Complex business structures create cyber issues in real estate and construction

ARTICLE | May 30, 2024

Authored by RSM US LLP

The cybersecurity threat facing real estate and construction companies may be overshadowed by publicity around prominent attacks in other industries, but these sectors are equally at risk.

An intricate network of players, combined with the mobile nature of work in this vast ecosystem, make real estate and construction prime targets for cybercrime. The high volume of field-to-office communication and payment transactions creates a playground for criminals to unleash social engineering, phishing attacks and other scams to exploit people and steal information and money.

“While cyber liability insurance helps protect companies against financial loss in the event of an attack, education and cybersecurity measures should be the first line of defense,” says Chris Wetmore, an RSM principal and leader in the firm’s technology advisory practice. Construction workers and others in these fields often connect to open networks, unaware that they are putting critical information at risk, he says.

Employee awareness training represents the bare minimum for effective cybersecurity governance. Companies doing business in multiple states must also adhere to nationwide data privacy and protection laws. For government work, such as Department of Defense contracts, compliance with the Cybersecurity Maturity Model Certification (CMMC) 2.0 program is now a requirement. Meanwhile, real estate investors increasingly want to see controls in place to protect their financial information.

Many real estate and construction companies are challenged by inadequate resources for training, technical support and internal controls, which has led to more outsourcing.

“We are seeing more companies leveraging cloud services and other technologies to mitigate cybersecurity risk, and also engaging third-party firms to manage their technology stack,” says Matt Riccio, an RSM senior analyst for the real estate industry.

Riccio notes that ransomware, fraudulent wire transfers and data theft are commonplace among middle market real estate and construction firms. Finding protection against these cyberthreats is increasingly important as attacker tools and strategies grow more sophisticated by the day.

On the plus side, emerging cybersecurity technologies enhanced by cloud computing, artificial intelligence and machine learning are continually advancing to help organizations stay one step ahead of cybercriminals.