Financial cybersecurity refers to the protection of your wealth from cyber threats. Ultra-high net worth (UHNW) individuals are often preferred targets for attacks by cyber-criminals and hackers, so it’s important to be aware of the threats and have a plan for managing them.
Key Cybersecurity Threats to Your Finances
The pandemic accelerated the digital transformation in wealth management. Consider how much of your information is now online and how many of your transactions are handled online rather than in person. In addition to making many processes more convenient, this has unfortunately fueled new opportunities for sophisticated criminals who may be looking to compromise your financial well-being in multiple ways.
Identity theft: This can be an especially serious issue for those with a reputation and wealth to protect. It can endanger your lifestyle, business, and family.
Wire transfer fraud: Criminals can break into the financial systems themselves or target individuals by convincing them to transfer funds to fake recipients.
Investment scams: This type of fraud is not new, but the digital transformation has created fresh opportunities.
Ransomware: These are software programs that block access to systems or data until a ransom is paid. Criminals can completely shut down your personal and business operations by locking you out of your computers.
Why Ultra-High Net Worth Individuals Are at Greater Risk for Cyberattacks
Financial cyberattacks are increasingly sophisticated, using more and more advanced tactics. To warrant the resources necessary to carry out these attacks, criminals tend to focus on profitable targets, making those with substantial wealth and assets more likely to be targeted. Other factors may make you more vulnerable to these attacks.
High-net-worth individuals tend to be more searchable online, especially if they own a company, hold an executive position, make large donations to charity, or are public figures. Criminals can search public records and social media to find detailed information about their investments, property ownership, other assets, family members, and associates. The more public or social presence you have, the easier it may be to target you.
Another factor that you may not be aware of is location. Criminals tend to target luxury locations where wealthy individuals gather. Using unprotected networks in luxury hotels or first-class airport lounges can leave you open to hacking.
Potential Actors and Common Cyber Attacks
Criminals looking for a financial payoff are one group likely to target wealthy individuals in cyber attacks. But there are other reasons you could be targeted. Hackers looking for reputational rather than financial payoff are also potential actors. These cyber-criminals seek to damage the reputation of an individual or company or make a public statement.
It’s also important to note that not all potential actors are external or unknown to their victims. Unfortunately, some attacks are initiated by employees, business partners, advisors, and even family members.
Attacks can take a variety of forms:
Phishing: Criminals mimic trusted individuals or entities to convince people to reveal sensitive information or transfer money.
Malware and spyware: Criminals can infect your systems with hard-to-detect software that gives them your sensitive information, including passwords, with every keystroke.
Ransomware: This software can shut down your systems and hold them hostage until you pay to have control returned to you.
Insider fraud: These can be difficult to detect or stop because the credentials used for fraudulent activities are legitimate, and the actors may have detailed knowledge of your processes, systems, accounts, etc.
Social engineering: Criminals try to manipulate individuals into providing confidential information, compromising security measures, or sending money. Tactics include pretexting (false security alerts, pleas for help, manufactured emergencies) and baiting (using an attractive reward to lure victims into vulnerable situations).
Deepfakes: Cybercriminals can use artificial intelligence to create fake audio or video content that appears to be authentic. Deepfakes can be used to harm a person’s or company’s reputation through false information or to impersonate individuals to gain access to their accounts.
The Potential Impacts of Cyber Attacks
If you are the victim of a financial cyber attack, you may suffer significant financial losses, identity theft, reputational damage, disruption to business operations, emotional upset, and sometimes even legal liabilities.
Cybercriminals can steal large sums of money from bank and investment accounts, including cryptocurrency accounts. They can also steal personal information such as social security numbers, credit card information, and account numbers.
If your business information is hacked, financial losses and information theft can ultimately damage your personal or professional reputation. An attack on your business can also disrupt operations and cause additional financial losses from downtime. If customer data is compromised or a service disruption negatively affects your customers, it could even give rise to legal liabilities.
How to Build a Personal Financial Cybersecurity Plan
Your financial institutions have cybersecurity plans in place to help protect your wealth. But given the growing sophistication of personal cyber attacks and the potential consequences, it’s important also to have a personal cybersecurity plan to guide you in detecting and responding quickly to attacks. Here are some key best practices to consider incorporating into your plan:
Enable multi-factor authentication on all software used for personal or corporate business. It’s an added layer of protection beyond simple passwords, requiring multiple forms of verification before login, such as a one-time passcode sent to your phone.
Share sensitive information within the family or business on a need-to-know basis. This makes a smaller target for criminals seeking knowledge.
Develop a family password or secret question to verify recipients when transferring funds or sensitive information.
Set ground rules for social media use for all family members. Social media is a vast pool of information that can be valuable to criminals, so use strict privacy settings, vet all followers, and restrict the type of information shared. Remember to look closely at photos to ensure they don’t reveal information you’d rather keep private.
Take extra precautions away from home. If you must use public Wi-Fi, use a virtual private network (VPN) and secure communication channels.
Consider hiring a professional firm to conduct risk assessments, monitor threats, and help educate family members, especially if you may be a high-risk target.
Given the importance of digital activities in wealth management today, cybersecurity should be considered a vital part of a strategic financial plan. After all, loss prevention and risk management are just as critical to reaching your financial goals as growth and investment. Your financial advisor can help ensure that your plan covers all aspects of your financial life.
To be custom-matched with a financial advisor you can trust to support your goals with a comprehensive, personalized financial plan, take advantage of Carson’s advisor matching program today.
Investment advisory services offered through CWM, LLC, an SEC Registered Investment Advisor. Carson Partners, a division of CWM, LLC, is a nationwide partnership of advisors.
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