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The Actuary The magazine of the Institute & Faculty of Actuaries

UK wealth managers urged to change ‘nonchalant’ approach to cyber risk

Less than a third of wealth managers in the UK agree their clients are growing more concerned by data breaches and cyber crime, a new survey has found.

UK wealth managers unconcerned by cyber risk ©iStock
UK wealth managers unconcerned by cyber risk ©iStock

This is in stark contrast to their global counterparts, with three in five wealth managers worldwide believing their clients are increasingly worried by cyber risk.

Analytics company GlobalData, which carried out the research, said the “nonchalant” view among UK clients reflects the attitudes of the firms themselves.

It found that over 20% are “not at all concerned” about the impact that data breaches can have on their reputations, compared with just 8% that feel the same way globally.

“UK wealth managers should not underestimate the risks related to cybercrime and data breaches,” GlobalData wealth management analyst, Sergel Woldemichael, said.

“Not only because of reputational damage, but also the hefty fines introduced by GDPR. Reassuring clients that companies have relevant security measures and contingency plans is critical.”

GlobalData said the lack of alarm could be due to the UK wealth industry not yet seeing data breaches related to cyber crime, but warned that low levels of client concern won’t persist.

The firm highlighted how awareness around data is rising after companies outside financial services like Facebook and British Airways experienced security breaches last year.

This comes after research from Aon found that the impact of cyber attacks and other ‘reputational events’ on share prices is two times higher today than before the introduction of social media.

It revealed that companies now risk losing up to 30% of their value in the immediate aftermath of a crisis, but that an instant response based on honesty could boost reputations.

“Although risk management awareness and tools have evolved, reputation risk continues to weigh on corporate executives as one of their leading concerns,” Aon enterprise client leader, Randy Nornes, said.

“Savvy companies that develop and use a robust risk management framework can not only better navigate reputation events, but can often see a net gain in value post-event.”

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