van der Linde   

As more personal information becomes available due to numerous data breaches, the interconnected nature of cyber and physical risk is heightened. Wealth has long been a target, but recent events in Canada, France, and New York indicate that crypto wealth is becoming a new focal point in an increasing wave of threats, not only leading to digital compromise, but also physical danger for some victims.
Nearly 50 per cent of data breach content is personally identifiable information, (1) making personal attacks much easier to conduct. Recognizing the intersection of physical and digital risk is crucial as family offices manage and plan for the family’s physical security, particularly at home and during travel.   

Global conflicts and their implications
Unpredictability has become the new normal not only in financial markets, but also in geopolitical affairs, with reverberating effects on families at home and work. Significant economic and geopolitical shifts, trade policy uncertainty and shifts in long-standing security stances have further intensified cyber and physical risk and have left many in global community unsettled. 

“Boards and leadership are now grappling with the unavoidable realities of geopolitical tension and economic fragmentation. Ignoring these factors is no longer an option - it’s a liability” - Dale Buckner.

At this stage, one has to expect the unexpected anytime, anywhere in the world, making risk preparedness a critical component of family office operations. A broad digital footprint leads to heightened risk.  Even within the perceived bubbles of safety many families believe they live in, understanding the connection to physical risk is important, and preparing for unpredictability needs to be the new normal.  

Closer to home, the targeting of corporate executives and sports figures with known itineraries increases risk at residences and during travel. Sophisticated criminal groups are targeting wealthy families when they are known not to be home, using cyber techniques such as home Wi-fi jamming, disabling alarm systems and cameras.   As families travel close or far from home, commute to and from work, or students study abroad – again, preparing for eventualities is key.  

Family offices must anticipate risk of all kinds and be prepared for potential disruptions. Engaging with experts and having contingency plans in place can mitigate the impact of these conflicts on family wealth.

Proactive risk management strategies:

1. Integrate security into decision-making: For a family office, it's critical to keep cyber and physical risk top of mind as part of readiness discussions for families as they need support at home and while travelling. Be aware of the geopolitical tensions and economic fragmentation that can cause an escalation.

2. Stress-test emergency plans: Ensure that any and all emergency plans are stress-tested before incidents occur. Establish relationships with security providers, legal advisors, PR, and cyber risk mitigation providers before a crisis.

3. Reduce digital footprints: Take an active approach to reduce the public exposure and digital footprint of family members to minimize potential physical and cyber threats. Implement cyber defenses and privacy tools daily to keep risk exposure to a minimum.

4. Plan for emergencies: Before family members or office staff travel for business or pleasure, plan for emergencies. Determine how you or the family will handle a crisis before it occurs. Hire professionals and experts to guide you in the event of medical emergencies, natural disasters, or other needed evacuations.

As global uncertainty increases, it impacts us through geopolitical conflict affecting trade, travel, and physical security. Our digital footprints can be accessed by nearly anyone from the other side of the globe, causing risk and disruption close to home. Expect risk, play offense, and be prepared for increasing eventualities.

By taking these proactive steps, family offices can better navigate the complexities of today's risk landscape, ensuring the safety and security of their members and assets.

Footnote

1, https://secureframe.com/blog/data-breach-statistics