Guidance for managing cybersecurity risk

As our homes, finances, and daily lives become more connected, the risks we face have expanded far beyond the physical. From hacked smart devices to fraudulent fund transfers and social engineering scams, cyber threats have grown more sophisticated — and more costly.

High net worth families present particularly enticing targets due to their complex financial structures, household staff, and reliance on digital communication. For example, wealthy individuals are 43% more likely to be victims of identity theft[1]. Having multiple bank accounts, investment portfolios, personal assistants, and interconnected smart home devices creates numerous entry points for cybercriminals.

Yet many people still believe, “It won’t happen to me.” Even those who don’t consider themselves wealthy are often far more attractive targets than they realize.

Common cyberattacks targeting individuals

Cybercrime takes many forms, with financial fraud being the most frequent and costly. Techniques are growing more sophisticated as well. “Brute force attacks,” or automated attempts to try every possible combination of characters to guess a password, are one example. And with the rise of artificial intelligence, cybercriminals are now capable of mimicking voices and writing styles with remarkable accuracy, making scams more convincing than ever. According to HUB International[2], common incidents include:

• Fraud and cybercrime: Unauthorized transfers of funds, altered checks, forged documents, or theft of cryptocurrency.
• Social engineering: Manipulative tactics to trick victims into transferring money or revealing sensitive information.
• Cyber extortion: Criminals demand payment to prevent release of personal data or to restore access to devices.
• Identity theft: Stolen personal information used to open accounts or make fraudulent purchases.
• Cyber harassment: Threats or online stalking targeting adults or children, often using details from social media activity.
• Hacked home technology: Security cameras, smart thermostats, and doorbell systems compromised via WiFi access.

Real-life examples [3]

• You reserve a vacation rental online, only to discover the listing was fraudulent.
• A household employee forges checks or transfers funds from your account.
• A personal assistant is deceived into wiring money after receiving a convincing “urgent” request.
• Your child receives threatening messages from an online predator who has gathered personal information from social media.
• A hacker intercepts email correspondence between you and a contractor or auction house, altering payment instructions to divert funds.
• A client receives a call from someone impersonating a trusted financial institution (such as Coinbase), instructing them to move assets to a “safe” account only to lose the entire balance to the fraudster.

The cost of a cyberattack

Recovering from a cyber incident can be lengthy, stressful and expensive. Victims often face:

• Responsibility for stolen funds or fraudulent credit card charges
• Costs for legal, forensic, and crisis management services
• Public relations assistance to protect personal reputation
• Replacement of lost or stolen digital property
• Expenses related to temporary relocation if home systems are compromised

Why consider a Cyber Liability policy

Cyber Liability insurance provides comprehensive protection that goes far beyond basic identity theft monitoring. The right policy can:

• Reimburse financial losses from fraud, cyber extortion, or unauthorized transfers (including cryptocurrency)
• Cover voluntary or involuntary fund transfers resulting from deception or telephonic instruction
• Extend protection for acts committed by household staff or advisors acting on your behalf
• Provide access to experienced digital forensics, legal, and PR professionals to help you recover quickly

Leading high-net-worth insurance carriers, such as Berkley One, Chubb, Cincinnati, Private Client Group (formerly AIG), and PURE, offer varying levels of protection, with key differences often found in the limits for social engineering or fraud-related losses. Stand-alone options are also available through private markets, such as NetGuard/Tokio Marine, which provides up to $1 million in coverage. However, these standalone policies typically exclude losses arising from large-scale cyber events affecting multiple individuals, e.g.,  a breach at a major financial institution or cloud service provider that exposes client data across thousands of households.

Proactive protection tips

In addition to proper insurance coverage, adopting good digital hygiene can significantly reduce your risk [4]:

• Use a password manager to create and store strong, unique passwords for all accounts.
• Enable multi-factor authentication wherever possible.
• Avoid clicking on unfamiliar links or attachments in emails or texts.
• Verify requests for money or personal information by calling the company directly — not using the contact details provided in the email.
• Install alerts in email systems (like Outlook) that flag similar but unfamiliar sender addresses.
• Regularly update computers, cell phones, smart home devices and routers with the latest security patches.

What to do if you’re hacked

If you suddenly find you’ve been hacked despite your best efforts, there are some immediate actions you can take to try and minimize the damage. Pathstone’s own chief information and security officer recommends the following:

• Immediately disconnect affected devices from the internet.
• Contact your financial institutions and freeze accounts if necessary.
• Notify your Cyber Liability insurer and follow their instructions.
• Change passwords for all critical accounts.
• Engage a reputable cybersecurity professional for assessment and remediation.
• Document all actions and communications for potential legal or insurance claims.

Final thoughts

Cybercrime has become one of the most frequent and financially damaging types of loss facing individuals today. We believe the best defense combines robust personal cybersecurity habits with comprehensive Cyber Liability insurance.

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