Tech innovation is amazing---especially with new risk management tech---but it can create the illusion of security.
Family offices, in particular, are increasingly being sold novel risk-management technological solutions to address the complex issues they face.
Unfortunately, these fresh risk-tech solutions are sometimes adopted without a clear understanding of the specific problems they are supposed to solve.
Viewing risk-tech a silver-bullet solution to complex security issues is one of the factors that leads to a common risk management paradox seen in family offices and in other industries…the illusion of security.
𝗦𝗵𝗶𝗻𝘆 𝗢𝗯𝗷𝗲𝗰𝘁𝘀 𝗮𝗻𝗱 𝗛𝗶𝗱𝗱𝗲𝗻 𝗗𝗮𝗻𝗴𝗲𝗿𝘀
Without a solid foundation of processes, people, and training, even the most cutting-edge technology can become an expensive placebo, having no effect...convincing yourself it has an effect, or it simply masking symptoms rather than addressing underlying vulnerabilities and providing a false sense of security or complacency, leaving you even more vulnerable.
Family offices may believe that having the latest risk “gadget” can ensures safety, overlooking human error and internal process vulnerabilities.
Firewalls, "encrypted" messaging services, VPNs, advanced network hardware, "privacy" apps, (fill in the blank AI "solution"), complicated family vaults, dark web and social media monitoring services, complex device management systems, personally identifiable information hunters, or fancy "security" dashboards…on their own…can't stop fundamental risk problems that family offices face every day.
It is difficult to deal with issues such as business e-mail compromise, social engineering, or wire fraud if basic operational processes are not followed consistently and your team is not trained to detect these issues.
𝗪𝗵𝘆 𝗛𝘂𝗺𝗮𝗻𝘀 𝗮𝗻𝗱 𝗣𝗿𝗼𝗰𝗲𝘀𝘀 (𝗦𝘁𝗶𝗹𝗹) 𝗠𝗮𝘁𝘁𝗲𝗿 𝗠𝗼𝗿𝗲 𝗧𝗵𝗮𝗻 𝗥𝗼𝗯𝗼𝘁𝘀 𝗶𝗻 𝗥𝗶𝘀𝗸 𝗠𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁
Effective family office risk management requires a comprehensive system where technology supports tested processes and risk-aware personnel.
Don’t ignore the importance of building and testing a risk management plan and training your team to know what to look out for.
First focus on:
- Process: Why do you do the things that we do?
- Training: How can we get better at doing the things that we do?
𝗕𝗼𝘁𝘁𝗼𝗺 𝗹𝗶𝗻𝗲: 𝗬𝗼𝘂 𝗦𝘁𝗶𝗹𝗹 𝗖𝗮𝗻'𝘁 𝗙𝗶𝘅 𝗮 𝗙𝗹𝗮𝘁 𝗧𝗶𝗿𝗲 𝘄𝗶𝘁𝗵 𝗝𝘂𝘀𝘁 𝗮𝗻 𝗔𝗽𝗽
The right tech, at just the right time, for the right task, can supercharge your risk management---but only if it's part of a bigger game plan involving real, live humans.