Most high net worth individuals are digitally unprotected

By Matt Cullina

With their significant financial resources, prominent professional and civic roles, and connections to sensitive information, high net worth individuals can face unique cyber risk exposures that demand specialized protection. Yet the biggest issue with those of affluence may be the belief they’re better protected than they really are.

Many HNW individuals already employ the expertise of insurance agents and financial advisors to protect their assets — but often don’t consider what comprises their “digital resources.” In today’s world, digital vulnerabilities can present more danger than dropping a blank check in the front yard — and for this audience, risks go well beyond the financial.

Agents and advisors have an opportunity educate this unique market segment about changing cyber risk dynamics and solutions tailored to address their specific vulnerabilities.

HNW individuals can be prime targets for cybercrime

Although any person or entity with substantial financial resources can be a tempting target for profit-seeking fraudsters, attacks aimed at the HNW segment — and resulting damage — are often more complex. Cybercriminals have learned there are more ways to exploit HNW victims than direct financial compromisecontinually evolved their tactics to maximize the impacts of their attacks.

HNW targets don’t only possess wealth; they can also provide access to sensitive information, valuable relationships and networks of potential new targets. Even their personal brands can be exploited because HNW individuals who are in the spotlight and face greater public scrutiny can be vulnerable to significant reputational damage.

For prominent executives, the demands of their careers mean they frequently access sensitive work information via personal devices — which can be less secure. Their family members can be targeted as well, making personal devices and relationships potential entry points for attackers seeking sensitive information and a backdoor into an enterprise’s critical systems. As a result, the professional and personal cyber risks of these executives are increasingly comingled.

The dangers aren’t only for executives. HNW individuals often serve on boards of corporations and charitable organizations, and may participate in private investment deals. Compromising these individuals often exposes sensitive information that can be used for social engineering scams, phishing attacks and unauthorized access.

In one example, following the hack of a HNW individual’s email, a fraudulent fundraising message was sent to his network. Those who gave generously via the provided link unknowingly enriched a criminal to the tune of more than $300,000. In addition to those unrecoverable losses, the incident damaged the victim’s reputation, making his contacts wary of future emails.

Extortion is another tactic HNW individuals may face. Once hackers gain access to a personal account like social media, they may threaten to post deepfakes, defamatory content, sensitive photos or embarrassing information unless a sum is paid. This reputational damage can have devastating personal and professional consequences. Mitigating these issues can quickly become complicated and lead to unwelcome surprises regarding the victim’s cyber protection and restoration options.

Misconceptions about existing cyber protection

Despite the abundance of modern cyber risks, many HNW individuals believe they are adequately protected through commercial cyber policies or identity theft riders attached to their homeowners insurance. However, these policies are often insufficient to address the full spectrum of threats.

Commercial policies: While business owners and executives may assume their corporate cyber policies extend to their personal lives, this is rarely the case. Such policies are designed to protect the organization, not the individual, and may not cover attacks targeting an executive’s personal accounts or devices.
Identity theft riders: Identity theft coverage often focuses on restoring stolen identities or reimbursing financial losses from fraudulent activity. These policies typically lack the scope to address complex issues like ransomware negotiations, digital asset recovery, defrauding others or legal fees.

This gap in coverage can leave HNW individuals exposed to financial and reputational risks, as well as lacking support from their professional services team. Though many HNW individuals have extensive networks they can rely on when urgent matters arise, it’s unlikely they have a contact on speed dial who can immediately help remediate a cyber attack. This further highlights the need for robust personal cyber insurance — which comes with 24/7 expert cyber crisis management support.

Educating the HNW market about risks

Insurers and financial advisors play a critical role in bridging the knowledge gap for their HNW clients since many are simply unaware of the severity of their cyber risks or the limitations of their existing coverage.

By proactively educating this market, insurers and advisors can position themselves as trusted partners and build lasting relationships. Important steps include:

Conducting risk assessments
Insurers can offer personalized cyber risk assessments to help HNW clients understand their vulnerabilities. This may include evaluating their digital footprints, assessing the security of personal devices and networks, and identifying potential exposures of professional or philanthropic activities.
Tailoring policies to unique needs
High net worth individuals require policies that go beyond traditional cyber coverage. Cyber risk insurance professionals can help agents design personal cyber insurance policies that include coverage for matters of extortion, data restoration, reputational damage and legal expenses.
Bundling cyber coverage with other HNW services
Insurers and advisors can build packages for the HNW segment that combine cyber insurance with other relevant services, such as asset protection or estate planning. This holistic approach appeals to clients seeking streamlined solutions for managing their risks.

Preparing for the future

As the cyber threat landscape continues to evolve, insurers and advisors must continually adapt their offerings and educate clients. For those serving the HNW market, fostering a deeper understanding of cyber risks and how to mitigate them is recommended.

As the need and demand for personal cyber insurance grow, insurers and advisors that rise to the occasion will be well-positioned to capture a greater share of this expanding market — and make a significant impact in protecting the financial, reputational and emotional well-being of their policyholders.