Written by Sam Robson
09 November 2020
With wi-fi and social media offering the sophisticated hacker a gateway into your world to steal, slander, manipulate and extort, what you have spent decades working for can be stripped away in a morning.
Accordant Global Partners (AGP) works with ultra high net worth (UHNW) individuals and families to identify a range of non-financial risks arising from gaps in their internet security and physical safety at their residence. It also includes the potential for attacks on their business and reputation. Sometimes, these are more gaping holes than gaps – and it’s not just happening at the billionaire level. Increasingly, anyone with significant assets can be a target at home, when travelling, or on board their boat.
What price would you put on your extensive business operations? Your family’s reputation? The data and private information of every guest you have ever had in your home or on board your yacht over the last five years?
Priceless is probably the only phrase that covers it, but Queensland-based Pete Shanley, cofounder of Accordant Global Partners, warns these are key areas the keen hacker will target and raid.
In times when seemingly impossible things are happening all too often, a family must place a high priority on ensuring the resilience and management of both their financial and non-financial risk – and have an appropriate resource allocation to mitigate such risk.
As a non-financial risk management advisory firm, AGP employs current and former chief advisors to some of the world’s most prominent family offices. As Shanley explains, “We work with our clients both in Australia and internationally to define what they wish to protect, and then we develop strategies around the preservation of their non-financial assets.”
Holistic family office risk plans provide – by design – multilayered, non-intrusive paths to provide security and safety to family members and office staff, as well as intergenerational resilience.
Over time, risk levels move up and down, so understanding where a family is at any given point is critical to the maintenance of a robust risk management plan. For this reason, the plan needs to be dynamic and not just a document that sits in a drawer: “The global and local environment must be continuously monitored for early warning signs,’ says Shanley.
“The desired outcome is maintaining a high level of risk coverage and contingency opportunities while ensuring the least amount of intrusion into the family’s lifestyle and routine.”
One of the main ways AGP ensures such close monitoring is under one of their retainer arrangements, whereby they are on standby 24/7 to help families identify and manage non-financial risk. The duration and range of services encompassed by the retainer will vary according to the family’s needs and complexity. Still, the core services include one-on-one, direct communication with a senior AGP executive who communicates directly with the family, as well as the chief executive of the family office, as and when needed.
A Risk Review Session, where a senior AGP executive guides the family through a review of the family’s non-financial risks, revolves around the following five pillars.
The next step is to develop a non-financial risk management plan that addresses the items prioritised in the initial risk review session. A senior AGP executive is on standby 24/7 to advise the family on specific issues.
AGP’s Advisory Board meets monthly to discuss emerging non-financial risks to families as well as best-practice solutions, and a senior AGP executive regularly updates the family on developments. If a family needs to engage a specialist technical expert vendor, AGP can recommend one or more AGP-approved vendors.
Shanley explains, “We work with the family to understand the areas where they are exposed to significant risk. We often find that the family principal assumes data security is covered by their office technology staff or outsourced IT provider – in almost all cases, it isn’t. We often get called in to fix issues after the fact, which is possible, but certainly not advisable.”
One of the other essential points Shanley makes is that this is a family-wide issue.
Therefore, a collective understanding of the risks involved is needed, which requires direction and authority from the principal of the family to implement structure.
“Working through the implications of a family’s current exposure, I often see light-bulb moments occurring as clients realise these topics are highly relevant to them. Once they are made fully aware of the risk to the family as a whole, the principal acts,” says Shanley.
As attackers find it increasingly challenging to get into large corporations, intelligence experts and research groups are seeing cybercriminals make a definite shift toward targeting ultra-high net worth families and individuals, as well as their estates and businesses.
Research conducted by UK-based Campden Wealth, which provides intelligence for family businesses and offices internationally, found that 28 percent of the UHNW families reported having been the victim of one or more cyber attacks.
According to Rebecca Gooch – Campden Wealth’s director of research – phishing was the most common type of attack, followed by ransomware, malware infections, and social engineering. She outlines that UHNW individuals are targeted in a variety of ways, including via their operating businesses, family offices, and through the family members themselves.
More than half the attacks were viewed as malicious, and nearly one-third came from an inside threat, such as an employee intentionally leaking confidential information. Around one in ten was deemed accidental.
Gooch says, “The impact of these attacks is notable –more than a quarter of family offices and family businesses surveyed lost revenue; one-fifth had their private or confidential information lost or exposed; and 15 percent suffered either blackmail or a ransom situation, or had a loss or delay in their company’s activity.”
It is worth noting too that while the focus is often on the financial loss involved in an event, it’s usually what comes after the event that is more disruptive to the family unit. Ongoing court cases, media exposure, reputation damage, a rise in the family’s public profile and occasionally conflict within the family leadership team all take their toll.
Just a brief internet search reveals several recent high-profile cases where UHNW individuals’ exposure was heavily exploited, including the theft of £50m worth of jewellery at Tamara Ecclestone’s Kensington residence in London. Documents showing drawings of each room were available to view on a council website after the couple submitted a planning application to renovate the £70m home, which enabled the thieves to access the floor plans before the burglary.
This is just one example, but in such uniquely challenging and uncertain times, it clearly makes sense to minimise risk – and stress – and be in full control of your finances and assets, as well as your family’s safety and security. As 2020 keeps reminding us, in almost all risk categories, it is not a case of if, but when. Therefore, it makes sense to talk to a specialist before you ever need to.