Financial markets and analysis always involve an element of risk—it’s part of the game and can even be part of the reward when risk plays out successfully. But now risk enters the financial advising world from an entirely different angle, and not one with a reward for financial markets or clients—only for criminals. It’s the world of cyber attacks, aimed at the financial sector, and in response, financial advisors have turned to new ways to increase cyber security.
Have you analyzed it yet?
The trend continues to go up. In finances, that’s a good thing. In this case, not so much, since we are talking about the increase in size and scope of cyber attacks. Bigger breaches, hitting more countries, impacting more businesses, shutting down more operations, and even adversely impacting the economy of entire countries.
Why the increase in attacks? In part, simply copycat crime: one cyber criminal makes money on a scam, and whether he directly shares his tactics or not, word gets out and other criminals jump on the bandwagon. Data gets sold online, you can even buy cyber crime packages, like pre-created phishing scams, on the cyber black market. Financial advisors get hit because of access to potentially valuable data, like client information and credentials, but also get targeted in direct fraud.
Basically, cyber criminals test the fence for the weakest link, and you don’t want that to be you.
There are so many ways in which financial advisors could be held accountable in the event of a cyber attack. Here are a few of the more common ways:
- Information gets stolen from your network, your failure to protect that information puts you in a sticky situation.
- Your email gets hacked and a phishing scam goes out with your name on it. You don’t want to happen.
- You recommend a company, such as a broker, and that individual gets hacked, you could be in hot water.
- Your email gets hacked and someone poses as you, requesting client funds. They comply, you may be liable.
- Your client requests funds. It looks legitimate, but turns out was the work of cyber criminals. You’re in a tricky situation.
As you can see, the possibilities are almost endless, and cyber threats constantly evolve.
It behooves financial advisors, then, to get proactive about cyber threats. Many of them are.
Don’t be surprised if informed clients start asking you about your cyber security measures before choosing to use your financial advising services. Why? Because as cyber attacks grow, so does the press coverage. Stories about people losing their entire life savings as a result of a hack have people pointing fingers and running scared.
Instead of running, or hiding your head in the sand, get proactive:
- Educate yourself and your staff about common industry cyber security attacks and protective measures. Basic tools like effective passwords and up-to-date computer systems go a long way toward mitigating the threat.
- Insure yourself against cyber security liability, and don’t assume that your errors & omissions insurance covers these types of attacks. Find out, then insist that you get coverage.
- Enlist professional assistance to prepare a comprehensive cyber security threat mitigation response plan. Having an action plan, specific to your business, will help you stay ahead of the threats.
As financial advisors continue to follow these simple steps to increase their cyber security, the hole in the fence gets repaired. It’s unlikely that cyber criminals will then stop attacking and take up more productive (and legal) activities, but at least you will not have to be the victim.