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3 Risks RIAs Take When Backing Up Their Data

For RIA firms, data is the lifeblood of the business. Client account numbers, financial history, and transaction records to just list a few categories of financial data needed to serve your clients. What keeps that data pumping safe and secure is your network and information technology infrastructure. Firms, large and small, spend a lot of time and money creating a network with the proper hardware and software that meets your firm’s technology needs, configuring the servers correctly, creating the right data connection for speed and volume, and so on.

But computers aren’t perfect. Files become corrupt and motherboards malfunction. Systems shut down, files get lost during server transfers, or viruses attack your operating system. Laptops can be lost or stolen. Should something go wrong, you don’t have time to work through a “technopocalypse.” You need to get back up and running quickly to serve your clients. That’s why having a process in place to back-up your data is essential.

When we meet a new RIA client, one of the first things we do is an assessment of their technology infrastructure and network. After all, we serve as our client’s outsourced IT department so we need to know what’s working well and where there are risks to the system that need to be addressed. One of the ways we do this is by looking for Red Flags, or signs that their system may not be as secure, reliable, or recoverable as it needs to be.

To help you be proactive in securing your firms’ and your clients’ sensitive data, here are 3 Common Red Flags or risks we see RIAs make when backing up their data.

  1. Backing up the data to tape. Whether you back up your data to tape every night, every Friday or once a month, this is not an optimal way of securing your data. Most backup that still save to tape devices are file-level backups. Backing up your data to tape every night helps protect individual files but it rarely is enough to restore your whole system. If something goes wrong with your computer system, you’ll need to reinstall the operating system and application software losing hours of precious client-serving time. Protect your time.
  2. Backing up your data to a USB drive. First of all, make sure that your USB drive is encrypted. So many companies don’t take that extra step and it’s so easy for someone to grab a USB drive and walk away with your data. In addition, the process of swapping out the external USB drives and transporting them to an offsite location is manual and requires a great deal of human intervention. During transportation the drive could be damaged or stolen and each of these scenarios places your firm at significant risk in the event of a disaster. Eliminate the chance for human error.
  3. Not restoring your data from back-up periodically. How do you know it works, if you never test it? It’s one thing to save the data but you also need peace of mind knowing that the recovery system works too. Make sure your back up system works from start to finish.

So, what is the right way to back up sensitive financial data?

Today’s best practices for backup mechanisms cover three levels of backup: a file-level, image or image-level, and an offsite copy. We provide our clients with these three levels of backup because it truly gives the RIA firm the tools needed to re-constitute a complete network infrastructure.

To learn more about these three levels of backup or to read about more common risks or red flags in your information technology network, check out our new book RED FLAGS: Recognize and eliminate the risks in your RIA firm’s Disaster Recovery, IT Compliance, and Cyber Security processes to safeguard your reputation and client trust.

For a limited time you can download a Kindle reader version of RED FLAGS from Amazon for only 99¢. Grab your copy today to recognize and better control risks in your firm’s Backup, Disaster Recovery, IT Compliance, and Cyber Security processes.

Want to learn more about protecting and perfecting your RIA firm’s technology and network? Sign up for our e-newsletter to stay up to date on news, tips, and potential threats to your system.

Think you have an IT issue that needs immediate attention? Give us a call at 855-ITEGRIA (483-4742).

How does your RIA firm back up its data?