Business Owners’ Personal and Family Security RisksSubmitted by Varsity Wealth Management on March 27th, 2018
Accumulating wealth turns out to be a double-edged sword for business owners. It certainly has its privileges, but it also comes with additional risk exposures. In a 2011 Zogby survey, 92 percent of people with a high new worth indicated concerns over the possibility of home invasions, muggings, kidnapping, and even random street crimes. Not mentioned widely was the ever increasing risk of cyber crime, which can do serious financial, reputation and identity damage. One way some potential victims are attempting to reduce their risk is through a significant reduction of their profile; however, it is becoming increasingly difficult to fly under the radar. A more proactive approach, and one recommended by risk management experts, is to incorporate a deliberate strategy of preemptive security and risk management in order to minimize potential threats.
You and Your Family are an Open Book
The news is rife with stories of high profile figures having their financial records and past histories dug up by computer hackers only to be openly displayed, or worse, used against them in extortion attempts. Some attacks can be highly sophisticated, going beyond the mark’s own computer records, digging into the records and files of colleagues, family members and professional advisors in order to launch an all out assault. And, we only hear about the attacks on high profile people, such as celebrities and politicians; however, cyber-criminals aren’t particular about your resume – if you have a sizable bank account and a reputation to protect, you are an attractive target.
If you have managed to keep the public information available on your financial and family life hidden, you may be at a lower risk. However, anytime you make a major purchase, such as a house, a car, a boat or a plane, it becomes a matter of public record. Even those records thought to be held in private have been subject to cyber attacks which have successfully penetrated the often archaic technology of public and government agencies. That’s why public figures tend to register their major purchases under alternative identities.
Who do you Trust?
Interestingly, investigations into information leaks or theft have revealed the most likely source is the victim’s inner circle of friends, business associates or relatives. In many cases, the weakest link in the family’s information security chain is the younger family member. Social media has become an information gateway for family information and secrets as young people compete for attention in the noisy, digital social arena. Of greater concern, is the posting of family activities, destinations, and future plans for all to see, including those who wish to do the family harm.
What are the Threats?
The vast majority of crimes perpetrated against the wealthy involve identity theft and fraud committed with the help of supposedly private information collected through security breaches. However, information security breaches also lead to more serious crimes, those feared the most by wealthy families – kidnapping, extortion, and home invasions.
What can be done to enhance private security?
An increasing number of business owners, especially those that tend to travel abroad, are undertaking a complete assessment of the risks and threats that face their family; and many are looking to risk management professionals and private security companies to design and, in many cases, install a preemptive security strategy. This might include
- Installation of a state-of-the-art home security system
- Upgrade identity theft and protection systems and software
- Systematic background investigations on business associates, household staff, and employees
- Installation of cutting edge cyber security software
- Global travel intelligence to identify potential risks when traveling abroad
What about Insurance?
Although a preventative security strategy is essential, it can never be 100 percent effective, which is why it would be important to consider insuring against potential risks and threats. Many of the services and systems listed above come with some sort of guarantee or insurance protection against any breaches (You’ve heard of the $1 million guarantee against identity theft offered by LifeLock). Just about any risk is insurable, and insurance or risk management companies offer broad coverages for all types of threats, including kidnapping and extortion where a payment is demanded.
Education as the Best Prevention Method
The most effective prevention method is education in which family members become intimately familiar with the risks and threats they face. It doesn’t have to reach the level of living in cloud of paranoia; rather, simply ensuring that everyone has awareness about their surroundings, their actions, and the company they keep. Caution is the key word.
Working with a qualified risk management and security specialist to implement a coordinated, preemptive strategy you should be able to live a perfectly normal life. But we all have to take some responsibility for our personal safety by understanding the threats.
*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2014-2018 Advisor Websites.