Should financial advisors be concerned with cyber security? Yes! Learn what financial advisors need to know about cyber security. Every individual and every business which conducts financial transactions online or stores sensitive personal information on their servers needs to be concerned about cyber security. The next security breach is just one hack away, as cyber criminals become increasingly more sophisticated. The goal of these criminals, in most cases, is to obtain financial information, from passwords to credit card numbers, and sell them on the black market. Some hackers, however, simply like to wreak havoc to satisfy their egos and impress themselves with their hacking skills. It’s a cat and mouse game, where hackers will never stop developing new tactics. Likewise, professionals in the financial industry must do all they can to combat them. Your clients need to know they can trust you with their sensitive financial information.
The cyber threat is great enough that the Securities and Exchange Committee (SEC) is starting to get involved. In April 2014, the Office of Compliance Inspections and Examinations of the SEC issued an information request to more than 50 financial advising firms and broker-dealers. The SEC is attempting to gather information on the experiences of finance industry professionals and their efforts to protect their client’s financial information from cyber threats. While it seems the SEC is simply collecting information at this point, it could be a sign that changes and more regulation will follow. A threat to individual firms could be a part of a much larger threat to financial markets on a global scale. How financial advisors are handling cyber security across the industry is important in the fight against attacks.
Education is the first step to preventing a security breach. Being aware of what types of cyber threats exist and how they work is key to protecting against them. Financial advisors need to be aware of the latest cyber security threats, as well as the tools and methods they can employ to eliminate or minimize them. A security breach can be as simple as: leaving a password on a Post-it note for an unauthorized person to see, not having the proper protection against a disruptive computer virus, or using an unsecure method to transfer funds. Cyber protection software can be purchased to help eliminate the risk, and third-party agencies can be used to monitor and manage threat risk.
Cyber liability insurance can also be purchased to help mitigate the damage caused by the theft of digital property. Unlike general business liability insurance, cyber liability insurance may cover the costs of monitoring client’s credit activity for signs of fraud, as well as the costs of any litigation resulting from the security breach.
The war between criminal hackers and professionals in cyber security will never be won by either side, but it is important for the health of the financial industry to stay on top of the latest threats and the newest weapons used to fight them. Importantly, while money is certainly at stake, the trust of your clients and the reputation of your business are also at risk.
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