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Chronic Threats
Security Trends -- Talented, Organized Hackers Find MFOs-SFOs Easy Targets

An excerpt from the soon-to-be-released 2012 Security Study Report

By Kathleen M. McBride

Even as banks and some MFOs and SFOs implement measures to mitigate security risks, many, particularly SFOs, remain “blatantly vulnerable, without exception” to hacking, says Paul Michael Viollis, Sr., PhD, CEO of Risk Control Strategies. Calling it a new form of “organized crime,” very sophisticated hackers from Russia and China have been targeting family office computer systems in the last 18 months, considering them to be low hanging fruit because “they do relatively nothing to protect themselves.”

Multifamily offices and SFOs “either do it themselves or use their IT guy, but with unemployment so high in Russia, Viollis notes, hackers don’t have jobs but they have skills and “they spend all day honing those skills. It’s the difference between a general practitioner and a brain surgeon.” They can break in, “extract 70 or 80 account numbers, credentials, passwords, pin numbers and shift it all to the Caymans with so much eloquence, you don’t even know you’ve been hacked.” For the hackers, it’s a “minimum risk, maximum return, phenomenal business model,” according to Viollis.

“It’s a best practice for advisors to preemptively mitigate” threats to the “human, physical, financial interests” of clients, to at least take a solid look—a needs assessment of physical, communications, electronic and travel risks and best practice mandates for mitigation,” as Tier 1, Viollis says.

Tier 2 is threats to executives. “The C-suite is hated in the current environment,” Viollis asserts, citing a recent shooting of a CEO more than a year after an employee was laid off and couldn’t find another job.

Tier 3 is travel. Viollis says, “U.S Embassies are no longer a safe haven” for travelers abroad. Executives and families need help with “due diligence” before traveling, for example, engaging already-vetted drivers before a trip. Then, if they encounter security problems—including health or medical issues, executive “express” kidnappings for ransom, or other security problem, they have in situ people to turn to.

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