Cyber risks tops UK wealth management firms’ list of concerns
Cyber risks tops the list of concerns for UK wealth management firms, our recent research reveals.
We recently carried out a survey of UK wealth management firms that collectively manage £130 billion of assets, representing almost a fifth of the industry, the senior decision makers interviewed believe that data breaches by cyber hackers are the most damaging threat facing the industry.
With the main concerns being about cyber crime, regulation and relationships with insurance brokers, it is unsurprising that the findings in this report can easily be extrapolated and applied to a wide variety of financial institutions.
Titled ‘Insurance and Wealth Management Industry Trends’, the research highlighted that there needs to be greater understanding between wealth management firms and the insurance sector about the risks of cyber-crime, with 55% saying the vast scope and fast-evolving nature of cyber crime made it difficult to get the right policy or find an insurer with the correct expertise.
Our specialist division,Lark Financial Institutions (Lark FI), has over 20 years of experience operating within the niche financial institutions sector and hoped to gain a deeper understanding into the needs of the wealth management sector, as well as the challenges they may be facing.
In addition, the research seemed necessary as improved client service tended to be at the forefront of this investment, with 35 %of firms planning to upgrade customer relationship management (CRM) systems over the next three to five years. One quarter (25%) also plan to develop their online portals while 15% want to improve their mobile technology.
We also see that behind cyber crime, regulation was viewed as the next greatest risk to the industry, with one fifth (20%) of respondents worried about the reputational risks associated with failing to comply with new measures, something we aim to change with our current and future clients.
However, despite these concerns over cyber security (90% of wealth managers rate the threat of cyber-crime as either high or very high) wealth management firms view technology and the use of online platforms as growth and service enablers and plan to continue investment, in spite of the risks.
“We commissioned the research project to enable us to better understand the challenges that the wealth management sector is currently facing. Along with regulation, it was perhaps unsurprising to discover that the one common area for concern for all the participants are the issues relating to cyber risk. We are already working with our insurer partners and other strategic suppliers to strengthen our proposition in this fast developing area of risk and this will enable us to provide bespoke and responsive cyber insurance solutions for all our clients. As the report suggests, wealth management businesses are looking to work with insurance providers that really understand the sector and their business activities. This research will help us to do this so we can continue to develop long standing relationships with clients, something which has always been our ethos since my grandfather started the business in 1948,” says Stephen Lark, managing director of Lark (Group) Limited.