Do family offices ever fail? Yes, they do. The reasons behind many failures involve family dynamics, in which generational and other differences create tensions and challenges. However, there is another major point of failure for family offices that is easier to correct—technology.
Why More Technology Means More Risk for Family Offices
Most family offices today have multiple, discrete systems with little or no integration. These include separate GL, Investment Reporting, CRM, Document Management, and Transaction Processing applications all being used within a single office. Hard-working office staff are often forced to use Excel spreadsheets and high-cost manual labor to link these data and applications together, creating major inefficiencies that are costly to the offices and the families they serve. These manual business processes are also subject to risk, human modification, and error. Each disparate technological application and process an office utilizes increases the likelihood of incorrect data impacting the office or family.
But for family offices, which can be seen as easy targets for cybercriminals looking to defraud an account, the risk goes beyond potential staff error leading to inaccurate information.
External bad actors can take advantage of vulnerabilities in an office’s technology to gain access to data or – even worse – client funds.
The lack of enterprise-level integration is fraught with danger in an era of mounting cyber threats. Many offices falsely believe they are protected if their system incorporates APIs (application programming interfaces). However, even if there is an API, there is no guarantee of security. In June, a company called Akamai released a survey report focusing on APIs, which it described as “the attack surface that connects us all.” Another survey this year, this one from Radware, finds that over 92% of organizations report growth in their use of APIs over the past year, but exhibit over-confidence in their approach to API protection. It is worth listing two of their findings. The first involves the threat of undocumented APIs (where the lack of visibility into an API presents an unquantified risk). Over 60% of respondents felt a third of their APIs were undocumented. The second problem is that API attacks are flying under the radar (many existing tools are simply unable to detect and protect against API threats and attacks).
Cybersecurity vulnerabilities caused by holes in family office technology infrastructures impact disaster recovery, business continuity, and the ability of an office to survive a focused cyber-attack. And the more disparate systems an office utilizes, the more opportunities a bad agent has to breach the system and wreak havoc.
Protecting the Family Office Against Technological Failure
The solution to this growing cyber risk is adopting a more integrated platform approach with a single database, where the potential points of failure (and vulnerabilities) are minimized – you only need to protect one system and can inherit cybersecurity.
If you also layer onto that approach a cloud-native architecture with the highest levels of end-to-end encryption (where you can own the “key”) and built-in business processes and workflows, you have the tools for a secure, enterprise-level technology base to support the family office.
The result? A platform that can meet :
Family offices need to replace their current technology infrastructures and utilize an integrated enterprise platform designed and built for a family office. Such a technology platform offers a dynamic workflow and process management engine to dramatically streamline and improve work processes while bringing a new level of risk reduction and cybersecurity. It’s an approach that promotes the success of the office and protects against a major point of potential failure.