By Brandon Rickwood and Aaron Jackson
Cybercriminals will go to great lengths to gain access to your personal and sensitive information. Be ready by having a plan to reduce risk.
NEW YORK —Your real estate firm is at risk from the growing threat of cybersecurity attacks. The days of retaining hard copies and physical files are increasingly phasing out. In an era where digital transformation is altering the industry landscape, real estate firms are becoming progressively more vulnerable to cybersecurity threats due to the sensitive information they maintain. While firms are adopting digital solutions to streamline operations, close transactions faster and improve the customer experience to ease streamlining operations, doing so also makes them prime targets for cybercriminals. As the frequency and sophistication of cyberattacks grow, real estate firms and professionals must understand the risks and implement robust security measures to protect themselves from the escalating threat of cybercrime.
Cybersecurity threats facing real estate firms
Real estate firms are particularly vulnerable to various cybersecurity threats due to the sensitive nature of the information they manage. From phishing attacks and social engineering to data breaches and ransomware, it is important to be cognizant of the most common cybersecurity threats your real estate firm may encounter.
Phishing attacks
"Phishing" remains one of the most prevalent threats facing real estate professionals and firms. Cybercriminals use deceptive emails or messages to trick individuals into divulging sensitive information such as login credentials and/or financial information. It is increasingly common to receive emails or messages from attackers posing as "trusted colleagues" or "trusted clients" asking for immediate action on an urgent matter.
Social engineering
Similar to "phishing" attempts, social engineering tactics involve manipulating individuals into divulging confidential information. In the real estate industry, attackers might impersonate clients or colleagues through phone calls, emails, or other forms of communication to establish trust and gain access to sensitive data or financial resources.
Data breaches and ransomware
Data breaches are also a common occurrence where unauthorized parties access confidential information, such as personal identification details, financial records, and/or transaction histories. Additionally, ransomware attacks that hold firms' encrypted data hostage are rapidly becoming an ever-present threat. There were nearly 318 million ransomware attacks in 2023 alone, and researchers estimate that such attacks will increase to one attack every two seconds by the year 2031.1 Real estate firms maintaining a significant amount of sensitive data are prime targets for such attacks.
Given the present threats and future predictions, it is critical for your real estate firm to prioritize this threat. Cybercriminals will go to inexhaustible lengths to gain unauthorized access to your personal and sensitive information. You must be ready for the attack.
How cybersecurity attacks impact real estate transactions
Cybersecurity threats pose a broad risk to real estate transactions, with significant implications for a real estate firm's financial stability, reputation, and legal compliance.
Financial repercussions can be catastrophic as firms grapple with the costs of ransoms, data breach remediation, potential regulatory fines, legal fees and lost business opportunities. Such attacks can be economically devastating to large firms and catastrophic to smaller firms.
The exposure of sensitive and secure information can result in severe legal consequences, class action lawsuits, data loss, compliance issues, and financial fraud to name a few. Ransomware incidents stifle operations, resulting in significant financial losses and downtime. On September 12, 2023, MGM Resorts confirmed that it suffered a ransomware attack that forced the shut-down of several operational systems, which amounted to $100M in losses according to SEC filings.2
Beyond the immediate monetary losses, a cybersecurity incident can also damage a firm's reputation, as trust and reliance are essential in real estate dealings. Clients provide personal and financial records throughout the real property transaction, which flow through financial and broker institutions to complete the deals. Any breach of client data and/or disruption of services can lead to negative publicity, delayed transaction processing, a decline in clientele, and/or the refusal of lenders and financial institutions to work with the breached firm. In this environment, prioritizing cybersecurity is not just a technical necessity but a critical component of maintaining financial health, client trust, and regulatory adherence.
Best practices for enhancing cybersecurity in real estate
Considering the cybersecurity threats posed to real estate firms and their customers, it is important to highlight the mitigation strategies that real estate firms and individuals should apply to avoid such threats. As the most practical strategy, educating employees about the best cybersecurity practices is essential. Recommendations include the following:
- Educating employees is vital to maintaining sound cybersecurity. Firms should conduct regular training sessions with employees and agents to help them understand how to: 1) safely operate online, 2) identify and avoid cyber threats, and 3) handle and secure sensitive information.
- Using encrypted communication methods and strong multi-factor authentication measures for sharing information can also help protect against unauthorized access and add an extra layer of security for attackers attempting to gain such access.
- Ensuring regular software updates, routinely backing up data and establishing recovery plans further address vulnerabilities that may be exploited by attackers.
- Developing and enforcing clear policies along with executing robust security protocols are also important to combat any existing risks and can defend against future threats.
In conjunction with these best practices, it is vital to ensure the firm's readiness by establishing a robust incident response plan to execute in the event of any cyberattack.
Conclusion
As real estate firms continue to embrace digital solutions, the importance of cybersecurity cannot be overstated. By understanding the threats and implementing best practices, firms can protect their operations, safeguard client information, and maintain their reputation in an increasingly digital world. Caution, awareness, and proactive measures are key to traversing the complex landscape of cybersecurity in real estate.
© Mondaq Ltd, 2024
