With privacy and security under increasing threat from digital malice, what can HNWs and their wealth managers do to protect themselves?
It’s bad enough when you accidentally tweet an intimate photo instead of sending it as a direct message. How much worse, then, when that in flagrante photo and other personal digital data, whether lascivious, libellous or merely laughable, are stolen from you. Nor is there just one enemy to combat: it may be the press — as the prosecution alleges of Rebekah Brooks and crew — or corporate enemies or even a range of international governments. Living in the post-Snowden era, it’s clear that the NSA may be making even the most intimate of conversations a ménage-à-trois.
It is not just individuals who need to attend to privacy. Family offices and wealth management firms, says Heyrick Bond Gunning of operational risk advisers Salamanca Group, are in danger of betraying their clients through inadequate digital security: ‘They think that they’re below the radar so they’re fine.’ But there are several pitfalls to consider. First, ‘they need to be careful about the jurisdiction their server sits within: it could be subject to the Patriot Act’, meaning all a family’s data may be devourable by the US government. Next, they have to be careful how they dispose of old data and old data-storage systems: you may think you’ve wiped a computer, but a criminal or the Serious Fraud Office can disagree.
Read more on digital privacy issues from Spear’s
And third, if they don’t get on top of this soon, the European Commission will go after family offices with its directive on data security in force from 2016: ‘If you have a breach of data, you have to tell the regulator. From a reputational point of view, you’re toast.’ And if the regulator conducts an inspection, ‘you can be fined up to 5 per cent of your global revenue’. Obama is mirroring this in America, too.
But what technology has wrought, technology can repair. A new generation of boffins (the technical term) is melding ones and zeroes into barriers of beautiful opacity. Up on the 39th floor of Canary Wharf, Ben Goldsmith (not that one) is taking me around the imaginatively named Level 39, a ‘bona fide technology accelerator’, where tech, media and telecoms companies, renting space and sharing ideas, acquire the momentum (and money) to move from promising start-ups to fully fledged businesses.
Keeping it zipped
One such firm is ZipZap. In the words of slick founder Eric Benz, ‘ZipZap is a global cash network — we deal with digital and physical cash. We are catering to that individual who wants to shop online without entering their financial details.’ When you buy something online, a website with ZipZap’s technology will allow you to pay in physical cash — there are plenty of local pay-in points — or digital cash, such as Bitcoin, Feathercoin, Litecoin and others. At no point do you need to send your bank account or credit card details across the ether.
Now, that might sound somewhat dodgy, all these anonymous pounds flowing through the system, but this is hardly Silk Road, the now-defunct website on the shady side of the internet where you could buy drugs, babies or contracts on someone’s life. Beyond its use for the global billions who are ‘under-banked’, without access to standard means of online payment, ZipZap allows HNWs to protect their privacy: you are not exposing your details for thirsty fraudsters or nosy government agencies. Benz also suggests ZipZap might be relevant for the maritally paranoid, for example ‘Bob’, an HNW online poker player whose wife dislikes his habit: ‘He can now go to any location and top up his [ZipZap] wallet with cash. There’s no credit card server that says, “Ooh, Bob topped up his credit from so and so.”‘ Thus ZipZap can combat both the eye in the sky and the eye across the breakfast table.
Much of the risk to HNWs’ data comes from their own misuse, says Heyrick Bond Gunning: inappropriate passwords (they should have letters, numbers, spaces and punctuation marks), enabled geotagging (or constantly tweeting your location like I do), failure to delete sensitive emails or texts (no matter how arousing), passing data over public wifi.
But sometimes, even if you’ve turned every lock, the government or the cybermafia simply have the key — or at least a battering ram. This is an issue Dudley & Roche, run by two techie friends, have faced by developing their own (metaphorically) ironclad computer, the Number 7, to evade ‘the quagmire that is computing’. Produced in an edition of 45, it has electronic innards protected to NSA standards — which is ironic since it is the NSA which is doing most of the snooping.
‘Our device real-time encrypts the operating system and all the data on it,’ says Fred Ryder (whose middle name is Dudley). Edward Hughes (the Roche-bearer) speaks of ‘a constantly evolving battleground’ in IT security, and Dudley & Roche monitors computers it sells so that a defence against a threat to one can be rolled out for all the others.
Hughes reminds users that the weakest link is rarely the technology, most often user behaviour. The NSA, he points out, ‘haven’t broken the encryption or destroyed the mathematics’ but have waited for a user to slip up — or a whistleblower to give their shrill cry.
When Ryder says that ‘it sits comfortably on a desk that might have cost £50,000 or beside a painting on a wall that might cost many times more than that’, you may doubt, but it is rather a chic object, a product of British craftsmanship, with none of the ugliness of the standard moulded-plastic-shell computer which pollutes offices everywhere. (Starting at £27,500, it ought to be.) What Dudley & Roche is really selling, of course, is peace of mind for HNWs: ‘They’re far too busy to be worrying about these things.’ Perhaps they are too busy — but, with their privacy, finances and even freedom at stake, they oughtn’t be.