March 31, 2022

Cyberattack: How To Protect Your Finances.

The cyberattack, it's a term that no longer needs explanation. It's almost 100% certain that if you've been on the internet for any time at all, you've been attacked.

Your computer is hacked, potentially your identity stolen, and perhaps even your financial accounts invaded.

All of these are the modern threats of the world wide web. Bad actors exist, whose goal in life is to disrupt, steal and harm anyone online.

The majority of these attacks will be aimed at individuals and institutions as a single attack. But the day is likely coming that the entire internet will feel the full impact of a worldwide attack.

Yesterday, for instance, Check Point reported that well over 20 million attacks were launched in a single day. “Techjury” reports that 64% of all companies with a web presence will be attacked this year. Resulting in 30,000 websites being compromised and disabled.

Everyone's favorite dark state player, Klauss Schwab founder of the World Economic Forum, is hard at work preparing for this year's Cyber Polygon. Scheduled for July 8th.

This event always attracts IT, managers, from some of the largest companies in the world, as they too try to fight this growing internet plague.

As some of you may know, my background is with brokers/dealers. Where I was directly responsible for the books and records of a couple of firms.

With that as background, I thought we'd discuss some of the basic principles that the brokerage community uses to protect their financial records. Concepts you can use at home to protect your financial records.

The heart and soul of their investment protection are Denial Of Access and Redundancy.

The first concept is to deny outside access. This can be as simple as turning off the internet when it's not in use. I'm amazed at how many people leave their internet connection, 24 hours a day. Why? If you are worried that it won't come on again, don't be. It will come on again. So turn it off at night.

Another method is to have a simple “A” “B” switch. An A/B switch turns power between one cable and another. Just leave the second connection empty.

Then when you want to have internet, you connect it through to your modem. When you don't want internet you connect it to “B” the empty switch.

Don't like a switch? Then just unplug your internet cable to your modem.

Of course, a Virtual Private Network, VPM is also a highly recommended software to have.

Various firewalls and antivirus software are also very good tools to use.

There are also several resources online that will give additional suggestions on how to protect your internet access from outsiders.

But today's conversation has gone beyond just what to do if you're attacked. We're now asking what to do if the entire internet were to go down.

And this is a question that the financial community has been addressing for a very long time.

For instance, I remember a long time ago when Maddoff and Company, the third market maker owned by Bernie Maddoff was taken over by the feds. As I recall Maddoff and Company was the largest third market trader at the time.

This brings into question why Bernie Maddoff had to do all the shenanigans which got him into trouble, but that's a discussion for another day.

The point here is that when the Fed's stepped in and shut the company down. No one missed a bear. That's because all the trades and records were kept on both sides of each transaction.

So even though Maddoff's records were compromised, the other side knew exactly what trade had taken place, when, what price, and between who.

The entire system was redundant.

And it's redundancy that the investment community has relied on for years.

It may surprise you to know that most funds and many brokers operate at least two completely redundant Information Technology Sites.

Each is complete with its own separate computers, and servers. Further, they're generally geographically distanced so that if a disaster happens at one, it does not affect the other.

Additionally, many brokers and funds have third-party company backups for their complete processing. This provides yet another layer of redundancy.

So here are a couple of easy, backup systems for the average investor.

Number one make a  paper copy. Even if you no longer receive your statement in the mail. You can still print a copy. Then store it somewhere safe. Like one of those fireproof file boxes. They don't cost very much and are well worth the peace of mind.

If you have a large number of financial documents to store, a backup storage drive might be worthwhile. Even just a thumb drive.

I have a NAS, a Network Access Storage system, but I realized some time ago that I need the internet to get into the system. So that's out.

Better to have one of those little USB external drives, if you need to have a computer-based backup. 

A note here about cloud-based backups. This is a very good method of redundancy for your personal files. If anything should happen to your home, for instance, the cloud would provide good redundancy.

However, remember if the entire internet goes down, so does the cloud. Consider both, a cloud-based backup AND a paper file. That paper copy when stored in a safe dry place. Like that fireproof file box. AND a cloud-based backup, should something happen to your home.

SO there you have the two basic concepts that brokers use to protect them from a cyberattack or a complete internet blackout.

First Denial of access. And then Redundancy. 

Something to consider during these perilous times.