Family offices, responsible for managing substantial wealth and assets, are increasingly becoming prime targets for a diverse range of security risks. From sophisticated cyber -attacks to insider threats, family offices are facing a complex and evolving risk landscape that threatens both their financial well-being and long -term legacy.
With rising global tensions, advanced cyber crime, and a growing reliance on third-party service providers, family offices must take immediate, proactive steps to safeguard their assets, protect sensitive data, and ensure business continuity.
This blog outlines the key security threats family offices face and offers actionable strategies to address them in an increasingly hostile environment.
The threat landscape for family offices remains dominated by nation-state actors, who continue to exploit the privacy and activities of the principal and their family office for strategic purposes.
The connection between serious organised crime and state-sponsored actors is closer than ever. Cyber attacks like ransomware, which may seem purely financial at first, are increasingly being used to steal data for espionage. This shift raises the stakes for family offices, as stolen information is no longer just about profit - it can be sold to the highest bidder or used for strategic advantage.
While family offices are often low-profile and may not have a public-facing website, they are still a target for cyber criminals.
If they are breached, it's often due to the exploitation of data that has surfaced on the dark web or because cyber criminals have identified an opportunity. Even in the absence of direct visibility, criminal actors may notice vulnerabilities or potential value and, if systems are weak, automated crawlers can exploit them. This is why it is critical to implement robust firewalls and conduct thorough system security checks to close any potential gaps.
Phishing attacks, whether through email account compromise, voice phishing, or social engineering, are another major concern. Family office staff, often less familiar with the threat landscape and security best practices, are prime targets for these types of attacks. When successful, phishing can lead to the compromise of financial accounts, intellectual property, and other confidential information.
Regularly update security software and perform vulnerability assessments to reduce exposure to emerging threats.
Insider threats are among the most significant yet often overlooked risks for family offices. They can cause severe and lasting damage, particularly when trusted personnel have direct access to sensitive financial, personal, and business data. Given the long-term relationships family offices typically build with employees, advisors, and managers, these individuals naturally gain significant trust and access over time.
Disgruntled staff, those facing financial difficulties, or even well-meaning individuals who make poor decisions can exploit their privileged access, causing considerable harm.
For small businesses, the impact of insider threats can be especially severe. A data breach, for instance, can be far more damaging due to an insider’s deep access to critical information. These attacks often occur after several years of employment, typically when the individual holds a managerial or senior role. With detailed knowledge of internal controls, systems, and processes, they are well-positioned to identify and exploit vulnerabilities, planning and executing their actions with precision.
Family offices are increasingly turning to third-party service providers such as legal consultants, IT specialists, and financial advisors to manage their complex operations.
While these experts bring essential skills and knowledge, they also introduce potential risks. If third-party vendors are not closely monitored or properly vetted, they can create weak points in the overall security framework of the family office.
Many family offices struggle with resource constraints, making it difficult to effectively oversee these external relationships. Without adequate oversight, external vendors who don’t uphold strong security standards can lead to data breaches, cyber attacks, and fraud, all of which can significantly harm the family office.
The lack of oversight is especially problematic when smaller, less obvious vendors such as those handling maintenance or personal services are involved. These vendors often don’t have the same level of cyber security infrastructure as larger organisations, which makes them potential targets for cyber criminals. While these third parties may not be directly responsible for the family office’s core financial or technological operations, their systems might still hold personal or sensitive information that could be exploited if compromised.
Family offices often hold significant physical assets, ranging from estates and artwork to luxury vehicles and real estate spread across various jurisdictions. These assets, while not subject to the same risks as digital data, are nonetheless vulnerable to theft, damage, or loss. Managing and securing such physical assets requires a strategic, tailored approach that considers their value and vulnerability.
Furthermore, physical security overlaps with risk management. The security of tangible assets needs to be integrated into the broader security strategy, considering both the risk of loss and the need for effective insurance coverage.
The most critical assets in a family office are the family members themselves. However, risk appetite varies between generations. The older generation may prioritise discretion and risk avoidance, while younger family members often have a more open relationship with technology, increasing digital exposure.
Balancing these differences is essential to creating a security strategy that respects personal freedoms while safeguarding the family’s long-term interests.
Despite the increasing frequency of cyber -attacks, many family offices remain unprepared to respond effectively to a breach. According to recent reports, 31% of family offices lack a formalised incident response plan, and another 43% say they have a plan but it “could be better,”1 leaving them vulnerable when an attack occurs. This lack of preparation exacerbates the impact of breaches, making recovery more difficult and prolonging business disruption.
There is nothing in life we get right the first time, so why expect people to perform perfectly in a crisis? Organisations need to test their responses in advance, thrashing out scenarios and preparing for rapid activation and prudent de-escalation. Without a formal plan in place, the impact can be much more severe.
Complacency, often driven by optimism bias, is one of the most dangerous threats to family offices. It is common for family offices to believe that because they don’t have a website and are quite discreet that it won’t happen to them. This false sense of invulnerability can lead to inadequate or outdated security practices, leaving the family office exposed.
A recent report revealed that 43% of family offices have experienced a cyber attack in the past one to two years. And out of those, one-third suffered real damage, like losing confidential data or facing a financial hit as a result of the breach. This shows just how vulnerable even the most private, low-profile family offices are. Cyber criminals are no longer just targeting big names - they’re looking for weak spots anywhere they can find them.
The foundation of any strong security system is built on basic principles, and these are often the ones that are missed. Simple steps, such as keeping software up to date, implementing multi-factor authentication, and regularly backing up data, are often overlooked but are essential for mitigating the risk of an attack.
Ultimately, the key to long-term security lies in a proactive, risk-based approach one that combines the right technology, policies, and ongoing vigilance to safeguard the family’s legacy, assets, and reputation.
Engaging with trusted security experts and continuously adapting to the evolving threat landscape will be critical in ensuring that family offices remain secure, operational, and protected in an increasingly hostile environment.
To discuss how Toro can help secure your family office, then please get in touch.
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