Q: I have most of my portfolio invested with a single mutual fund company. I believe that individuals and governments in certain countries (Russia, China, North Korea, Iran, Nigeria, etc.) now have the ability to create havoc by hacking into many government and private institutions. Is there anything I can do to protect myself?

Ron

A: Your question touches on the biggest financial challenge of the digital era. That said, there is no easy personal finance answer. What we can do as individuals is limited. We're dependent as savers, investors, borrowers and customers of the financial services industry, on their U.S. regulators and the high-tech community to devise solutions to lower the risk of cybercrime.

The threat is real. "We are looking at exponential trends in growth with cyber security attacks," said Wulf Kaal, professor at the St. Thomas Law School and chief executive of the high-tech firm Semada.

The Treasury Department has identified cyberattacks as one of the greatest risks to the U.S. financial sector. The financial services industry is responding by investing money and talent to repel cyberattacks. High-tech entrepreneurs like Kaal at Semada are racing to design a digital architecture that is less vulnerable to cyber thieves, often involving blockchain technologies to create the so-called internet of Trust. (I wish the broader financial community would spend even more effort on cyber security and less on dismantling regulatory guardrails erected after the global credit meltdown.)

In the meantime, "it behooves us to use caution," recommended Massoud Amin, director of the Technological Leadership Institute at the University of Minnesota. Invest in learning the basics of managing information securely, such as using a password manager and encrypting your hard drive. I'd also put a freeze on your credit reports.

Diversification is a sound risk management technique. Most of us are well diversified, almost by accident. Perhaps our life insurance policy is with one company; savings in a federally insured bank or credit union, and our portfolios with a mutual fund company.

I favor putting money into blue chip financial institutions with the resources to invest in cyber security. If that's where your retirement portfolio is now, say, with a mutual fund behemoth, you're probably fine staying the course; it's as safe as your money can be in the digital era. However, if it allows you to sleep better why not diversify into another financial institution that still meets your investment goals? It's another layer of protection.

Chris Farrell is a senior economics contributor, "Marketplace," commentator, Minnesota Public Radio.