Family offices have lost up to $50,000 in attacks on their cyber security, the new Global Family Office Report by Campden Wealth reveals.
The report, in partnership with UBS, also found family offices were barely satisfied, or even dissatisfied, with their software – despite each family office spending on average a staggering $245,000 a year on their information technology systems.
The original study discovered a significant 15% of international family offices reported having experienced a cyber security breach in the past.
The email scam known as phishing was identified as the cause of many of the breaches. Instances of the installation of malicious software, called pharming, and of viruses were also raised by family office respondents.
Secure data housing, implementing security strategies and accessing specialist skills were among the actions being taken by family offices to manage the threat of cyber attacks.
Philip Higson (right), Vice Chairman, UBS Global Family Office Group, said the figure of 15% did not surprise him because identity theft was a huge issue in general and virtually everyone had been affected to various degrees.
“That’s why in the previous years in the Global Family Office Report we’d been asking people about how they protected against different potential risks, and you know it’s a live and hot topic,” Higson said.
“I would say the 15% is probably pretty right, could even be low.”
The report found 25% to 45% of family offices sat on the fence in terms of IT provider satisfaction or described themselves as dissatisfied with their system.
Stuart Rutherford (below), Director of Research at Campden Wealth, said securing decent IT appeared to be a fairly low-ranked priority for many family offices.
“However, I think there are priorities that good IT solves in the ways of data confidentiality and preserving family reputation,” Rutherford said.
Higson said UBS clients valued online access to their statements, to execute and to be in charge of their activities but people took technology for granted.
“Fifteen years ago there’s no iPhone and no one is even talking about a lot of this stuff. Fifteen years later the so-called dissatisfaction I think is actually because software is so complicated, it’s difficult to be on top of how it’s all going to work and whether you’re getting the best of the stuff that you’ve got. Nobody uses their software to its full potential.
“But people want the benefit of technology. So in North America I’ve had some experience with discussions around the systems that they’d like to have. And they want an iPhone app that gives them everyone in their iPhone while they’re in the back of the car, they want to see what they’re doing. So that app in itself could well be amazing from the point of functionality, but it may bring more risk.”
Higson recommended family offices took professional IT advice on how to defend their data against cyber attacks.
“At some family offices conferences I’ve been to, they do demonstrations of how, if you’re sitting in Starbucks, there will be somebody with a fake Starbucks Wi-Fi, and you’ll just scroll down, click onto it, and that’s giving people access to your iPad or whatever. So their education level needs to go up.”
Rutherford recalled the Campden Research interview conducted with a cyber security specialist who urged the training of family office staff: “Accessing the skills externally if needs be, and making people aware of the threats and being vigilant to them.”
The information quoted in The Global Family Office Report 2016 comes from a quantitative, online survey of 242 family offices conducted by Campden Wealth between February and May 2016. The average AUM of participating family offices was $759 million, and the regional split was as follows: North America (32% of respondents), Europe (40%), Asia-Pacific (19%) and Emerging Markets (9%). The majority (75%) of respondents were single family offices.
Watch Rutherford and Dominic Samuelson, chief executive of Campden Wealth, discuss the highlights of the Global Family Office Report here.