Securing the Environment is NOT Always Easy, But is Entirely Worthwhile
Family offices have become increasingly attractive targets for cybercriminals. While family offices often steward billions of dollars in assets and oversee a vast range of sensitive personal and financial data, many lack the robust cybersecurity infrastructure of traditional financial institutions because they are not public institutions. This imbalance—high-value assets protected by lean operational teams—creates a perfect storm of vulnerability, despite the best of intentions.
Why Family Offices Are at Risk
The appeal of family offices to threat actors lies in both the value of the data and the perception of weaker defenses. Family offices typically handle detailed investment portfolios, transaction records, estate documents, and confidential personal information, including Social Security numbers, private correspondence, and even family secrets of very high net worth individuals. A successful breach can trigger cascading consequences: financial loss, reputational damage, extortion, identity theft, or exposure of confidential affairs.
Cybercriminals might exploit several common attack vectors, most notably sophisticated phishing and social engineering schemes. Gone are the days of poorly worded scam emails. Today's attackers often use advanced techniques—sometimes even employing artificial intelligence and deepfake technologies—to convincingly impersonate trusted vendors, employees, or family members.
These constantly evolving, tailored approaches are designed to bypass traditional defenses and exploit human trust. All individuals within the service chain must be on guard to protect valuable assets within the family office environment.
The Human and Technological Weak Links
Family members themselves can be a significant vulnerability. Their expansive digital footprints— social media, public records, and press exposure— provide a wealth of intelligence for attackers. Personal devices, unsecured communication channels, and a general lack of cybersecurity awareness among family members further heighten the risks.
Compounding this vulnerability is a common misconception: that family offices are less likely to be targeted than large banks or hedge funds. This can foster complacency and lead to underinvestment in cybersecurity infrastructure. Many family offices operate with minimal IT staff and cyber infrastructure, relying on third-party service providers for technology and security functions.
While outsourcing is convenient, it doesn't absolve the organization from responsibility—or offer protection from the risks posed by supply chain vulnerabilities in third-party systems.
Further complicating matters is the absence of formal cybersecurity governance. Many family offices lack dedicated incident response plans, business continuity strategies, or regular risk assessments. Legacy systems still in use may not be patched regularly, and penetration testing is rarely conducted, creating ripe conditions for exploitation.
Strategic Recommendations for Cyber Resilience To reduce exposure and improve resilience, family offices must view cybersecurity as core to their fiduciary responsibility. They should adopt enterprisegrade security strategies scaled to their operational model. Key recommendations include:
- Invest in Cybersecurity Talent
Hire or contract with an individual with IT and cybersecurity expertise who can manage vendors and ensure accountability. Outsourcing without oversight is a risky endeavor. - Implement Formal Risk Management
Conduct comprehensive cybersecurity risk assessments. Map out assets, data flows, and threat vectors. Prioritize critical vulnerabilities for remediation. - Develop and Test Response Plans
Establish clear incident response, disaster recovery, and business continuity plans. Test these regularly through tabletop exercises and simulated attacks. If you do not have acceptable plans, enlist cyber counsel and consultants to help. - Enhance Cyber Hygiene Across the Board
Train employees and family members on phishing, social engineering, and secure digital behaviors. Offer specific training on protecting personal devices and managing online footprints. Third party vendors can provide this training. - Adopt Advanced Security Controls
Move beyond basic security measures. Utilize endpoint detection and response (EDR), multifactor authentication, encryption protocols, and regular penetration testing. - Vet and Monitor Third Parties
Require cybersecurity assurances from vendors. Conduct due diligence and establish contract language that includes data protection obligations and breach notification requirements. - Insure Against the Inevitable
Consider both cyber liability and umbrella insurance policies. Ensure coverage includes response costs, legal fees, data restoration, network disruption and reputational damage. We can discuss with you the layers of insurance to best mitigate risk.
A Necessary Paradigm Shift
Cyberattacks inflict billions in damages globally each year and no sector is immune. Family offices, despite their low public profile, control wealth and data volumes that approximate major financial institutions—but often without the corresponding cybersecurity controls and resultant maturity.
Family offices are targets precisely because of their discretion, wealth, and operational lean-ness. If you follow the few simple steps outlined here, you will make it harder for an attacker to succeed and more likely that they will move on. The better you prepare for the worst, the less harm it will cause.
Protecting assets today is not only about investment diversification or hedging against inflation—it's about safeguarding digital perimeters, managing third-party risk, and educating the next generation of family stewards. In a world where cyber threats evolve daily, digital defense is a critical strategic addition to any wealth management plan.
Originally published by Family Office Magazine.
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.
