United States: Privacy And Cybersecurity Checklist When Designing A Family Office

As family office executives set up a family office or review an existing family office, it is importantto make sure the privacy and cybersecurity concerns are addressed and the governance and information security infrastructures are set up to get it right from the start. Working with a family office means personalized and tailored services are delivered that take into consideration a family's entire situation, including their assets and liabilities, as well as wealth transfer, intergenerational and philanthropic objectives. Thus, protecting the privacy and confidentiality of not only the financial and wealth management decisions but also the personal information, goals and preferences of the underlying family are of utmost importance. Family offices can establish privacy and cybersecurity controls that proactively mitigate risks related to cyber attacks and implement incident response playbooks that help families plan ahead in the event of a breach.

There are two types of family offices – single-family and multi-family offices. Whether the family office manages the financial and personal affairs of one family or multiple families are sharing resources and infrastructure costs through a multi-family office, delivering products and services in investment advising, financial planning or tax planning means a great deal of sensitive personal information will be collected, processed and managed by family offices. Below are checklists to assist family offices in identifying data privacy and cybersecurity risks.

Know Your Data: How to Design a Critical Asset Protection Program

The first step to protecting the privacy and confidentiality of the most sensitive information housed by family offices is to know the data. By asking the who, what, when, where and how of what the family considers to be the most sensitive and critical asset, a family office can identify and design a critical asset protection program that is right-sized and risk-based. When designing a family office or reviewing an existing family office, consider the following:

  • Who - Whose information is collected, processed and managed by the family office? Does it include multiple generations' data, including children's data for example, or is the data set limited to the family leaders?
  • What - What types of data classification or access management controls are in place to ensure that only the right amount of data and personal information is used or processed by the family office?
  • When - Are there repeated processes, regular schedules by which investment decisions or asset transfers are made, for example, which a malicious attacker or an insider could exploit?
  • Where - If the family office has a presence overseas, or if it has clients overseas, what non-US laws might a family office need to comply with in terms of data transfer restrictions and other regulatory obligations?
  • How - How is the data being used and for what purpose? Is the data being shared with any third parties, including service providers or other hosting services?

Protect Yourself From Cyber Attack, but Have a Plan (Just in Case)

Once a basic level of governance and infrastructure controls is put in place as described above, specific protocols can be implemented to meet the physical, technical and organizational needs in terms of cyber security risks. Hacking and other cyber attacks have occurred with increasing frequency, especially in the financial services sector, but the potential harm may be mitigated if an organization can deal with such incidents effectively. In preparing a response to a data breach, a family office may consider the following five core functions of a cybersecurity framework:

Five Core Functions of a Cybersecurity Framework

Identify - Have an understanding of how to manage cybersecurity risks to systems, assets, data, and capabilities .  Have you considered sp ecific kinds of cyber attacks?  Different types of cyber attacks may demand different responses .  A ransomware  attack, for example, raises questions about backup policies, whether information is  backed up thoroughly or held offline .  Risk assessments should be conducted  regularly to design and implement a comprehensive risk management strategy.

Protect - Controls and safeguard necessary to protect or deter cybersecurity threats .  Are  controls in place and have employees b een trained on those controls?  Establishing  access controls to sensitive information and training employees and service  providers on the safeguard s will help maintain a cybersecurity program that  protects the organization from internal and external threats .  To test the  effectiveness of such controls and training, regularly - scheduled phishing tests or  tabletop exercises are recommended to test how th e organization fares in  response to attacks and breaches .

Detect - Continuous monitoring to provide proactive and real - time alerts of cybersecurity - related events .  Are data forensic capabilities in place that will detect anomalies,  fraud activities or dat a th eft events?  A robust data security program should include  forensics and monitoring that will assist in not only detecting a cyber attack or a  breach but also analyzing and understanding them after such vulnerability is  discovered.

Respond - Incident - r esponse activities .  Is an incident response team in place and does the  team have a playbook to fo llow in the event of a breach?  A cross - disciplinary team  should be in place to receive reports, investigate potential breaches and to  respond to known breaches .  Response plans and playbooks should clarify roles  and responsibilities, including how the family will be notified, whether law  enforcement will be contacted and who will analyze various other legal  requirements for notification that may be triggered.

Recover - Business continuity plans to maintain resilience and recover capabilities after a cyber breach .  If a severe cyberattack renders the family office ' s network unusable,  how fast can the network be shut down an d brought back into operation?  Recovery  planning should include not only procedures for how to best respond and keep the  organization resilient but also how lessons learned from  " near - misses "  can be  incorporated to address data security gaps and reduce future risks.

Key Takeaways:

  • Know your data. Establishing a comprehensive data privacy and cybersecurity program can feel overwhelming. To begin the process of determining a risk-based approach, the first step should be to inventory the data and establishing basic governance and infrastructure controls, such as implementing policies and procedures to identify the critical assets handled and managed by the family office.
  • Have a plan. No cyber security program will be 100% successful in detecting and preventing all cyber attacks and data thefts. Implement a cybersecurity framework that sets industry-standard levels of controls to identify, protect, detect, respond and recover from data breaches.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions