As concerns around cybercrime and information security mount - at the individual and institutional level - one global firm is pushing to grow its presence in the private client space.

K2 Intelligence, the investigative, compliance and cyber defense services firm, recently launched an office in Los Angeles, CA, to serve as a “critical hub” for its growing private client services team. The firm said its high-profile entertainment industry, high net worth and family office clients are increasingly seeking expertise and support to manage the physical security, cyber, fraud and compliance-related threats they face.

“With so many of our current clients and technology partners based on the West Coast, the office will serve as a convenient hub to service them. A presence in Los Angeles will also help to strengthen and expand our relationships in important West Coast industry sectors, such as finance, technology, media and entertainment,” said Robert Brenner, chief operating officer at K2 Intelligence. The firm has moved “very decisively” to make this practice a “formal front and center part of the business,” Jordan Arnold, head of private client services, told Family Wealth Report.

“Cybersecurity and considerations around privacy related to personal information and other activities have really transformed the nature of risk, particularly among these types of clients,” Arnold said.

K2 Intelligence, which has US offices in New York and California – as well as London, Madrid, Geneva and Tel Aviv – works directly with high-end clients, professional advisors and other entities serving these individuals. The new Los Angeles branch, for example, also provides business intelligence and investigative services to help companies manage issues such as those pertaining to fraud, pre-transactional due diligence, shareholder activism and corporate contests.

“The critical thing for advisors and clients to think about is that a lack of appropriate safeguards in the cyber realm can very easily lend itself to offline physical risk,” Arnold said. “If you're storing 'core' information online about what you have and who you're connected to – and you're not doing that in a secure way – you're effectively giving potential attackers a road-map to finding you and your assets.”

The goal is to be able to “strike the right balance between opportunity and risk,” whether it's ensuring that mobile devices are optimized from a security and privacy standpoint (when using banking apps, for example), to making sure that clients have a clear idea of best practices and the forever-increasing ways that attackers may try to target them.

“For us, this involves technical advisory work, training, and, of course, being able to respond when things occur to help in real time,” Arnold said. “Recent events have really drawn in people's attention to all these risks.” In October last year, for example, Sony agreed to pay some $8 million to settle claims from employees over the theft of their personal information in a computer hack linked to the release of “The Interview” move (source: Bloomberg).

The incident underscored the need for much greater awareness around areas such as email security, with former employees having reportedly alleged that the company knew it had inadequate measures in place to protect its data, and, moreover, had suffered breaches twice previously.

“The critical considerations are around awareness within an organization, whether a small boutique or a solo private wealth advisor,” said Arnold. “This is critical beyond words. Training is key and there is a lot that can be done to make sure everyone recognizes their role as it relates to cybersecurity,” he continued. “Other important considerations include vulnerability assessments, penetration tests and conducting regular health checks on the security of networks.”

Keeping an eye out for significant changes such as large quantities of data being exfiltrated is also crucial, he said. “If you don't have the right type of security sensors in place to recognize when that type of event occurs, it might be too late.”

While issues related to data/information security and fraud prevention have of course always had to be a priority at financial services firms, a number of factors are pushing such matters further into the limelight. Developments in the technology space, for example, are creating opportunities for businesses to improve their operations while also providing clients with greater access to information, advice and capabilities.

It has been argued, however, that this is making data more vulnerable to threats from sophisticated hackers because of the format in which information is stored and shared. Indeed some reports have claimed that the wealth management industry, for example, has in many ways been slow to innovate - which is arguably a risk in itself.

Banks and other financial institutions are dedicating more of their resources to security-related efforts, while for some players such as K2 Intelligence there are also business opportunities to be had from the expanding complex web of threats, as clients worry increasingly about their financial and personal safety. Last November, Regions Bank, which provides financial services including wealth management, named former FBI executive John Boles as manager of international and cyber investigation. At various conferences held by the publisher of Family Wealth Report, cybersecurity was flagged as one of the major issues keeping family offices at night (see a related article here).

One of the most in-demand services at K2 Intelligence is its Cyber HouseCall service, Arnold said, through which the firm has assisted high-profile clients affected by the recent Apple photo hack and various well-known breach events, as well as those clients wanting to get ahead of the cyber defense curve. With this service, a K2 Intelligence expert spends a full day at the client's home and assists household members with maximizing security and privacy settings on smartphones, tablets and laptops, online accounts and home networks.

Wealthy individuals have of course always been a lucrative target for fraudsters, but as more interactions are conducted online and hackers up their game, knowledge and practical advise is crucial, with the same applicable to businesses of any size.