Our top-trends blogs, which highlight what our experts foresee as driving best practices and priorities across the U.S. and the world, remain among our most popular posts. This year, in 2020, we present a multi-part series covering critical issues and advances in (1) security risk management, (2) security design, (3) threat and violence risk management, (4) emergency management and response planning, (5) investigations, (6) law enforcement consulting, and (7) private client and family office security.
Trend #1: Cyber criminals will escalate their targeting of affluent families – and particularly their family offices.
Cyber crime continues to generate trillions across the globe, leaping well beyond legitimate companies in profit and offering those willing to engage illicit-but-untaxable income. This “cyber economy” is becoming more diverse, and the tactics to target individuals and organizations are growing. This shows no sign of slowing down; cybercriminals are reinvesting 20 percent of their revenues to simply fund more crime and more strategies.
Affluent families sit in the crosshairs of this illegal economy as frequent targets of cyber crime. Their prominence – including an at least minimal public presence – and wealth increase their vulnerability. For example, one malware infection “essentially took over” the digital life of a Morgan Stanley Wealth Management client – a trend that is of concern to the financial services firm’s security leadership.
Cyber criminals have several tactics in their repertoire – ranging from phishing scams to the aforementioned malware – and several points of entry. Third-party vendors and disgruntled employees also pose an insider threat to cyber security. Affluent families will have to continue to invest in their safety and privacy to protect information, assets and themselves, both at home and at their family office. Many family offices oversee the management of assets comparable in scale to mid-sized businesses – with far fewer information security countermeasures in place. As the risk of cybercrime continues to rise, families will need to make cyber security a much higher priority.
Trend #2: Smart homes and Internet of Things (IoT) devices improve security, but only if experts are diligent in maintaining these increasingly complex systems and addressing vulnerabilities immediately when they arise.
In 2019, security researchers found that a Zipato smart hub, which was installed in reportedly 20,000 households, had three security flaws that cyber criminals could exploit to unlock front doors. This alarming vulnerability was just one of many documented situations wherein smart devices are exploitable – or when the device itself is exploiting the family using it.
The Amazon Alexa voice assistant is not-so-slyly listening in on your conversations. Researchers found they could request and collect personal data and eavesdrop on users through both Amazon and Google smart home products. Hackers can even infiltrate a smart coffee maker in what Quartz called “caffeinated chaos.”
These hacks rarely stop with one device – once a cyber criminal is “in” your smart home, everything is connected, and they have access to everything. Families need to be proactive in engaging either outside experts or an internal security function to actively monitor and manage their systems.
Trend #3: Security will remain a priority for affluent families traveling internationally.
Best practices in private client travel security include establishing an emergency preparedness plan to mitigate the effects of an adverse event abroad, whether that be natural or man-made; practicing general security awareness, such as always identifying exit and entry points in entertainment venues; avoiding public Wi-Fi; and selecting facilities, such as hotel rooms and transportation, that promises the most safety.
We particularly emphasize the safety of our client’s children, who often face higher risks while traveling due to their age and frequent social media use. For example, sharing current locations and experiences on Instagram in order to build a personal brand could prove unsafe for digital-minded teenagers.
Unfortunately, these protective measures will continue to be essential. Though terrorism decreased overall for the fourth consecutive year, it remains a reality and far-right extremist attacks actually increased by 52 percent in Western Europe and North America.
Trend #4 – The Demand for Investigation Services from Family Offices Will Grow
According to one report, the number of family offices with more than $50 million in assets increased 23 percent from 2018 to 2019, and that trend appears to be continuing.
Along with this growth in the number of offices, Forbes and other media outlets have reported that the focus of a family office has expanded from not just seeking financial returns, but also to managing reputational and security risks.
In 2019, we saw an uptick in the need for investigative services from our Private Family Office clients. This trend appears to be continuing into 2020 as demand increases for self-due diligence investigations, as well as in-depth background investigations of our clients’ household and family office staff, financial advisors, and, even in some cases, who their children are dating.