Nearly 3 in 4 family offices faced cyber breaches in recent years: EY

ALMOST 3 quarters or 74 per cent of single family offices (SFO) surveyed by EY experienced some form of cybersecurity or data breach in recent years, according to a new study conducted by the advisory services firm.

Yet, out of 250 SFO survey participants in 12 countries globally - including more than 50 from Asia-Pacific – a majority said they did not have a cyber incident plan (72 per cent) nor processes to detect IT breaches (61 per cent) in place.

Most, however, plan to address the issue, with 81 per cent indicating the intention of investing in 3 or more digital technologies over the next 2 years. 

“While digital transformation provides great opportunities, it also comes with risks. Cybersecurity is a key focus area, not just for the family office but the entire ecosystem which includes the families themselves and connected businesses,” said EY’s Asia-Pacific family enterprise leader Desmond Teo in a press release on Tuesday (Jun 7).

Regulatory issues have proved to be a major concern among SFOs, especially amid the current environment of tax and regulatory policy changes.

Notably, 72 per cent of respondents worried about the potential tax implications of remote working. About half or 53 per cent of respondents expressed concern over increasing requirements for global transparency and information exchange, as well as the growing complexity of cross-border tax compliance (48 per cent).

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

Commenting on these results, EY believes it is “telling” that 64 per cent of SFOs surveyed lacked confidence in the performance of their tax operations as it indicates “work needs to be done” to remain compliant.

“The incredible pace of regulatory change in tax and beyond demands that SFOs learn to adapt quickly; and in the face of rapid digitisation, they need to review their technology and their protection against cybercrime,” said EY global private tax leader Steven Shultz.

“With reputational risk, and ever-increasing threat, SFOs need to look closely at their risk management practices, to ensure they are robust; and when it comes to strategy and governance it’s hard to overstate the importance of taking into account non-financial metrics.”

The study also found that 83 per cent believed in the importance of measuring non-financial performance although only 30 per cent do so, exposing a potential execution gap.

EY believes it is “critical” for SFOs to be afforded next-generation performance criteria to complement a broader emerging mandate such as ESG (environmental, social and governance).

Based on its study findings, EY believes there is a “proven tangible benefit to innovating and evolving performance to include new measures” – as 58 per cent of SFOs that have included non-financial metrics to a significant extent also had their performance exceed expectations.