This is the fifth and last blog in a series on the top trends in 2018 that we expect to see driving best practices and priorities across the U.S. and the world in: (1) threat and violence risk management, (2) investigations, (3) security risk management, (4) law enforcement, and (5) private client and family office services.

Trend #1: Affluent Families Will Ask More Questions about Their Security

Private clients and their Family Offices are exceptionally attractive targets for criminals. Affluent families and their advisors, however, tend to be much more aware and diligent about financial risks than they are about physical, travel or cyber security. We don’t expect that to change overnight. But we do see persistent evidence, directly and through our channel partners – large private wealth management companies, major insurers and established family office associations – that clients are more likely to ask about security-related matters than they have been in the past. Within families, security is influenced by many factors, such as:

  • Recent occurrence of a “wealth moment,” or anticipation of one
  • Family size
  • Distribution of members across generations
  • Family culture (cohesive, consistent vs. fractured, divisive)
  • Degree of dissent and conflict among family factions
  • Maturity and resilience of Family Office governance
  • Decision-making procedures and protocols
  • Travel habits
  • Prominence of public or online profile
  • Association with various political, cultural, environmental or religious issues

Trend #2: Sophisticated Phishing and Ransomware Attacks Will Impact More Families

As the risks of cyber threats continue to rise, so will concerns among private clients. Last week, Secure World’s “State of the Phish Report 2018” identified phishing as “one of the fastest growing and malicious [cyber] threats” today, driven by hackers who are evading “even the most sophisticated safeguards through carefully planned, socially engineered email phishing attacks that are only getting more advanced.” The other major cyber threat of concern is ransomware, which, according to IBM, increased by 6,000 percent in 2016. A Tripwire article on the “State of Security” predicts that ransomware this year and beyond will be much more dangerous, due to factors such as (1) ease of infection and distribution, (2) the Internet of Things (IoT) and deepening reliance on connectivity, and (3) cryptocurrency as an anonymous source of payment.

Additional cyber security risks to private clients and family offices in 2018 will include, for example:

  • Targeted cyber attacks or identity theft via cyber breach
  • Fraud or other loss related to electronic funds transfer
  • Invasion of privacy and infliction of reputational damage
  • Portable device theft or loss compromising digital privacy and security
  • Employees or children who misuse access by accident or intent

As a result, we expect to see more affluent families and their “inner circle” of advisors increase their focus in 2018 on priorities such as (1) information security assessments; (2) automated IT support, management and oversight; and (3) network security tools and secure data storage, access and management solutions. We also anticipate more private clients (4) engaging “virtual” Information Security Officers to conduct a family information security assessment, implement policies and procedures, help make informed technology-related decisions, and educate family members and advisors.

Trend #3: Educating Children on Safe and Secure Social Media Practices Will Increase in Priority

The wave of new social media applications continues. The anonymity of many of these not only allows kids to bully their peers, but also gives bullies and other influencers – as well as predators – access to children. Many of these apps have minimal standards for verifying age and even fewer maintain control over age-appropriate content. When profiles ask a user to enter personal information such as age, birthdate, address, location, activities and interests, this information can easily fall into the wrong hands.

We expect to continue to see a growing emphasis on this area in 2018 by parents across almost all socio-economic strata – and especially among private clients. Effective parenting in a digital world – and the duties of some Family Offices extend to promoting this kind of security as well – requires asking questions like: (1) “How do we teach our children about the safety of social media?”; (2) “How do we make them aware that their digital footprint is growing by the minute and will follow them their entire lives?”; and (3) “How do we manage the delicate balancing act of monitoring their safety and giving them individual freedom without being overbearing?”

Parents can educate themselves quickly by consulting helpful associations and websites – such as the National Center for Missing and Exploited Children (NCMEC) and the FBI, as well as Instagram, Snapchat and Kik. But private clients and their advisors need to press further and also “connect the dots” between social media security awareness and education with other critical security-related priorities such as ensuring sound practices in operational security, device destruction, data storage and location-based services.

Trend #4: Many Affluent Families Will Underestimate the Importance of Background Investigations on Prospective Household Staff – While Family Offices Will Treat This as a Top Priority

The theft of Kim Kardashian’s jewels in Paris in 2016 may have garnered headlines all over the world, but it isn’t a unique incident. Among the greatest threats to wealthy families is the “insider” – someone who either trades on their privileged access in unauthorized ways to their own advantage, or whose personal behaviors (past or present) could place the family or its assets, interests and reputation at risk.

Many of the due diligence and background investigations we undertake for private clients actually focus on disaffected or unstable family members or their extended relatives, as well as staff such as personal chefs, administrative assistants, drivers and other household personnel. In our experience, however, family leaders are much less likely to proactively conduct background investigations of new personnel than Family Office directors, who typically view this task as a vital part of their duties. Where both families and their advisors can do a better job is ensuring periodic investigation updates on existing staff (and family members who potentially pose a risk). We see this area as a priority for Family Office directors in 2018.

Trend #5: Security-Minded Families Will Consider Conducting Threat Intelligence Monitoring

One of the newest trends related to helping affluent families “protect what matters” is evolving rapidly – the growing use of open source intelligence (OSINT) and threat monitoring services to identify threats in time to intervene or mitigate the effects of a negative event. While the technology underlying this countermeasure has been used by governments in one form or another for decades, its accessibility to individuals and the private sector today is a new and evolving development.

More and more private clients and their families are engaging us this arena. Sometimes it’s around a particular event or period – such as an individual who may post a threat to a family member or a high-profile incident related to controversy or negative media coverage associated with a family member’s activism, politics, lifestyle or business associations. In other cases, the family seeks ongoing coverage because the threat is persistent. We see demand increasing in this area – for legally identifying, collecting, analyzing, monitoring and preserving digital open source social media content that could potentially threaten the family, including references to violence, threats, improprieties or other areas of concern. We also see this trend accelerating because it’s a two-way street: OSINT can also be leveraged by individuals harboring malicious intent toward the family – such as tech-savvy burglars.

What issues do you see confronting affluent families and their Family Office in 2018?

We are interested in hearing how you are preparing for the upcoming year. Tell us what’s on your mind. Or consult our additional blogs on issues of importance to families with means.