A couple of years ago, the term “cybersecurity” may not have been a part of your vocabulary let alone your business’s operations. These days, with an increasing amount of data being online, cybersecurity has become an essential part of running a successful financial firm.
Cyber attacks aren’t only for big names and accounts. These threats affect all businesses, small and big. As a financial advisory firm, it is your responsibility to ensure your clients are properly protected and that their fiduciary matters are safeguarded from potential threats. Having a detailed cybersecurity strategy will not only help firms please regulators, but it will also create a blueprint to assist in the occurrence of a breach.
If cybersecurity is something your firm has yet to tackle, now is as good of a time as any to do so. As technology improves and new systems are put into place, it’s better to be ahead of any threats rather than behind them. In this article, you will learn about the different attacks your firm may be susceptible to, the importance of cybersecurity, and how best to protect your accounts.
What are the Biggest Cybersecurity Threats Financial Firms Face in 2020?
You may think that being in a digital age that has brought us SaaS and Fintech that the days of hacking and security breaches are behind us. Despite these advances, Investment Advisors Association reported that an incredible 83% of respondents noted cybersecurity as their biggest concern in 2019. The same report states that this was the sixth year in a row where cybersecurity was the biggest compliance concern for investment adviser firms. 2020 is no different.
When it comes to personal information, the finance industry can be a hotbed for hackers. With account information, contact details, security numbers, and more available in these types of databases, it’s easy to see the appeal for cyberthreats. This is why data compliance is so crucial.
Without the proper protective software, your firm can be vulnerable to the following risks:
Phishing emails are arguably the biggest threat to your firm. These types of emails are a fraudulent way of obtaining your client’s personal information. They work by pretending to be a company or client in order to gain access to these closed files. In other words, they “fish” for data.
Public Network Attacks
Utilizing a public network can be extremely useful when working out of the office and free WiFi becomes available. However, “there’s no such thing as a free lunch” can come into play here. Public networks make your system vulnerable to attacks. Joining a multiple person network means that there is the chance that you may open up your system to a hacker.
Malware, or malicious software, comes in many forms. In the financial industry, ransomware is the most common. This software scrambles your data with the goal to extort a ransom. These can be picked up through malicious emails or websites.
With great technology, comes great responsibility. How we use our own data and devices is crucial to ensuring client confidentiality and protection. If devices aren’t properly secured, they can be easily accessed at any point. Once the data has gotten into the wrong hands, this can lead to severe consequences for your firm.
Hacking is probably the most well-known form of cyberthreats. Hacking into your data can be done in a number of ways such as malware and forced entry (using software to “crack” your code).
The Importance of Protecting Your Firm:
At the end of the day, there’s no firm too small for cybersecurity. Hackers and malware have one goal which is indifferent to your firm’s size or client base. For this reason, it’s vital that your data is protected.
When your clients choose to work with your firm, they are opting for your experience and entrusting you with their personal information. With their funds and investments in your hands, they expect the utmost protection and confidentiality. This is why we are seeing an increase in the use of encryptions, digital signatures, and other forms of authentication coming to the fore in finance. Extra steps are being taken to ensure the safety of valuable information, as they should.
Without these extra steps, a firm can be extremely vulnerable to attacks. Not only does this affect your client but it drastically affects your firm’s authority and brand name. Furthermore, when your firm’s data is taken hostage, there is the chance that you could pay up to hundreds of thousands of dollars to release the information. All in all, your clients’ trust can be lost and your competitive edge can be diminished.
Then there’s data security compliance. Regulations now require firms to create secure networks and systems for their clients that will maintain a vulnerability management program. These systems and networks are put in place to protect client data and maintain a thriving security policy.
How to Protect Your Financial Advisory Firm:
After reading about the threats that await your firm on the internet and the importance of cybersecurity, here are some safety regulations to consider in the world of financial software. These are a few actions and applications that should be implemented across the board to ensure optimal protection.
- Conduct a Security Audit – Review the strengths and weaknesses of your current cybersecurity setup.
- Implement Firewalls – Install hardware to block attacks and update regularly.
- Use an Anti-Virus and Anti-Malware Application – Adding this application will optimize your overall coverage.
- Utilize Multi-factor Authentication – Exercising MFA is critical in client protection where mobile and online apps are used. Passwords are rarely changed and MFA adds an extra level of security by sending a code to the client’s cellphone for confirmation.
- Educate Your Team – Constantly teaching your team and clients about the importance of cybersecurity can help change habits and reduce the risk of an attack.
Cybercrime targets the financial industry for a very obvious reason – it’s where the money is. As attacks increase and technology improves, firms should be proactive in recognizing their vulnerabilities. As a result, this can improve your service delivery, risk management, and overall team performance.