Cybersecurity at RIAs: Threats And Best Practices

As the wealth management industry embraces digitalization, it becomes an increasingly appealing target for cyber threats. These threats, broad and diverse, evolve continuously, making cybersecurity an uphill battle. Let's examine the burgeoning landscape of these threats using data from leading cybersecurity surveys like Accenture's State of Cybersecurity Report, and Ponemon Institute's Cost of a Data Breach report. Also, we identify the best practices for countering them, tailored to the wealth management industry.

The Landscape of Threats

Phishing Attacks: Coming in a variety of guises—email, text message, or phone call—phishing attacks trick individuals into divulging sensitive personal or corporate information. The 2020 Data Breach Investigations Report from Verizon reveals that phishing represents 32% of all data breaches. Furthermore, the trend towards remote working due to COVID-19 has given these attacks more room to thrive.

Ransomware Threats: A form of malicious software, ransomware infiltrates systems, encrypts data, and renders it inaccessible until a ransom demand is met. Accenture's iDefense threat intelligence team identified ransomware as one of the most significant threats in 2020, with demands reaching an average of $170,000.

Data Breaches: Costing the financial services industry $210 per compromised record—higher than the overall average cost ($150) per record—data breaches can have far-reaching financial and reputational implications, as noted in Ponemon Institute's report.

Vulnerabilities within Wealth Management

Smaller wealth management firms often fall prey to these threats due to limited resources dedicated to cybersecurity. Bigger firms, however, aren't exempt—they're more likely to be targeted because of the vast amounts of data they house. Ultimately, any group without a solid cybersecurity framework is vulnerable.

Expanding Best Practices for Cybersecurity

Continuous Staff Training: Training at all levels of the organization to recognize phishing attacks and follow safe online practices is a potent defense against cyber threats.

Security-First Culture: A proactive, security-first culture that prioritizes the safeguarding of sensitive data is crucial, as per Deloitte. Such a culture propagates greater responsibility and vigilance at all levels.

Investment in Robust IT Infrastructure & Practices: Emphasizing robust, updated software solutions, regular patching of systems, and adequate encryption to protect data is necessary.

Engage a Chief Information Security Officer (CISO): A CISO can spearhead the cybersecurity strategy by staying updated on recent threats, solutions, and regulatory requirements.

Incognito Operations: By disclosing minimal details about the technology systems and processes, firms can reduce exposure to potential cybercriminals.

In these digital times, cybersecurity is no longer a choice but a necessity, given the sophisticated nature of threats and potential implications for financial assets and client trust. Propel cybersecurity to the forefront of your firm's strategy, and navigate the digital landscape with assurance.