Ransomware attacks on family offices are on the rise.

• Wealthy families' money management offices, known as family offices, have become attractive targets for hackers due to their small staffs and significant funds.
• But a growing fear of cyberattacks has not translated into better defenses.
• According to a recent survey, only about one-third of family offices have well-developed cyber risk management processes.

The original article was published in CNBC's Inside Wealth newsletter with Robert Frank, providing a weekly guide for high net worth investors and consumers. To receive future editions, subscribe and have them delivered directly to your inbox.

A survey reveals that family offices are increasingly targeted by cybercriminals and lack the necessary staff and technology to defend themselves.

Over 79% of North American family offices believe the likelihood of a cyberattack has significantly increased in recent years, with 25% reporting a cyberattack in 2023, up from 17% in 2020. Additionally, half of the family offices surveyed know another family office that has experienced a cyberattack.

Cybercriminals are increasingly targeting family offices due to their substantial wealth and limited staff, experts warn.

"Edward Marshall, global head of family office and high net worth at Dentons, stated that the Willie Sutton effect refers to the practice of targeting banks as they are perceived to be the most profitable."

Family offices, with limited staff and access to sensitive information, prioritize efficiency and speed over risk management, leaving them vulnerable to cyberattacks without proper technology and planning.

He stated that family offices tend to prioritize efficiency over security.

Family offices may face high costs when using in-house security teams, while third-party vendors and suppliers can pose risks from "sophisticated criminals and bad actors."

Despite the increasing concerns about cyberattacks, only a small percentage of family offices have well-developed cyber risk management processes. Only 29% of family offices believe their staff and cyber-training programs are sufficient, and less than half have upgraded or regularly updated their cyber policies.

The report stated that there is a concerning difference between the level of awareness of cybersecurity risks and the measures taken to mitigate and defend against attacks.

According to a report from EY U.S. and the Wharton Global Family Alliance, family offices should prioritize cybersecurity by focusing on the three key aspects of technological risk: hardware, software, and applications.

Instead of sending emails with sensitive information, the report advises family offices to use a website or intranet site. Additionally, the report recommends the use of password vaults and thorough vetting of technology vendors for enhanced security.

Marshall emphasized the importance of family offices adopting a more proactive approach to risk assessment, extending beyond just cybersecurity threats.

He stated that they must shift their mindset from accepting the unexpected to anticipating it.

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